Risk management, top management support, internal audit activities and fraud mitigation
| DOI | https://doi.org/10.1108/JFC-11-2019-0147 |
| Published date | 24 January 2020 |
| Date | 24 January 2020 |
| Pages | 569-582 |
| Subject Matter | Accounting & Finance,Financial risk/company failure,Financial crime |
| Author | Waled Younes E. Alazzabi,Hasri Mustafa,Ahmed Ibrahim Karage |
Risk management, top management
support, internal audit activities
and fraud mitigation
Waled Younes E. Alazzabi and Hasri Mustafa
Department of Accounting, University Putra Malaysia, Serdang, Malaysia, and
Ahmed Ibrahim Karage
Department of Strategic Management, Putra Business School, Serdang, Malaysia
Abstract
Purpose –This paper aims to examine the effectof top management support (TMS)and risk management
(RM) on the internalaudit activities (IAA) and fraud mitigation (FM) in the Libyan banking sector.
Design/methodology/approach –The data is collected usinga survey questionnaire of 16 commercial
banks in Libya and analysedusing a structuralequation modeling.
Findings –The study shows positive and significant relationships between RM and employees’FM and
TMS and employees’FM. The study also demonstrates a significant mediating effect on the relationship
between RM,TMS and FM.
Research limitations/implications –The study is conducted in the Libyan banking sector. Further
research is needed in other contexts and sectors to understandthe contribution of the RM and TMS on FM,
including the impact of technology and internal audit characteristicsin terms of experience, education and
professionalcertificates on FM.
Originality/value –The study is the first attempt to explore FM in an emerging economy, particularly
Libya, by introducing IAA as a mediator. The study provides implications for regulators and top
managementin the banking sector.
Keywords Banking, Libya, Top management support, Risk management, Fraud mitigation,
Internal audit activities
Paper type Research paper
1. Introduction
Fraud is a universal crime. Fraudulentactivities hamper sustainable development and cause
substantial losses to the global economy. Recent study shows that fraud costs the global
economy $4tn (Associationof Certified Fraud Examiners, 2018b), and the highest number of
fraud cases are recorded in the banking sector at 16.8 per cent (Association of Certified
Fraud Examiners, 2016) with a median loss of $110,000-$200,000 (Association of Certified
Fraud Examiners, 2014,2018a,2018b).In the Middle East and North Africa (MENA) region
[1], asset misappropriation and corruption are the most common and widespread fraud
activities in the banking sector. Since the rise of the Arab spring in Libya in 2011, fraud
incidents are more noticeable in the financial services institutions, including Libya’s
An earlier version of this paper was presented as a sundry paper at the National Seminar on
Digitalisation, Sustainability and Globalisation (10th Faculty of Economics and Management
Seminar, UPM) on 16 July 2019 at Universiti Putra Malaysia. The authors thank the conference
reviewer for suggesting improvements. Any errors nevertheless remain the authors’own
responsibility.
Top
management
support
569
Journalof Financial Crime
Vol.30 No. 2, 2023
pp. 569-582
© Emerald Publishing Limited
1359-0790
DOI 10.1108/JFC-11-2019-0147
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