Documente Academic
Documente Profesional
Documente Cultură
Bueron, Louise Jill S.
Galvez, Glennizze M.
Rovillos, Kenneth Martin D.
Rubillar, Patricia Nicole T.
Sabater, Liezel E.
A Thesis Prsented to the
College of Business Administration and Accountancy
University of Perpetual Help System DALTA
In Partial Fulfillment
Of the Requirements for the Degree
Bachelor of Science in Accounting Technology
Las Piñas City
2018
RISK MANAGEMENT ON FRAUD DETECTION AND PREVENTION
compare. The way you design and plan your research will have significant
implications for the success of your project. The methodology that you use
will result in questionable integrity of the results and may lead to biased results
CHAPTER 1
INTRODUCTION
countermeasures will be needed; this is where risk management comes in. Risk
forecasting and evaluating possible risks and coming up with ways on how to
minimize the impact of it on the business. Fraud happens to fall under the
scope of risks that businesses face, as it is also uncertain as to when this could
the practice of staying open up until the wee hours of the night; this puts a lot
demands a lot of trust from the employers as well. Even if they are working
within the normal working hours, they still have to live up to the business
owner’s faith and confidence in them. Yet some cases of deceit may still occur
within the organization: one of these may include fraud. This study will help
the coffee shops, specifically those within Las Piñas City, since it is closer to
our campus and we are familiar with the location, assess the types of frauds the
company may experience and the extent of how they utilize their risk
verification.
no secret as to why this has been a growing trend. For those needing their
caffeine fix either to re-energize from a long day or to stay up finishing some
us students who are on a budget and can instead opt for another one of those
convenient 3-in-1 coffee sachets but still students lounge around in coffee
shops during their leisure time. Aside from the obvious promise of free Wi-Fi,
coffee shops have been considered as a place for socializing, a place to spend
leisure time with friends and it has been claimed that the ambience of coffee
detection and prevention , how they operate on managing these risks, policies
they implement with regards to risk. Risk management aids in determining and
analyzing the risks throughout the course of business operations for the
possible risks and providing a coherent basis for better decision making, and
providing steps on how to manage and create solutions for it. In this case, fraud
is one of the risks that falls under the scope of risk management, as there is no
guarantee that it would happen but there is a possibility that it could; hence the
analyzing the status of the risks, the vulnerability of their fraud preventive
In 2011, a study was conducted that analyzed fraud risk assessment and
organizations. The argument raised by the study was that today’s fraud risk
also fraud prevention (Powell, 2011). The role of risk management on fraud is
(Deloitte, 2011).
The purpose of this study is to know the relevance of risk management in fraud
detection and prevention; it aims to know what and how the existing practices
are being implemented in the coffee shops in Las Piñas City, the frequency of
OPERATIONAL FRAMEWORK
This conceptual framework shows the inputs and outputs of the study,
with the aid of the data obtained from the respondents in the questionnaires, we
can assess the demographic profile, types of fraud and the extent of practice
used in the risk management of fraud detection and prevention of the selected
coffee shops. After analysing the necessary data we will evaluate the efficiency
against fraud by means of risk management and how to maintain the effective
practices and to identify in which aspect requires improvement and provide
possible solutions.
With the aid of a descriptive survey we will obtain necessary data for our research.
For instance, on what types of fraud are the coffee shops subject to experience, these
include: accounting fraud, asset misappropriation, payroll fraud and vendor fraud. We
would then assess the extent of their risk management for fraud detection in terms of
assessment. Another assessment would be on the extent of their risk management for
verification.
detection and prevention of coffee shops in Las Piñas City. Specifically, it aims to
2.) To know the types of fraud the business is may have experienced in
terms of:
d) Payroll fraud
3.) To know the extent of the practices of risk management for fraud
a) Surveillance
b) Monitoring
c) IT control
d) Physical control
4.) To know the extent of the practices of risk management for fraud
b) Supervision
5.) To know the significant difference in the extent of the practices of risk
profile.
OBJECTIVES OF THE STUDY
1.) To determine the demographic profile of the coffee shops in terms of:
2.) To determine what type of fraud did the company encountered in terms
of:
d) Payroll fraud
a) Surveillance
b) Monitoring
c) IT control
d) Physical control
b) Supervision
the profile.
the profile.
