Quality of internal control procedures : antecedents and moderating effect on organisational justice and employee fraud

Rae, Kirsty and Subramaniam, Nava 2008, Quality of internal control procedures : antecedents and moderating effect on organisational justice and employee fraud, Managerial auditing journal, vol. 23, no. 2, pp. 104-124.

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Title Quality of internal control procedures : antecedents and moderating effect on organisational justice and employee fraud
Author(s) Rae, Kirsty
Subramaniam, Nava
Journal name Managerial auditing journal
Volume number 23
Issue number 2
Start page 104
End page 124
Total pages 21
Publisher MCB University Press
Place of publication Bradford, England
Publication date 2008
ISSN 0268-6902
1758-7735
Keyword(s) fraud,
ethics
employees
auditing
Summary Purpose – This study aims to bring together theoretical concepts from the organizational justice, internal control and fraud literature to develop two distinct models relating to employee fraud and the quality of internal control procedures (ICP), respectively.

Design/methodology/approach – Survey data from 64 Australian firms were used to develop the two models. The first model was tested using a logistic regression analysis, and the second model was tested using a multiple regression analysis.

Findings – The first model reveals that the quality of ICP has a moderating effect on the relationship between perceptions of organizational justice and employee fraud. The second model indicates that ICP quality is significantly and positively related to three key organizational factors: the corporate ethical environment, the extent of risk management training of staff, and the internal audit (IA) activity level.

Practical implications – Risk management strategies relating to employee fraud will need to pay greater attention to organizational factors that affect both perceptions of justice at the workplace and ICP quality, including fostering a more ethical and equitable work environment, increasing IA activities and staff training in risk management.

Originality/value – Using the fraud triangle framework, this study extends previous literature by providing empirical evidence on the role of organizational justice and ICP regarding employee fraud.

Language eng
Field of Research 150102 Auditing and Accountability
220102 Business Ethics
HERDC Research category C1 Refereed article in a scholarly journal
ERA Research output type C Journal article
HERDC collection year 2008
Copyright notice ©2008, Emerald Group
Persistent URL http://hdl.handle.net/10536/DRO/DU:30017892

Document type: Journal Article
Collection: School of Accounting, Economics and Finance
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