VARIABLE MEASUREMENT

INTERNAL CONTROL VARIABLES MEASUREMENT

Control environment Code of Ethics

To measure control environment, the researcher

will Assess whether the SMEs has established a
code of ethics that sets out the company's values
and expectations for employee behavior. The
code of ethics should provide guidance on
ethical issues and set out the consequences of
non-compliance.

Secondly,Policies and Procedures: Review

the SME's policies and procedures to ensure
they are adequate and appropriate for the
size and complexity of the organization.
Policies and procedures should address
areas such as financial reporting, asset
management, and segregation of duties.
Karim et al. (2018) and Elikai & Yawson (2019),
also used code of ethics and policies and
procedures to examine the effectiviness to
internal controls to prevent fraud in SMEs. They
found that SMEs with a strong control
environment, including the use of a code of
ethics and policies and procedures, were less
likely to experience fraud.

Risk assement
Segregation of Duties:

To measure risk assessment in SMEs the

researcher will Evaluate whether the SME has
implemented adequate segregation of duties to
prevent fraud. This involves ensuring that no
single employee has complete control over a
process, and that different employees are
responsible for different aspects of the process.
 Secondly, Access Controls:

Review access controls to ensure that only

authorized personnel have access to sensitive
information and that access is monitored and
logged,and also reviewing the company's risk
management policies and procedures, evaluate
the effectiveness of their risk identification and
analysis processes, and assess whether they
have taken appropriate actions to mitigate
identified risks.

Kusuma and Suardika (2021) and Shen and Li

(2020) used segrigation of duties and access
Controls to examine the effect , of internal
control on fraud prevention in SMEs . They found
that adequate segregation of duties and access
controls were important factors in preventing
fraud in SMEs.

Control Activities Documented Policies and Procedures:

To measure control activities as way of

preventing fraud in SMEs the reseacher shal
evaluate documented policies and procedures
that should communicated to employees and
consistently applied. These policies and
procedures should cover areas such as financial
reporting, cash handling, purchasing, and
inventory management.

Secondly, Monitoring and Reconciliation:

Review the monitoring and reconciliation

processes that are in place to ensure that
transactions are properly recorded and
accounted for. This includes regular reviews of
financial statements, bank reconciliations, and
other key financial records.

Chen and Lin (2020) and Al-Saimary and Al-Ani

(2021) uesd documented polices & preocedures
and monitoring &reconciliations to examine the
effectiveness of internal control in preventing
 fraud SMEs. They found that SMEs with effective
internal controls, including documented policies
and procedures and monitoring and
reconciliations, were less likely to experience
fraud.

Information and communication Communication Channels:

To measure information and communication
as a way of preventin fraud in SMEs the
researher will access the effectiviness of
communication channels because SMEs
should establish effective communication
channels to allow employees to report
suspected fraud or other irregularities. This
includes providing employees with multiple
reporting options, such as hotlines, email, in-
person reporting and whistleblowing.
Tran and Tran (2021) and Kaur & Singh (2021)
used communication channel as measure.
the authors examined the effectiveness of
internal control in preventing fraud in
Vietnamese SMEs and Indian SMEs
respectiviley. They found that SMEs with
effective communication channels, such as
hotlines and anonymous reporting mechanisms,
were less likely to experience fraud.

Monitoring Segregation of Duties:

To measure monitoring as way of preventing

fraud the reseacher shall assess the monitoring
process in SMEs as they should have a system of
segregation of duties where different individuals
are responsible for different aspects of financial
transactions. This includes ensuring that no
single individual has complete control over a
transaction from start to finish.
 Secondly Regular Reviews:
SMEs should conduct regular reviews of
financial transactions and other business
activities to detect and prevent fraud. This
includes reviewing financial statements,
bank statements, and other records on a
regular basis

Tran and Tran (2021) and Kaur & Singh

(2021) also used segregation of duties and
regular review to measure monitoring .They
found that segregation of duties and regular
review of financial transactions were
important factors in preventing fraud in
SMEs

Low cost techinology based solution Cloud-Based Solutions:

SMEs can use cloud-based solutions to store and

process financial data securely. This includes
cloud-based accounting software and other
cloud-based solutions that can help SMEs
manage their financial operations more
efficiently.

Training and Awareness:

SMEs can provide training and awareness
programs to employees to ensure that they
understand how to use technology-based
solutions to prevent fraud. This includes
training on how to use fraud detection
software, cloud-based solutions, and other
technology-based solutions