HYPOTHESIS
Based on the research objectives and questions, the hypotheses have
the profile.
extent of the practices of risk management for fraud detection when grouped
the practices of risk management for fraud prevention when grouped according
to the profile.
the practices of risk management for fraud prevention when grouped according to the
profile.
research that is limited to the respondent's personal thoughts and insights with
relation to their management. The scope of the study is the personnel working
in coffee shops in Las Piñas. For each of the aforementioned coffee shops there
variables. With regards to the sensitivity of this study that involves business
methods since this is easier to present, summarize, and compare. Our study
fraud will be detected and prevented and to provide possible solutions. Those who will
loss, by the evaluation of how well their risk management is and how
2. The management of the coffee shops. This is beneficial for the management
practices in fraud prevention, reassess how well they manage their risks and to
shops because they can be rest assured that the said coffee shops have
management, and they can have the confidence to know that the
practices.
4. Future researchers. This is beneficial for the future researchers who
DEFINITION OF TERMS
which their decisions over the course of the business are based upon.
altering accounts, or even misuse of the company’s resources that could harm
Fraud. The act of deceiving another party solely for the purpose of personal gain
which involves dishonest acts that could harm the business and its operations.
Fraud detection. The process of identifying, examining, or noticing any irregular
risks of fraud that may occur within the course of the business operations, and coming
up with ways to avoid the chances of this from happening again in the unforeseeable
future.
documents.
storage of information.
ways the procedures and policies of the business are being carried out or
implemented.
Payroll fraud. It is a kind of fraud that is mainly done by means of the
Physical control. This involves the proper practice of ensuring that the
Risk. It refers to the uncertain probability of damage that could harm the
things, situations, processes, etc. that may cause harm, particularly to people.
After identification is made, you analyze and evaluate how likely and severe
in a way that will benefit the business or help in the decision making process of
the company.
ensure that there is no bias in the way they handle their tasks and to ensure the
Supervision. It is the process of watching over and guiding the personnel to
ensure that they adhere to company policies and procedures and that the tasks
Surveillance. This involves watching over what happens during the course
of the business by means of CCTV footages, to check how the business runs
RELATED LITERATURE
2.1 Introduction
This chapter reviews the definitions and expounds more information about
overview of the probable influences these have on the coffee shops in Las
Piñas and the research gap in fraud risk prevention and detection.
companies progressively focus more on finding risks and working them before
they even distress the business. The aptitude to handling risk will aid
of the risks they are facing will give them various options on how to deal with
topic, its principles and concepts however are crucial to the survival of your
to thrive, grow and ultimately enjoy the fruits of success (Brokerage, 2013).
There are various types of risks that a business will experience but this
study focused on specific types which are: operational risk, compliance risk,
competent and successful also has the possibility of generating risk (Spacey,
within a given field or industry. Operational risk is the risk not essential in
determining financing and systematic risk, and includes risks resulting from
Compliance risk is the probable for losses and legal penalties due to failure
to fulfil with laws or regulations. In many cases, businesses that fully intend to
comply with the law still have compliance risks due to the possibility of
incompetent. The term tends to be used to describe the risk of a serious loss of
business or entity. Reputational risk can occur through a number of ways: directly as
the outcome of the actions of the company itself; indirectly due to the actions of an
Avoidance is one of the easiest ways to mitigate risk is to put a stop to any
activities that might put your business in jeopardy. However it's crucial to
remember that with nothing ventured comes nothing gained, and therefore this
is often not a realistic option for many businesses (Elders Insurance, 2013).
Avoidance is when you have the option not to take on the risk by avoiding the
steps required to minimize the potential that an incident will occur. If the cost
of risk reduction outweighs the potential cost of an incident occurring, you will
accepts that sometimes incidents do occur, yet ensures that your business will
be prepared to cope with the impact of that in the event that it would actually
often chosen by those who consider the cost of risk transfer or reduction to be
Poor user adoption is when the subordinates or personnel fail to adhere to
company policies and procedures, or when they don’t follow the guidelines
standards that the business management requires and in turn incurs costs and
management activities extends the expected time and delays in projects also
company is spending way more money than they can afford (Ten Six, 2017).
