Internal audit practices, management controls and fraud prevention among public technical vocational education and training institutions in Nairobi Metropolitan area

Abstract

This study investigated internal audit practices, management controls and their role in fraud prevention within public Technical Vocational Education and Training (TVET) institutions in the Nairobi Metropolitan area. Internal audit practices play a critical role in enhancing financial transparency, accountability, and fraud prevention within institutions. However, Public TVET institutions in Nairobi Metropolitan Area continue to experience financial mismanagement and fraudulent activities, raising concerns about the effectiveness of internal audit mechanisms. The study was guided by the following research objectives: To determine the effect of internal control systems on fraud prevention among public TVET institutions in Nairobi Metropolitan Area , To establish the effect of internal audit IT adoption on fraud prevention among public TVET institutions in Nairobi Metropolitan Area, To assess the effect of management controls on fraud prevention among public TVET institutions in Nairobi Metropolitan Area, To establish the moderating effect of Board oversight on internal audit practices and management controls on fraud prevention among public TVET institutions in Nairobi Metropolitan Area. The research was anchored on the Agency Theory, which highlights the relationship between audit committee board (institutional management) and agents (employees), the Fraud Triangle Theory, which explains the conditions that lead to fraud, and the Institutional Theory, which emphasizes the role of organizational norms and structures in shaping audit practices. The study adopted a descriptive research design to provide a comprehensive analysis of internal audit practices in TVET institutions. The target population comprised of the 141 public TVET institutions in Nairobi Metropolitan area, with 103 heads of internal audit forming the units of observation. Data was collected using structured questionnaires which were subjected to validity and reliability tests. The collected data was analyzed using both descriptive and inferential statistics. Descriptive statistics such as means, standard deviations, and percentages summarized the data, while inferential statistics, including correlation and regression analysis, were used to determine the relationship between internal audit practices and fraud prevention. The study revealed that fraud prevention had strong positive correlations with internal control systems (r = 0.666, p = 0.000), management controls (r = 0.702, p = 0.000), and internal audit IT adoption (r = 0.753, p = 0.000). The regression model explained 62.3% (R² = 0.623) of the variation in fraud prevention. Internal control systems (B = 0.241, p = 0.019) and IT adoption (B = 0.464, p = 0.000) were significant predictors, while board oversight’s moderating effect was insignificant (B = 0.054, p = 0.810). The study recommended that TVET institutions enhance internal controls through continuous staff training, strong enforcement of compliance measures, and periodic review of control systems to address emerging fraud risks. Adoption of digital audit tools and capacity building in IT-based audits should be prioritized to strengthen fraud detection. Management should enforce transparent compliance procedures and establish fraud risk committees to enhance accountability. Lastly, board oversight should be reinforced through governance training, independence, and regular performance reviews to promote integrity and institutional transparency.