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An Evaluation of Certified Fraud Examiners Perceptions of
Behaviour and Lifestyle Change as Fraud Indicators

(ennis ). *icho+i
',
(r. -gnes P. .ani
2

'. /ecturer& (epartment o0 Securit1 and )anagement& School o0 2usiness and 3conomics& 4aratina 5ni6ersit1
P.". 2o7 !5& '#'##& N1eri& 4en1a
2. /ecturer& (epartment o0 Sociolog1 and Social 8or9& 5ni6ersit1 o0 Nairo+i& P.". 2o7 :#';& ##'## Nairo+i
4en1a
,3mail<=omiano>gmail.com

Abstract
?his is an e7plorator1 and descripti6e stud1 that sought to in6estigate the perception o0 certi0ied 0raud e7aminers
(@A3s) on the suita+ilit1 o0 using red 0lag +eha6iour indicators to detect and in6estigate crime in 4en1a. ?his
was necessitated +1 the continued pre6alence o0 0raud cases in go6ernment and pri6ate o00ices despite
esta+lished mechanism 0or 0raud detection and deterrence. ?he stud1 used random sampling procedure to select
;# @A3s out o0 '5# @A3s who were read1 to participate in this research. ?he stud1 is anchored on social
learning theor1 and sel0 control theor1. ?he stud1 0indings re6ealed that @A3s had an optimistic and positi6e
perception towards the use o0 +eha6ioral red 0lags as indicators 0or detecting 0raud. Aindings also showed that the
@A3s +elie6ed that the indicators o0 li0est1le and +eha6ior change can +e used success0ull1 0or 0raud
identi0ication in all the industries and occupations e7plored in the stud1. ?he stud1 concluded that there is a need
0or 0urther stud1 on emerging trends o0 +eha6ioural and li0est1le changes related to 0raud commission. It also
recommended that @A3s +e proacti6e in monitoring and sur6eillance o0 suspect emplo1ees 0or tips on 0raud.
ey!ords" Araud& Araud detection& Araud in6estigation& 2eha6ioural change& 4en1a

#$% I&'()*+C'I)&
4en1ans are li9el1 to lose the war against corruption i0 the pro+lem o0 detection and mitigation o0 0raud is not
addressed. 8hereas the issue o0 corruption has +een a lot o0 attention 4en1an politics in6estigators ha6e
complained that there is little support to occupational 0raud detection and deterrence which is di00icult to carr1
out due to its hidden 0orm. 5nli9e the0t which is o6ert& occupational 0raud has thri6ed in the countr1 +ecause o0
the perpetrators a+ilit1 to conceal their moti6es and +ad deeds. 2ut while there ha6e +een 6igorous media
discussions +1 corruption e7perts a+out the sudden li0est1le and +eha6iour changes o0 suspected perpetrators& no
studies ha6e +een done to identi01 the actual social indicators associated with 0raud perpetrators that can +e
utiliBed +1 0raud e7aminers and auditors to detect and e7amine 0raud.
@onseCuentl1 occupational 0raud as a crime in 4en1a has not +een 0ull1 anal1Bed in relation to li0e
st1le change and its impact on societ1. ?hough the 4en1an go6ernment has impro6ed on internal and e7ternal
audit& documentation& I? controls as recommended +1 the -ssociation o0 @erti0ied Araud 37aminers (-@A3&
2#'#) perpetrators o0 0raud still manage to circum6ent the s1stem 0or their personal gain. -s such large scale
corruption in such go6ernment departments li9e state re6enue collection& pu+lic procurement& and pu+lic
propert1 trans0er remain a headache to the current administration.
2ut what is occupational 0raudD "ccupational 0raud is the use o0 oneEs occupation 0or personal
enrichment through the deli+erate misuse or misapplication o0 the emplo1ing organiBation resources or assets
(-@A3 2##4). ?he enrichment o0 indi6iduals through misuse o0 power is not new in 4en1a. )ati and *ithongo
(2##') trace corruption 0rom the era o0 4en1aEs 0irst president )Bee Fomo 4en1atta in the late !#s and the earl1
#s& where it was centered on opportunities presented +1 the policies through which the state sought to manage
the econom1. ?he two authors add that during the era o0 0ormer president (aniel arap )oi& which started in ';$
and lasted 0or 24 1ears& corruption was characteriBed +1 a+use o0 power and land gra++ing. ?he a+ilit1 o0 the
perpetrators to launder +ac9 the stolen wealth +ac9 to the econom1 has ensured that 4en1a +ecomes a 6er1
uneCual countr1 and a 6er1 0ragile one at that. -s such the socio economic de6elopment o0 the countr1 has +een
hampered +1 occupational 0raud since independence ma9ing the countr1 a poor destination o0 0oreign direct
in6estment.
Howe6er the promulgation o0 the new constitution in 2#'# has enhanced the countr1Es position in the
0ight against gra0t. ?he promulgation o0 the law has added impetus in the 0ight against corruption. ?he histor1 o0
the war against corruption goes +ac9 to ';; when the go6ernment created the 4en1a -nti @orruption -uthorit1
(4-@-) through the Pre6ention o0 @orruption -ct& cap !5 (*"4 ';;). ?he 0ight against corruption went a
notch higher in 2##' when the o00ice o0 the -ttorne1 *eneral introduced into parliament the 4en1a -nti
@orruption @ommission 2ill which sought to ma9e pro6ision in the constitution 0or the esta+lishment o0 the
4en1a -nti @orruption @ommission and also 6est powers upon the commission to in6estigate and prosecute
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o00ences o0 corruption& economic crime& and misuse o0 pu+lic o00ices 0or personal gain. ?he mandate o0 the
commission has recentl1 +een e7panded to constitute the more independent 3thics and -nti @orruption
@ommission (3--@) (*"4 2#'')$
8hile the go6ernment has +een acti6e at enacting legislations to 0ight gra0t other non-go6ernmental
organiBations li9e ?ransparenc1 International ha6e since ';;: pla1ed important role in creating awareness a+out
the presence o0 corruption in 4en1a. /i9e in other parts o0 the world ?I annual @orruption Perception Inde7 (@PI)
has +een used to help raise the pro0ile o0 corruption as a ma=or impediment to sustained de6elopment in the
countr1 ()ati and *ithongo 2##'). ?I 4en1a report (2##$) rated 4en1a at position :2 among 4 -0rican
countries and '4 among '$# participating countries worldwide. In addition the National @orruption Perception
Sur6e1 (2##;) 0ound that !.5G 4en1ans rated corruption in the countr1 as 6er1 high& ';.G rated corruption as
high& and onl1 a small '.$G rated corruption as low.
In addition to ?I& -@A3& the Institute o0 @erti0ied Pu+lic -ccountants (I@P-4) and 4en1a National
-udit "00ice (43N-") there are other +odies in 4en1a that ha6e +een in6ol6ed in the retooling the s9ills o0
auditors and other 0raud e7aminers to ena+le them tac9le 0raud in more sophisticated wa1s. ?his paper is a
summar1 report o0 a stud1 we conducted in 2#'' to 0ind out how -@A3 4en1a chapter mem+ers 6iew +eha6iour
and li0est1le change indicators and how the1 utiliBe them to detect 0raudulent indi6iduals.
In doing so the researchers hoped to address the 0ollowing Cuestions< which are the li0est1le and
+eha6ior changes that @A3s consider as 0raud indicatorsD how does li0est1le and +eha6ioral change indicators
compare to other indi6idual Cualities li9e age& prior criminal records& and le6el o0 education in 0raud detectionD
and how e00ecti6e are +eha6ioural red 0lag indicators in detecting crimeD ?he stud1 0ocused on occupational
0raud due to its e7pansi6e nature and its direct in0luence on societ1. ?his was done +1 scrutiniBing perpetratorsE
li0est1le change as o+ser6ed +1 the @erti0ied Araud 37aminers (@A3s).
@A3s are pro0essionalEs in6estigators with 0ormal training in other 0ields such as auditing& accounting&
law& in6estigation& securit1 management& law en0orcement and ris9 management amongst other related
pro0essions. ?heir responses and perception were used and relied upon 0or data anal1sis and conclusion. 8e
wor9ed solel1 with @A3s +ecause the1 directl1 deal with 0raud perpetrators. ?he stud1 co6ered +eha6ioural red
0lags 0raud indicators onl1& although there are other 0raud detection methods that are used to unearth 0raud.

