Academy of Accounting and Financial Studies Journal (Print ISSN: 1096-3685; Online ISSN: 1528-2635)


The Integration of Forensic Accounting and the Management Control System as Tools for Combating Cyberfraud

Author(s): Oluwatoyin Esther Akinbowale, Prof. Heinz Eckart Klingelhofer, Dr. Mulatu Fekadu Zerihun

Introduction: One of the major challenges confronting the development of any nation results from fraudulent practices among the citizens of the country. This is also true for the banking sector: business has become more complex with the recent developments in information and communication technology. This has changed the nature of bank fraud and fraudulent practices. Objective: This study investigates the integration of forensic accounting and the management control system as tools for combating cyber fraud. It is geared towards the minimisation of the cost of employed capacities for forensic and management control systems in order to mitigate cyber fraud. The study also explores the effect of integrating forensic accounting and management control systems on banks’ reputation and the huge loss of revenue resulting from cyber-fraud. Methodology: The study develops a conceptual model to show the relationship between forensic accounting, the management control system and cyber-fraud in the banking sector. A linear programming approach was employed to express the relationship amongst the variables considered in this study with a view to reduce cyber fraud, minimize cost and improve the reputation of financial institution (banks). This resulted in the formulation of a model which gives an idea of the feasibility of combining the components of forensic accounting, management control system and bank reputation in order to combat cyber fraud. This was validated using the genetic algorithm solver which resulted in an acceptable, a logical and feasible fitness value and penalty value. Findings: The ease of convergence of the fitness and penalty values of the solutions show that the developed model is feasible and suitable for achieving the set objectives. Conclusion and Recommendation: This study suggests that government should introduce a legislation that would ensure strict cybersecurity disclosure norms as this would defend companies’ critical assets as well as its anti-fraud programmes, while the banking sector should implement a control on fraud risk management to ensure reputation and regulatory compliance.

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