Forensic Auditing and Finance Fraud Risk Mitigation in Lake Victoria South Water Works Development Agency (LVSWWDA) Kenya

Abstract

Purpose: The study aimed to establish the relationship between forensic auditing and financial fraud risk mitigation among state corporations, with a specific focus on the Lake Victoria South Water Works Development Agency (LVSWWDA).

Material/methods: The study targeted 150 staff members across various organizational levels—senior management, middle management, and junior staff. A sample of 109 respondents was determined using Yamane’s formula and selected through stratified random sampling to ensure a balanced representation. Data were collected using a structured Likert-type questionnaire and analyzed using descriptive statistics (frequencies, means, standard deviations) and inferential statistics (correlation and regression analysis).

Findings: The results indicated that internal control systems and the regulatory framework had a statistically significant and positive influence on financial fraud risk mitigation. These elements were critical in enhancing the organization's ability to detect and prevent fraudulent activities.

Conclusion: The study concludes that robust forensic auditing practices—particularly strong internal controls and adherence to regulatory standards—are essential for mitigating financial fraud risks in state corporations such as LVSWWDA.

Value: This study provides empirical evidence supporting the role of forensic auditing in public sector financial governance. It offers practical recommendations for improving internal controls, ensuring regulatory compliance, and adopting modern forensic tools and training to strengthen fraud detection and prevention mechanisms in state-owned enterprises.