A CRITICAL ANALYSIS OF THE EFFECTIVENESS OF INTERNAL AUDITING IN FRAUD DETECTION IN ZIMBABWEAN CEMENT MANUFACTURING INDUSTRY

Abstract

This study aimed to analyze the impact of internal auditing on fraud detection in the cement manufacturing industry of Zimbabwe. Epistemology was adopted as the philosophical basis of the study, and a pragmatism research paradigm was employed. The study used a convergent parallel research design and a quantitative research approach, with questionnaires used for data collection. The study's target population was 5,000 staff and employees from three major cement manufacturers in Zimbabwe, and a research sample of 357 was obtained using the Krejcie and Morgan (1970) table. Simple random and purposive sampling methods were used to collect data through questionnaires and interviews. The study found that management audits were the most commonly used type of internal audit in the studied cement manufacturing firms. However, the effectiveness of the audits was poor in most aspects, including accomplishing objectives, enhancing organizational effectiveness, preventing errors and unforeseen problems, risk management, and identifying the basic objective of internal auditing. The study also found that internal auditing in the studied firms fails to deal with major forms of fraud, including skimming payments from customers, check tampering, cash theft, misuse of company credit cards, and improper payroll transactions. The study found a low but significant relationship between the fraud variable and the internal auditing in the firms, with an R2 of 0.307 and a T value of 0.942. The study also found no significant relationship between the return on assets and the performance level of the cement manufacturing firms, with an R2 value of 0.015 and a T value of 0.347. The study recommends the adoption of other internal audit principles and strategies, formulating a consistent internal audit policy, and regular financial auditing to enhance the fraud detection and prevention capabilities of internal audits in the studied firms.