#$# Limitations
?he stud1 onl1 0ocused on social +eha6ior and li0est1le changes related to 0raud commission. ?his does not mean
that there are no other plausi+le 0raud indicators e7hi+ited +1 dishonest emplo1eesH there are other 0raud
indicators which can guide an in6estigator to detect 0raud. -dditionall1& not all +eha6iour changes in an
indi6idual were anal1Bed +ecause not all +eha6iour changes point towards 0raud commission. 2ecause o0 the
sensiti6e nature o0 dealing with personal and con0idential in0ormation the inter6iewers did not reCuest the
perpetrators to gi6e testimonies o0 how the1 acCuired their wealth +ut instead anal1sed all in0ormation gi6en +1
0raud e7aminers.

,$# )ccupational Fraud in -ociety
2lac9 (';;#) states that& I0raud is 0alse representation o0 matter o0 0act& whether +1 words or conduct& +1 0alse or
misleading allegations& or +1 concealment o0 that which should ha6e +een disclosed.J -ccording to 2lac9
occupational 0raud can +e su+ di6ided into three ma=or categoriesH asset misappropriation& corruption and
0inancial statement 0raud. -sset misappropriations are 0rauds in which the perpetrator steals or misuses
organiBations resources. ?he1 include s9imming and cash larcen1& 0rauds in6ol6ing 0raudulent dis+ursement o0
cash li9e +illing& chec9 tampering& e7pense reim+ursement& pa1roll& and cash registers (A.3.) 2#'#). @orruption
re0ers to schemes in which 0raudsters use their in0luence in +usiness transactions in a wa1 that 6iolates dut1 to
their emplo1ers in order to +ene0it themsel6es or someone else. 37amples include +ri+es& e7tortions& and con0lict
o0 interest (A.3.) 2#'#).
Ainancial statement 0raud in6ol6es the misstatement or omission o0 material in0ormation 0rom the
organiBationEs 0inancial reports& commonl1 9nown as Kcoo9ing +oo9sE. 37amples o0 some o0 this 0rauds in6ol6e
reporting o0 0ictitious re6enues or the concealment o0 e7penses or lia+ilities in order to ma9e an organiBation
appear pro0ita+le than it reall1 is. ItEs an e7ample o0 organiBation occupational crime. (A.3.) 2#'#)
"ther irregular acti6ities that emplo1ees engage in 0or their own +ene0it include& acceptance o0
9ic9+ac9s and +ri+es& di6ersion o0 potential pro0ita+le transactions to other organiBations& em+eBBlement&
intentional concealment or misrepresentation o0 transactions& su+mission o0 0alse claims& intentional 0ailure to act
on unwarranted circumstances& unauthoriBed use o0 con0idential in0ormation& and illegal manipulation o0
in0ormation technolog1 networ9s or operating s1stem (A.3.) 2#'#).