2.2.1 Fraud
Fraud is an issue that is dealt with by various organizations regardless of
that is of value such as cash, goods, information or services; then fraud may be
There is no specific reason as to why fraud occurs, but there are factors as
to why this happens, this can be thoroughly illustrated using the fraud triangle.
The fraud triangle is built on the assumption that the possible combination of
factors that results to fraud are situational pressure, opportunity and ethics
(Hall, 2011).
act. These pressures could include financial constraints, debts, alcohol or drug
time or a situation in which something can be done. In cases like these, the
momentary chance that allowed them to accomplish such an act, with minimal
problems is left unattended with the cash register or the safe where the
person has a blurred moral compass of what is right or wrong then tend to
documents, files and etc. We must avoid, stop and prevent it for the business to
of fraud. In order to detect and prevent fraud from happening it is also vital to
be aware of and have a clear understanding of the various types of fraud that
assets are obtained solely for the fraudster’s personal gain (Hall, 2011).
insider fraud.
inventory theft, cash theft, service theft, expense account fraud, procurement
checks so that they can be deposited into a bank account under his control.
This could involve forgery, altering payee information, or issuing inappropriate
manual checks (Bush, 2017), whereas check forgery is when the signature of
the drawer is copied without his consent or knowledge. Inventory theft is when
an employee steals products from the company. Cash theft and service theft are
pretty much self-explanatory; these involve the actual stealing of cash and
stealing services intended for business purposes for personal gain by misusing
Under expense account fraud, this is where the employee either forges
false submitting receipts that personal expense but claim that they are
that exceed what is needed and is unknowingly being paid for by the company
exaggerates their circumstance so that all the expenses will be paid for by the
In commission fraud, alters the sales to increase their commission for the
sole purpose of their personal gain that will affect the business (Lomer, 2017).
the business management. (Bush, 2017). The following types of fraud can also
Examples of vendor fraud are billing schemes, bribery and kickbacks (Lomer,
2017).
In a billing scheme, an employee creates false receipts or source
they are obtaining the money being paid for by the business.
order from them, this involves bias and double standards which is not ideal for
the company.
financial standing of the business. They could either understate or overstate the
Embezzlement, also called larceny, is when a person misuses the trust the
company gives to him or her when he or she has complete access to the funds
and resources of the business. Accounts payable fraud encompasses
specifically the suppliers or the accounts payable function wherein they alter
The fake supplier scheme is when the employee creates a false supplier
also one of the most common types of employee fraud (Bragg, 2018). Payroll
fraud schemes include: timesheet fraud and pay check theft (Lomer, 2017).
timesheet in order to increase his or her wages, whereas the pay check theft
involves an employee getting the pay check of a fellow employee and cashing
it out claiming that it is the formers without the consent or knowledge of the
prescribed or anticipated actions and thus screen out abnormal events. When
worth a pound of cure. Preventing errors and fraud is far more cost-effective
than detecting and altering problems after they arise. The vast majority of
logical layout of the document into zones that comprise specific data, such as
customer name, address, items sold, and quantity, forces the clerk to pass in the
necessary data. The source documents can consequently prevent needed data
from being omitted. However, not all problems can be predicted and prevented
(Hall, 2011).
2.4.1 Fraud Detection
Even if certain fraud prevention takes place, it isn’t a guarantee that fraud
As with all other components of the fraud risk management system, fraud
controls and processes and must explicitly exist for monitoring processes and
results; for testing measures used to assess controls; and for the roles and
These are the methods commonly used to detect and prevent fraud: risk
independent verification.
financial reporting (Hall, 2011). It is the process of evaluating the risk resulting
IT controls are procedures, policies and activities that are conducted to meet IT
(Spacey, 2016) .
physical custody of assets, or they may involve the physical use of computers
limits access to buildings, rooms, areas and IT assets, logical access control
limits connections to computer networks, system files and data (Scheafer,
2017).
