ROLE OF INTERNAL AUDIT TO PREVENT FRAUDS IN MICROFINANCE INSTITUTIONS A CASE STUDY OF UMUTANGUHA FINANCE RUBAVU (2020-2023)

Abstract

The purpose of the present study was toto assess the role of internal audit to prevent frauds in microfinance institutions in Rwanda. Specific objectives were; to examine the role of internal audit to prevent frauds in Umutanguha finance, to find out the challenges facing internal audit in prevent frauds in Umutanguha finance to suggest solutions to overcome the challenges facing internal audit in prevent frauds in Umutanguha finance. Research design was analytical with xi quantitative method. In order to collect data, the researcher used documentation and questionnaire. In order to select the sample size of the study, the researcher used convenience and purposive sampling techniques, where researcher came up with 20 respondents from the total population of 20 as the study population was too small. To present, analyze and interpret the data, the researcher used figures with frequency and percentages.After analyzing and interpreting data, the study found thatthe role of internal audit to prevent frauds in Umutanguha finance were; to analyse the organization data, conducting through financial audit, identifying discrepancies among the customers’ accounts, and provision of recommendation for process improvement. The challenges facing internal audit in preventing frauds in Umutanguha finance were; talent inadequacy or completely no talent in this profession, increased remote work, obstacles to build relationship with other workers, technology evolutions and limited resources in the microfinance institutions. The solutions to overcome the challenges facing internal audit in preventing frauds in Umutanguha finance were; evaluating controls and advising managers, evaluating risks, to analyse operations and confirming information, to review compliance and to enhance managerial skills by coping with new acquired sophisticated technology. The study concluded that the internal audit plays the significant role in prevention of frauds in financial institutions especially microfinances like Umutanguha. Research recommended that there is a need to enhance managerial skills by coping with new acquired sophisticated technology.