,$, Prevalence of )ccupational Fraud in -ociety
-@A3 Report (2##;) indicates that 0raud escalates during economic recession. ?he report states that 0raud
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increase during such times due to indi6idual pressureH and 5#G respondents inter6iewed in the stud1 +elie6ed
pressure arising 0rom economic pro+lems resulted in ampli0ied le6el o0 0raud. ?he 0indings corro+orate -itan
(2##2) who argues that 0raud and corruption increase during hard economic times. ?he -@A3 Report (2#'#)
indicated that occupational 0raud during economic recession includes asset misappropriation& corruption and
misrepresentation o0 0inancial statements.
Howe6er data a6aila+le 0or this stud1 indicated that 0raud is a permanent 0eature in de6eloping
countries economies. Aor instance a stud1 +1 *@2 (2#'#) estimates that one out o0 two people per transaction
paid a +ri+e in Su+-Saharan -0rica. ?he sur6e1 0urther re6eals that in 2##! more than 2# de6eloping countries
reported signi0icant increase in pett1 +ri+e with the highest occurrences happening in @hile& @am+odia& 4en1a&
Nigeria and ?hailand. In addition ?I 4en1a (2##$) repot on 4en1a denotes widespread pre6alence o0
occupational 0raud and o+ser6es that +ri+er1 and pri6ate pa1ment to pu+lic and pri6ate o00icials to in0luence
decisions is the most pre6alent mani0estation o0 corruption. - 2#'# report +1 Nationals 3nterprise Sur6e1 on
@orruption listed greed& po6ert1& poor remuneration& unemplo1ment& +ad go6ernance and cultural reasons as the
main 0actors that promote corruption (ta+le ').

'able #" Comparison of (eason for Corruption Prevalence$
(eason for prevalence Percentage$
*reed 5#G
Po6ert1 4#.2G
Poor remuneration ';.G
5nemplo1ment '4.;G
2ad go6ernance '#.:G
@ultural reasons '#G
-ource" &E-C ,%#%

,$. Factors that Promote )ccupational Fraud
In his stud1 on occupational 0raud -l+recht (2##:) indenti0ies perpetrator characteristics and organiBational
en6ironment as two ma=or causes o0 0raud. He sa1s that indi6iduals who are li9el1 to commit 0raud e7hi+it
characteristics that include li6ing +e1ond onesE means& o6erwhelming desire 0or personal gain& high personal
de+t& close association with customers& the 0eeling o0 +eing underpaid& a wheeler dealer attitude& strong challenge
to +eat the s1stem& and e7cessi6e gam+ling ha+its. He also 0ound that organiBations that place too much trust on
9e1 emplo1ees& lac9 proper procedure 0or authorised transactions& do not mind personal disclosures o0 personal
in6estment and incomes& and do not per0orm independent chec9s on per0ormance ris9 are at danger o0 +ecoming
6ictims o0 occupational 0raud.
It is ha+it o0 most emplo1ers to teach their new emplo1ees a+out good ethical and pro0essional
+eha6ior once the1 =oin a new compan1. 2ut some emplo1ees indulge and get acCuainted in criminal +eha6iour
+1 learning 0rom their older colleagues. 8hile e7pounding on social learning theor1 -9ers and 2urgress (';!!)
e7plained that indi6iduals tend to rein0orce +eha6iours the1 learn and 0ind +ene0icial to them and similarl1 re=ect
those stimuli that cause pain to them. ?hus occupational 0raudsters tend to =usti01 what the1 see and regard as
+ene0icial li9e misappropriating 0unds 0rom a compan1 in order to sustain their la6ish li0est1les. Indi6iduals that
earn little pa1 and pre0er associating with high spenders get in0luenced to la6ish li0est1le and end up committing
0raud to sustain their desired li0est1les.
-ll o6er the world man1 people in responsi+le positions em+race the idea that the1 can 6iolate their
position dut1 and create opportunities to o6erride e7isting controls and hence commit 0raud. ?heir moti6es tend
to generate pressure 0rom within or without leading to immense dri6e to do an1thing in their capacit1 to achie6e
their goals (A.3.) 2#'#). ?he o00icials thus con6ince themsel6es that using their co6eted positions to steal 0rom
the pu+lic is a good thing. ?he architects o0 the theor1 o0 social control +ased their proposition on peopleEs
relationship& commitment& 6alues& norms and +elie0s which encourage them not to commit crime or +rea9 the law.
?his means that indi6iduals& who ha6e their moral codes internaliBed and tied into their wa1 o0 li0e& ha6e reduced
le6el o0 de6iance 0rom the norm.
Hirsch (';!;) proposed that there is need to esta+lish direct controls and how intimate groups help
increase controls when loo9ing at crime causati6es. He listed 0our components in his proposition< attachment
(a00ectionate ties indi6iduals ha6e with other persons)& commitment (cost 0actors in6ol6ed in criminal acti6it1)&
in6ol6ement (time dedicated on something) and +elie0 (the le6el o0 con6iction towards general 6alues.).
Similarl1& /a *range and Sil6erman (';;;) argued in support o0 sel0 control theor1 that indi6idual sel0 control is
in 0act one o0 the strongest prediction o0 crime. People are there0ore li9el1 to commit 0raud due to the attachment
the1 ha6e on the +ene0its the1 would get li9e li6ing in la6ish li0est1les.


