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Metropolitan Journal of Business and Economics

Impact Of Forensic Audit Practices In Fraud Detection In Financial Institutions In Uganda. A Case Study Of ABSA BANK, Kampala, Jinja Road.

Authors: Hosan Yusuf Mohamed1 , Magala Muhammed2

Journal: Metropolitan Journal of Business and Economics (MJBE)

Volume/Issue: Volume 5 - Issue 3

Published: 01 Jan 1970


Abstract

The study investigated the impact of forensic audit practices on fraud detection in financial institutions in Uganda, using Absa Bank located along Jinja Road, Kampala, as the primary case study. The research examined how transaction tracing, document examination, data analytics, and internal control assessment, as forensic audit practices, influenced the detection of financial fraud within the bank over a period spanning 2018 to 2023. A mixed-methods research design was adopted, combining quantitative data drawn from the bank's internal audit reports, compliance records, and fraud investigation files with qualitative insights obtained through structured interviews with senior audit and compliance officers. The data were analysed using both descriptive statistics, correlation analysis, and multiple regression techniques. The results revealed that data analytics and transaction tracing were the most statistically significant forensic audit practices in predicting fraud detection rates, with p-values of 0.002 and 0.005, respectively. Document examination also demonstrated a significant positive relationship with fraud detection (p = 0.019), while internal control assessment, though positively associated, showed a comparatively weaker level of statistical significance (p = 0.048). The study concluded that forensic audit practices played a substantial and measurable role in enhancing Absa Bank's capacity to identify and uncover fraudulent activities, and that the effectiveness of these practices was greatest when they were applied consistently and in combination with one another. It was recommended that Absa Bank and other financial institutions in Uganda invest more heavily in forensic audit capabilities, particularly in the areas of data analytics and transaction monitoring, and that the Bank of Uganda strengthen its regulatory framework to mandate the regular conduct of forensic audits across all licensed institutions. Future researchers were encouraged to examine the cost-effectiveness of forensic audit practices and to explore the role of corporate governance in facilitating or hindering their implementation.
Keywords

Forensic audit, fraud detection, financial institutions, transaction tracing, document examination, data analytics, internal control assessment, Uganda, Absa Bank.

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