As for the segregation of duties it split the general functions through the
physical custody of an asset, record keeping for an asset and also the
and ensure the effective and efficiency practices being applied within the
in order to discover fraud and prevent it from happening. This will include a lot
transactions and provide an audit trail of economic events (Hall, 2011). When
there are unusual differences in the accounting records, there are two possible
some gain for the perpetrator. The two means through which fraud is
committed include the misappropriation of assets and the misrepresentation of
These are the effects of poor fraud detection and prevention: failure of
(ACFE) in 2008 estimates losses from fraud and abuse to be seven percent of
annual revenues. The actual cost of fraud is, however, tough to quantify for a
number of explanations: not all fraud is detected; of that detected, not all is
criminal action against the perpetrators of fraud. Which in turn shows that
Another effect of poor fraud detection and prevention involves negative impact
practices will result in lack of trust and confidence of your investors, customers
and auditors in your ability to control the fate of your business. The
other brand-related costs that will keep on for a very long time. The cost of a
2.5 Synthesis
Companies must have sufficient knowledge of the risks they are facing to
able to detect and prevent fraud. There are various types of risks that a
business will experience but this study focused on specific types which are:
operational risk, compliance risk, and reputational risk. Fraud denotes a false
with the intention of deceit. There is no specific reason as to why fraud occurs
but there are three factors that play a part in its occurrence: opportunity,
situational pressure, and ethics. There are vast examples of frauds that take
takes place, it isn’t a guarantee that fraud can completely be avoided; therefore
the first line of defense in the control structure. Preventive controls are passive
events. Preventing errors and fraud is distant more cost-effective than detecting
Based on the articles, related studies, books and other sources we’ve read, we
have come to realize that there is a wide variety of frauds that could easily go
undetected if the organization is not aware of such and doesn’t have any form
that frauds don’t just happen due to mere opportunity or because of the less
from occurring can be minimized with proper and effective practices of risk
fraudulent acts from occurring. Based on the research we made regarding fraud
found out that there is very limited techniques or methods being applied by the
coffee shops within the vicinity, therefore we opted to further assess and to
evaluate the efficiency and effectivity of the businesses’ current fraud detective
and preventive measures against fraud by means of risk management and how
CHAPTER 3
RESEARCH METHODOLOGY
3.1 Introduction
This chapter identifies the methodology for conducting this research. The areas
method, data collection methods, data instruments, data gathering, and data
analysis.
describe a population with respect to important variables (W.G. Zikmund, 2010). It is
concerned with the conditions or relationships that exist, opinions that are held,
processes that are going on, effects that are evident, or trends that are developing
(Prado et al., 2010). Due to the sensitivity of this study that involves business policies
and practices, we adopted the use of quantitative data collection methods as it focuses
quantitative studies are usually easy to present, summarize, and compare. The way
you design and plan your research will have significant implications for the success of
your project. The methodology that you use underpins your entire project, and flawed
assumptions or flawed methodology will result in questionable integrity of the results
The study population refers to the range of locations or places as to which the
organizations in this study are situated, these are the coffee shops particularly located
We, the researchers, chose one representative per coffee shops. They are of no
particular age, gender, race or ethnicity but are qualified as a respondent due to
The sample size refers to the group of individuals or entities from which the sample
might be drawn (McLeod, 2014). For the purpose of this study, the chosen
respondents from each coffee shop would be the managers, supervisors, accounting
staff, and cashiers. We, the researchers, chose these particular personnel for the
following reasons:
Managers – since they are responsible for maximizing revenue and profit
Supervisors – since they are the ones that are responsible the hiring, training,
satisfaction; and for budgeting and efficient resource utilization (Kokemuller, 2018).
Accounting staff - since they are primarily in charge of managing the payroll and
Cashiers – since they are assigned to take customers’ payments and balancing of
For the purpose of this study, the non-probability sampling type was adopted,
specifically random sampling. This type of sampling can be very useful in situations
when you need to reach a targeted sample quickly (Crossman, 2018). One major
advantage of purposive sampling is that it ensures that some information from
respondents that are difficult to locate and can be vital to the study can be obtained
researchers who analyze the data and information. It is collected for the first time
since it has not been published before collection. This is more accurate since you get
the actual response and opinions of the respondents. The information is expected to be
unbiased since it will be collected and processed by the researchers (Salkind, 2010).