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,$/ 'he Impact of )ccupational Fraud to *evelopment
?he 5.N& 8orld 2an9& I)A& and specialiBed +odies li9e -@A3& 3-@@& and ?I are in agreement that corruption
is a draw+ac9 to de6elopment. ?he 2##$ -@A3 report re6ealed that the world econom1 loses up to G o0
re6enue to corruption. ?his implies that the 5S econom1 alone which was e7pected to hit L'4.';! trillion in
2##$ lost L;;4 +illion to occupational 0raud. "n the positi6e note& howe6er& the 2#'# -@A3 report indicates that
occupational 0raud reduced 0rom G to 5G.
2ut the situation in -0rica is Cuite +lea9. - 2##2 22@ anal1sis on an -0rican 5nion Report on
corruption stated that the cost o0 corruption on -0rican economies e7ceeds 5SL '4.$ +illion a 1ear. ?he panelists
noted that the resources di6erted +1 corruption acts and resources withheld due to corruption amounts to 25G o0
-0ricaEs *ross (omestic Product. -nd while corruption continues to eat on -0rican economies a 2#'# *@2
report o+ser6ed that& Ithe demograph1 o0 +ri+er1 continue to disad6antage the poor and the 1oung& as all sur6e1s
show that lower income earners report pa1ing more +ri+es than higher income earners.J In 4en1a& 0or e7ample&
the ?I report 0or 2##: estimated that K+ri+er1 ta7E accounts 0or a+out :#G o0 the ur+an 4en1an monthl1 salar1.
?hus the 4en1an wor9er who on a6erage is ta7ed :#G ta9es home onl1 4#G o0 gross pa1.

,$0 (ed flags as Indicators of )ccupational Fraud *etection
Red 0lags are the indicators or signals that something out o0 the ordinar1 is happening in an organiBation and
ought to +e in6estigated. Hanco7 and (i Napoli (2#'') state that a red 0lag is a set o0 circumstances that is
unusual in nature or 6aries 0rom the normal acti6it1. ?his means that unli9e the0t or ph1sical +rea9age into a
+uilding which is easil1 identi0ia+le and recogniBa+le& 0raud is perpetrated +1 people in a 0iduciar1 relationship
with the organiBation and detecting these indi6iduals is di00icult and hence in6estigators must rel1 on red 0lags to
map out insidious dealings. ?he two o+ser6e that perpetrators undergo some +eha6iour changes which include
a+senteeism& a+normal ill health li9e sha91 appearance& ma9ing and +rea9ing promises& memor1 loss& 0reCuent
0amil1 pro+lems& and e6idence o0 deceit. ?he1 howe6er caution that +eha6ioral change in an indi6idual cannot
solel1 +e used to accuse an indi6idual +ut numerous and noticea+le +eha6ior change leading to li0est1le change
are enough to pro6o9e 0raud e7aminers to conduct surprise audits.

.$% 1E'2)*)L)34
.$# (esearch -ite and +nit of )bservation
?he -@A3 4en1a @hapter (M':4) is an a00iliate o0 -@A3 International - an international pro0essional association
o0 anti-0raud and white-collar e7perts whose o+=ecti6e is to train @A3s all o6er the world on 0raud awareness.
?he -@A3 4en1a @hapter eCuips anti- 0raud pro0essionals with suita+le s9ills and 9nowledge to 0ight 0raud. ?he
4en1a chapter has a+out 2## mem+ers o0 whom '5# are @A3s. In this stud1 the unit o0 o+ser6ation is the trained
@A3. ?he @A3 is in contact with the occupational 0raudsters and is +est placed to pro6ide in0ormation on
+eha6iours that are percei6ed to +e signi0icant in 0raud detection. ?he unit o0 anal1sis is the +eha6ior and
li0est1le changes o0 the 0raudsters.

.$, -ampling 'echni5ues and *ata Collection
?he stud1 emplo1ed random sampling method to select ;# respondents 0rom a total o0 '5# @A3s that Cuali0ied to
+e part o0 this research. In addition purposi6e sampling techniCue was used to select si7 9e1 in0ormants who
pro6ided more insight on the su+=ect. Nuestionnaires that contained +oth open and closed Cuestions were
administered to the respondents through e-mail 0ollowed +1 a 0ace to 0ace inter6iew with the researchers to
gather primar1 in0ormation. Secondar1 data was e7tracted 0rom -@A3 4en1a @hapter 1earl1 0raud reports and
other institutions where the @A3s are posted wor9. ?he data was anal1sed using the Statistical Pac9age 0or
Social Science (SPSS).

/$% (E-+L'- A&* A&AL4-I-
/$# Bac6ground Characteristics of (espondents
?he e7planator1 6aria+les o0 this stud1 included age& le6el o0 education& occupation& the t1pe o0 industr1 a @A3
ser6ed and the num+er o0 1ears in the ser6ice. ?he ages o0 the ;# @A3s were +etween 5# and !# 1ears and were
classi0ied in groups o0 2'-:# 1ears& :'-4# 1ears& 4'-5# 1ears& and 5'-!# 1ears. Some 5$.;G respondents were
+etween :' and 4# 1ears& 2;G were +etween 2' and :# 1ears& 5.!G were +etween 4' and 5# 1ears while :.:G
were +etween 5' and !# 1ears. ?hree o0 the si7 9e1 in0ormants were +etween 4' and 5# 1ears and the rest were
+etween 5' and !# 1ears.
?he Araud 37amination @erti0ication is onl1 open to candidates who ha6e some 9ind o0 pro0ession. In
our stud1 !5.!G respondents had a +achelorEs degree& 22.2G had a diploma& and another $.;G had a mastersE
degree or were a+out to graduate. -mong these respondents :4.4G were auditors (22.2G e7ternal auditors and
'2.2G internal auditors)& 2#.#G were securit1 o00icers& ''.'G were accountants& '#.#G were ris9 anal1sts and
$.;G were +an9ers (ta+le 2 +elow).
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?he -@A3 4en1a @hapter is a 0airl1 recent institution and 4.4G respondents had onl1 ser6ed 0or ' to
2 1ears& '5.!G had ser6ed 0or 2 to : 1ears and $G had ser6ed 0or less than a 1ear. "nl1 one respondent had
ser6ed 0or 4 1ears. Aurther !$.;G respondents were emplo1ed in the ser6ice industr1 compared to 2$.;G who
wor9ed either as 0inance managers or auditors in the +an9ing industr1 (ta+le :).
'able ," (espondents occupation
)ccupation Fre5uency Percent
-ccountant '# ''.'
In6estigator ': '4.4
Securit1 o00icer '$ 2#.#
37ternal auditor 2# 22.2
Internal auditor '' '2.2
Ris9 anal1st ; '#.#
2an9er $ $.;
"thers ' '.'
?otal ;# '##.#
-ource" (esearch -urvey ,%##
'able ." (espondents Industry
Industry Fre5uency Percent
Ser6ice !2 !$.;
2an9ing 2! 2$.;
"thers 2 2.2
?otal ;# '##
-ource" (esearch -urvey ,%##

/$,$ 2o! respondents identified Behavioral (ed Flags
?his stud1 was principall1 concerned a+out the use o0 +eha6ioural change indicators in detecting and
in6estigating crime +1 the @A3s. ?he 9e1 +eha6ioral change indicators were clustered into 0our ma=or categories
with $: (;2.22G) respondents sa1ing that 0raud perpetrators engaged in e7pensi6e li6ing li9e +u1ing e7pensi6e
cars& palatial homes& =ewelr1& gi0ts& ma9ing 0reCuent e7pensi6e trips and o6erspending. Si7t1 eight (5.!#G)
respondents pointed to sudden or erratic +eha6iour change& li9e e7cessi6e gam+ling& alcoholism& withdrawal
s1ndrome& deceit& e7tended wor9ing hours& and 0reCuent long calls in silent tones or coded language. Si7t1 one
(!.$#G) respondents mentioned that people who committed 0raud had some personal pro+lems which
mani0ested in their +eha6iourH while 4' (45.!#G) respondents said that those who engaged in 0raud tended to
ha6e illicit e7tra marital a00airs (ta+le 5).

'able 0" ey Indicators of Behavioral (ed Flags
Indicators (esponses Percentage Percent of Cases
Expensive living standards $: :2.$# ;2.2#
Illicit relationships 4' '!.2# 45.!#
-udden behavior change !$ 2!.;# 5.!#
Personal problems !' 24.'# !.$#
-ource" (esearch -urvey ,%##
Some ;2.2G o0 the identi0ied cases engaged in e7pensi6e li6ing while another 5.!G cases e7hi+ited sudden
+eha6iour change ma9ing them the most signi0icant 0raud detection indicators (ta+le 5).

/$,$# 'he use of Behavioral (ed Flags by 'ype of Industry and )ccupation
8e e7plored the 9e1 +eha6ioural 0lag indicators common in di00erent industries so as to ma9e an in0ormed
generaliBation on the +est a6aila+le indicators 0or 0raud detection. 8e 0ound that !$.G respondents in the
ser6ice industr1 loo9 out 0or e7pensi6e li6ing& another !$.:G respondents loo9 out 0or illicit relationships& !4.G
loo9 out 0or sudden +eha6iour change and 0inall1 !$.$G loo9 out 0or personal pro+lems. Some 2$.;G
respondents in the +an9ing industr1 said the1 pa1 attention to e7pensi6e li6ing& compared to 2!.$G who loo9 at
illicit relationships& :5.:G who loo9 out 0or sudden +eha6ior change& while 2.;G pa1 attention to personal
pro+lems. @A3s wor9ing in other t1pes o0 industries said the1 also paid attention to e7pensi6e li6ing (2.4G)&
illicit relationships (4.;G) and personal pro+lems (:.:G).

8e also 0ound that @A3s in di00erent occupations emplo1ed the use o0 a6aila+le +eha6ioural red 0lags di00erentl1.
37ternal auditors paid more attention to illicit relationships (:4.'G) and e7pensi6e li6ing standards (24.'G)
while securit1 o00icers paid more attention to personal pro+lems (24.!G) and sudden +eha6iour change (';.'G).
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"n the other hand ris9 anal1sts paid attention to illicit relationships ('.'G) more than the +an9ers ('2.2G)& and
accountants and internal auditors (.:G). See ta+le ! +elow.
In su+-section 4.' a+o6e we showed that 4.4G o0 the respondents had wor9ed as @A3s 0or ' to 2 1ears. Some
$.#G o0 these @A3s said the1 pa1 attention to illicit relationships when loo9ing 0or clues on 0raud& 5.;G loo9
out 0or e7pensi6e li6ing& and 2.'G loo9 out 0or sudden +eha6iour change& while :.$G loo9 0or personal
pro+lems. Respondents who had ser6ed 0or 2 to : 1ears said the1 loo9 out 0or e7pensi6e li6ing ('5.G) and illicit
relationships ('.'G) to detect 0raud. ?he respondents who had ser6ed less than a 1ear said the1 used e7pensi6e
li6ing (.2G)& sudden +eha6iour change (''.$G) and ($.2G) personal pro+lems ($.2G) as standard +eha6ioural
red 0lags (ta+le ).

'able 7" Behavioral (ed Flag Indicators vs Industry
Behavioral red flag indicators$
Industry of
respondents
expensive living
standards 8
illicit
relationships 8
sudden behavior
change 8
personal
problems 8
-ervice !$.# !$.:# !4.# !$.$#
Ban6ing 2$.;# 2!.$# :5.:# 2.;#
)thers 2.4# 4.;# #.## :.:#
'otal '##.## '##.## '##.## '##.##
-ource" (esearch -urvey ,%##

'able 9" (espondents Behavioral (ed Flags and Length of -ervice
Behavioral (ed Flag Indicators$
4ears of
service
expensive living
standards 8
illicit
relationships 8
sudden behavior
change 8
personal
problems 8
5nder ' 1ear. .2 4.; ''.$ $.2
'-2 5.; $.# 2.' :.$
2-: '5. '.' '4. '!.4
4-5 '.2 .# '.5 '.!
?otal '## '## '## '##
-ource" (esearch -urvey ,%##
?he 0act that there are 6arious +eha6ioural and li0est1le changes that the @A3s used to detect 0raud impl1 that
there are man1 indicators which can +e used to identi01 0raud.

/$. 2o! CFEs Investigate )ccupational Fraud
In this stud1 some !; (!.G) respondents con0irmed to ha6e done a 0raud in6estigation o0 some 0orm compared
to 2:.:G who had not done one. ?he @A3s said there are a num+er o0 indi6idual characteristics used to single
out criminals 0rom other emplo1ees li9e onesE position in an organiBation& annual income& le6el o0 education& age&
gender& +eha6iour and li0est1le changes& time spent on =o+ on a dail1 +asis& collusion with 6endors& and pre6ious
criminal records. Howe6er this research onl1 assessed the e7tent to which indi6idual attri+utes li9e age and le6el
o0 education compare with +eha6iour and li0est1le changes and pre6ious criminal record as 0raud indicators. "ur
0indings showed that criminal record (4'.''G)& 0ollowed +1 le6el o0 education (:5.5!G) and +eha6iour change
('5.5!G) were commonl1 used as 0raud indicators. ?he respondents emphasise on age to a 6er1 little e7tent
(.$G) in e7amining 0raud (0igure ').
Figure #" (espondents Commonly +sed Personal :ualities as Fraud Indicators

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/$.$# 'he Fre5uency by !hich CFEs used Behavioural (ed Flags to investigate fraud
8e also in6estigated how o0ten the respondents used the +eha6ioural red 0lags to in6estigate 0raud. Some :
(4'.'G) respondents said the1 used +eha6ioral red 0lag 6er1 o0ten& :5 (:$.;G) respondents said the1 used them
o0ten& while ' ('$.;G) remained neutral& and onl1 one ('.'G) respondent said he used +eha6ioural red 0lags
less o0ten (?a+le $ +elow). - cross ta+ulation o0 the use o0 +eha6ioural red 0lags and t1pe o0 industr1 in 0raud
in6estigation showed that :' ($:.$G) respondents in the ser6ice industr1 compared to 4 ('#.$G) in the +an9ing
industr1 used the indicator more o0ten. Aurther 2 (.'#G) respondents in ser6ice industr1 compared to $
(22.;G) respondents in the +an9ing industr1 used the red 0lag o0ten (ta+le ;).

'able ;" (espondents Fre5uency +se of Behavioral (ed Flags
Fre5uency Percent
)ost o0ten : 4'.'
"0ten :5 :$.;
Neutral ' '$.;
/ess o0ten ' '.'
?otal ;# '##.#
-ource" (esearch -urvey ,%##

'able <" (espondents +sage of Behavioural (ed flag and 'ype of Industry
Fre5uency of +sage$
Industry of respondent
1ost often
8
)ften
8
&eutral
8
Less often

'otal
8
-ervice $:.$# .'# '.!# '##.5# !$.;#
Ban6ing '#.$# 22.;# $2.4# #.## 2$.;#
)thers 5.4# #.## #.## #.## 2.2#
'otal '##.## '##.## '##.## '##.## '##.##
-ource" (esearch -urvey ,%##

-gain a cross ta+ulation o0 the use o0 +eha6ioural red 0lags against le6el o0 education showed that !2.2 G
respondents with a degree compared to '!.2G respondents with a diploma use the indicators more often while 54.:G
respondents with degree education compared to :.'G with diploma education use the indicators often (ta+le '#).
-gain a cross ta+ulation o0 the use o0 +eha6ioural red 0lag indicators and the t1pe o0 pro0ession indicated 24.:G
in6estigators and securit1 o00icers and '!.2G ris9 anal1sts used the indicator most often (ta+le '').

'able #%" Level of Behavioural (ed Flag use versus Level of Education
Fre5uency of +sage
Level of Education
1ost often
8
)ften
8
&eutral
8
Less often
8
'otal
8
(iploma '!.2# :.'# 5.;# #.## 22.2#
(egree !2.2# 54.:# ;4.'# '##.## !5.!#
)asters ':.5# $.!# #.## #.## $.;#
"thers $.'# #.## #.## #.## :.:#
?otal '##.## '##.## '##.## '##.## '##.##
-ource" (esearch -urvey ,%##


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'able ##" Level of Behaviour (ed Flags use versus )ccupation
Fre5uency of +sage
)ccupation 1ost often
8
)ften
8
&eutral
8
Less often
8
-ccountant 5.4# #.## 4.'# #.##
In6estigator 24.:# ''.4# #.## #.##
Securit1 o00icer 24.:# 25.# #.## #.##
37ternal auditor 2.# 25.# #.## '##.##
Internal auditor #.## :'.4# #.## #.##
Ris9 anal1st '!.2# #.## '.!# #.##
2an9er 2.# 5.# 2;.4# #.##
"thers #.## #.## 5.;# #.##
?otal '##.## '##.## '##.## '##.##
-ource" (esearch -urvey ,%##

/$.$, 2o! CFEs rate Behaviour (ed Flags compared to other Indicators
8e also in6estigated how the @A3s rated the use o0 +eha6ioural red 0lag indicators in in6estigating crime as
compared to other indicators. 8e 0ound that 52.2G respondents pre0erred the use o0 +eha6ioural red 0lag
indicators to detect 0raud with :2.2G sa1ing that the1 rate the indicator 6er1 highl1& and onl1 '.'G sa1ing the1
rate the indicator lowl1. Some 5.G respondents in the +an9ing industr1 and 5'.!G respondents in the ser6ice
industr1 told this research that the1 ran9ed the use o0 +eha6ioural red 0lags 6er1 high (see ta+le '2).

'able #," (esponse (ate on the use of Behavioral (ed Flags by Industry
Comparison !ith other indicators
Industr1 o0 Respondent
%er1 high
G
High
G
Neutral
G
/ow
G
Ser6ice :$.# 5'.!# $.'# '.!#
2an9ing ''.5# 5.# :#.$# #.##
"thers '##.## #.## #.## #.##
?otal :2.2# 52.2# '4.4# '.'#
-ource" (esearch -urvey ,%##

8e also in6estigated how the le6el o0 education o0 a respondent impacts on the choice +etween the use
o0 +eha6ioural red 0lag indicators and other indicators. Results showed that $5G respondents with diploma
education rated the indicator highly compared to 4#.G with degree& 5#G with masterEs degree and !!.G with
other Cuali0ications. Some 5#G respondents with masterEs degree rated use o0 +eha6ioural red 0lag indicators
very high compared to :.:G respondents with +achelorEs degree& ::.:G respondents with other Cuali0ications
and '#.#G respondents with diploma education (ta+le ':).

'able #." +se of Behavioral (ed Flags by Level of Education
Comparison !ith other indicators
3ducation
%er1 high
G
High
G
Neutral
G
/ow
G
(iploma '#.## $5.## 5.## #.##
(egree :.:# 4#.# 2#.:# '.#
)asters 5#.## 5#.## #.## #.##
"thers ::.:# !!.# #.## #.##
?otal :2.2# 52.2# '4.4# '.'#
-ource" (esearch -urvey ,%##

/$/ 'he Effectiveness of Behavioral (ed Flags in Fraud Examination
"ne o0 the Cuestions in this research was whether the use o0 +eha6ioral red 0lag is an e00ecti6e method to
in6estigate 0raud. "ur results showed that $2(;'.''G) respondents compared to $($.;G) had used the +eha6iour
change indicators in conducting 0raud e7aminations (ta+le '4). Similarl1 !' respondents in the ser6ice industr1
compared to '; in the +an9ing industr1 emplo1ed +eha6iour red 0lags to e7amine 0raud. "nl1 2 respondents in
other industries used +eha6ioural red 0lags to conduct 0raud e7amination. ?he 9e1 in0ormant in the +an9ing
industr1 e7plained that the method was less used in the +an9ing sector +ecause 0raud e7aminers pa1 more
attention to +oo9 9eeping errors li9e poor +oo9 9eeping& misrepresented 0igures& coo9ed +oo9s& and un+alanced
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25
accounts.

'able #/" +se of Behavioral (ed Flags to Conduct Investigation by Industry
(espondents +sage of the (ed Flag
Industry of respondent yes &o
Ser6ice !' '
2an9ing ';
"thers 2 #
?otal $2 $

-ource" (esearch -urvey ,%##
8e also esta+lished that all securit1 o00icers& auditors and in6estigators had used +eha6iour red 0lag in e7amining
corruption compared to !#G accountants& .$5G ris9 anal1sts and 5G +an9ers used the indicator in 0raud
e7amination (ta+le '5).

'able #0" +se of Behavioral (ed Flags for investigation by )ccupation
(espondents +sage of the (ed Flag
)ccupation
4es
8
&o
8
-ccountant !#.## 4#.##
In6estigator '##.## #.##
Securit1 o00icer '##.## #.##
37ternal auditor '##.## #.##
Internal auditor '##.## #.##
Ris9 anal1st .$# 22.2#
2an9er 5.## 25.##
"thers '##.## #.##
'otal <#$#% ;$<%
-ource" (esearch -urvey ,%##

/$0 *iscussion
?he 0irst o+=ecti6e o0 our research sought to 0ind out the categories o0 li0est1le and +eha6ioral indicators that
could +e used to identi01 0raud. "ur results esta+lished that @A3s consider +eha6iour change indicators (2$.!#G)&
wea9 internal controls (25.!#G)& poor management (''.#G)& poor +oo9 9eeping (2!.:#G)& and others (.$G) as
the main indicators to detect 0raud. ?he +eha6ioral red 0lags that the @A3s used 0or 0raud anal1sis include
e7pensi6e li6ing (:2.$G)& illicit relationships ('!.2G)& sudden or erratic +eha6iour change (2!.;G)& and personal
pro+lems (24.'G).
Araud perpetrators who engaged in e7pensi6e li0est1le were 0ound to li6e +e1ond their means& +ought
e7pensi6e =ewelr1& cars& palatial homes& ga6e e7pensi6e gi0ts& and made 0reCuent e7pensi6e trips a+road. "thers
engaged in e7cessi6e gam+ling& alcoholism& had withdrawal s1ndrome& were deceit0ul& and wor9ed 0or e7tended
hours so as to get room to recei6e +ri+es and manipulate +oo9s. ?hose that su00ered 0rom personal pro+lems 0ell
into depression& isolation& and lac9ed moti6ation&
?he second o+=ecti6e o0 this stud1 sought to compare use o0 +eha6iour change and li0est1le change
indicators with other personal Cualities indicators 0or 0raud detection. "ur data showed that !.G respondents
compared to 2:.:G agreed that +eha6iour change is a good detector 0or 0raud detection.
?he third o+=ecti6e o0 this research sought to esta+lish how e00ecti6e +eha6ioral and li0est1le change
indicators in detecting occupational 0raud. "ur results indicate that ;'.'G respondents used li0est1le and
+eha6iour change indicators to detect 0raud while 52.2G considered li0est1le and +eha6iour change indicators
ideal 0or occupational 0raud detection. Ainall1 4'.'G respondents strongl1 agreed that +eha6ioral red 0lags could
+e used 0or 0raud identi0ication.

0$% C)&CL+-I)&-
)an1 studies ha6e shown that political patronage& 0a6oritism& and +ad go6ernance within the pu+lic and pri6ate
sectors are the main cause o0 corruption (-+igail& 2#'#). 2ut despite this appreciation& N3S@ (2#'#) reported
that corruption grew +1 more than ''G +etween 2##; and 2#'#. ?his is that the 3-@@ has put in place
deterrence measures to cur+ corruption. ?his stud1 sought to 0ind out what detection and deterrence measures
can +e put in place to mitigate the pre6alence o0 occupational 0raud. ?he stud1 was narrowed to use o0
+eha6ioral red 0lags to identi01 0raud although there are other 0raud indicators that can +e used 0or 0raud
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2!
detection and deterrence.
?he research data was collected 0rom ;# @A3s and ! 9e1 in0ormants who are also registered @A3s o0
the -@A3 4en1a @hapter. ?he -@A3 report (2#'#) supports the use o0 +eha6ioral red 0lags +1 o+ser6ing that&
I2eha6ioral 0raud indicators do not pro6e an indi6idual is engaged in 0raud& +ut should raise warning signs.J ?he
@A3s who participated in this research were o0 the opinion that the use o0 +eha6ioural 0raud indicators was a
good method o0 detecting and e7amining 0raud.
Howe6er we also 0ound that there is need 0or proper 0raud identi0ication procedures and the
willingness o0 top management to eliminate o00ences i0 we are to minimiBe crime in our institutions. ?he stud1
esta+lished that @A3s in all sectors e7cept those in the accounting and ris9 departments utiliBe +eha6iour and
li0est1le change indicators to e7amine corruption. ?hose in the accounting and ris9 department did not 6er1
much rel1 on the indicators +ecause the nature o0 their wor9 re6ol6ed around +oo9 9eeping especiall1
reconciling and +alancing o0 accounts. )uch o0 their crime scrutin1 is done when the1 detect anomalies in
0igures.

0$# (ecommendations
?he 4en1an go6ernment is at this time implementing the 2#'# @onstitution and putting in place new go6ernance
structures that la1 emphasis on integrit1 and transparenc1. ?he results o0 this research is one o0 the pieces
e7pected to help the transition authorit1 gauge indi6idualsE transparenc1 as the1 assume new roles in the new
administration.
?he stud1 0indings are also e7pected to assist the -ssociation o0 @erti0ied Araud 37aminers 4en1a chapter and
other sta9eholders in the 0ight against corruption and occupational 0raud.

(eferences
-+igail& )& ). (2#''). Axle Load Control Management Report& 4en1a< 4en1a -nti @orruption @ommission.
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O-6aila+leP< http<QQwww.ti9en1a.orgQdocumentQdessertation.
-9ers& R.& R 2urgress& R. (';!!). - (i00erential -ssociation- rein0orcement theor1 o0 criminal +eha6ior& stud1
o0 social pro+lems& l'4& :!:-:$:
-l+recht S. (2##:). Araud e7aminationH "H& South 8esternQ?homson.
-ssociation o0 @erti0ied Araud 37aminers Report to the Nations& (2##$).
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2ritish 2roadcasting @orporation (2##2). -0rica 5nion report compiled +1 Fuergen Schroeder.
@orruption Perception Inde7& (2#'#). ?ransparenc1 International report.
@ottrell (& ). R -l+recht& S. ()a1& ';;4). RecogniBing the S1mptoms o0 3mplo1ee Araud& Health @are
Ainancial )anagement& ';-25
@resse1 (. (';:). "ther peopleEs mone1H - stud1 in the social ps1cholog1 o0 em+eBBlement )ontclair& NF<
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*.".4. (';5!) /aws o0 4en1aH pre6ention act& cap !5.
*.".4. (';$;) /aws o0 4en1aH parliamentar1 act& cap 4$5-.
*.".4. (2#'#) /aws o0 4en1aH the new constitution section ;.
*ar1& @ and 4au0mann& (. (';;$). @orruption and (e6elopment& Ainance and (e6elopment& :5(')& '!-2;
*lo+al @orruption 2arometer& (2#'#). ?ransparenc1 International report.
Hanco7& S. R (i Napoli& (2#''). ?. Red flags of fraud& department o0 local go6ernment and school o0
accounta+ilit1. New Sor9.
4om+o& (. R ?romp& ( (2##;). Proposal and ?hesis 8riting< -n introduction& PaulineEs pu+lication -0rica.
/a *range& ?& @. R Sil6erman& R. -. (';;;). /ow sel0 control and opportunit1 testing. ?he general theor1 o0
crime as an e7planation 0or *ender (i00erence in (elinCuenciesH @riminolog1 :& 4'-2.
)ati ). R *ithongo& F (2##'). Fudicial (ecisions and the 0ight against corruption in 4en1a. "nline O-6aila+leP<
http<QQti9en1a.orgQimagesQ6margins.gil
National -nti- @orruption Plan (Ful1 5& 2##!). 4en1a -nti @orruption @ommission. 4en1a.
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