For the purpose of this study, we used survey questionnaires as primary data.
books that focused on fraud, risk management, fraud prevention and detection.
We also derived information from online articles that expounds more on our
topic.
For the purpose of this study, a questionnaire was utilized because it provides
a relatively cheap, quick and efficient way of obtaining large amounts of information
from a large sample of people. Data can be collected relatively quickly because the
researchers would not need to be present when the questionnaires are completed
the said respondents in their workplace. The questionnaire consists of multiple choice
questions, meaning there are a selection of possible answers that they get to choose
from. This method was chosen because it would narrow down the answers and would
and it is an important aspect of any type of research study. Any inaccurate data
collection may lead to invalid result and affect result of study (UK Essays, 2017).
3.8.2 Data Gathering
The following steps are how the researchers gathering the necessary data:
1.) A
dopt the questionnaire
2.) D
istribution of the questionnaire
3.) C
ollection of data
4.) D
ata analysis
2011).
of how often something occurred. This could be how many times an event
amount of time. It also comes up in a statistical area dealing with the effects of
variance in the group means within a sample whilst considering only one
(Mackenzie, 2018)
CHAPTER 4:
DATA ANALYSIS
4.1 Demographic Profile
Frequency Percent
4 1-5 years 17 81
Based on the table above majority of the coffee shops have existed for at
least 1-5 years. This shows that most of the coffee shops in Las Piñas have just
matter what age, race or background. In this day and age, the coffee industry
has been slowly growing and increasing in number, which shows that a lot of
people have been seeing large business opportunities in the coffee business
(2016)
Frequency Percent
3 P100,000-P300,000 3 14.3
Total 21 100
Based on the table above, 61.9% of the respondents have an annual net income
of less than P100,000, this is possibly due to the fact that majority of the coffee
It’s difficult to stand out in the coffee industry if you have a lot of competitors
in the area, especially for business that just started. There is a lot of start-up
costs involved in starting a new business such as rent, equipment, etc. (Tashia,
2015).You may say that you are a very small business and cannot afford to
Frequency Percent
4 2 to 3 7 33.3
3 3 to 5 6 28.6
2 5 to 10 4 19
1 More than 10 4 19
Total 21 100
Based on the table above majority of the coffee shops only have at least 2-3
employees, this is probably due to the fact that since the selected coffee shops
have just started their businesses and still have insufficient budget to provide
salaries for more employees, as they only have an annual net income of less
than P100,000.
Small-scale businesses still can’t afford hiring more employees with a tight
budget especially since they have just started out in their business venture
(LaMarco, 2018).
This indicates the rank of frauds in which the coffee shops are aware of
or have policies and practices against, it does not necessarily imply that these
are the specific frauds that the companies are experiencing. This just shows
their level of awareness to these types of fraud in terms of accounting fraud,
asset misappropriation, payroll fraud, and vendor fraud; and if they have
methods or procedures against these.
Frequency Percent
6 Cash Theft 16 76.2
Total 21 100
Based on the table these are the types of fraud under asset misappropriation,
ranked according to what most of the coffee shops are aware of or have
policies against. They probably have experience these in the past which made
Most of the respondents have selected cash theft as the common type of fraud
in which they have implemented policies and practices against in terms of asset
misappropriation. This could mean that the selected coffee shops may not have
1 Others 1 4.8
Total 21 100
Based on the table above these are the types of fraud under vendor fraud,
ranked according to what most of the coffee shops are aware of or have
policies against. Most of the respondents have selected billing schemes as the
common type of fraud in which they have implemented policies and practices
been cases of counterfeit money being distributed and circulated, also some
employees have the tendency to get a share of profit from some suppliers, or
some even go as far as to creating fictitious vendors in which the orders will be
paid for by the company without them knowing that it was all a ruse. (Lomer,
2017)
6 Embezzlement 4 19
Total 21 100
Based on the table above these are the types of fraud under accounting fraud, ranked
according to what most of the coffee shops are aware of or have policies against.
Most of the respondents have selected fake supplier fraud as the common type
employees with less supervision, accounting fraud could take place. Financial records
could easily be altered, source documents could be tampered with, etc. (Lomer, 2017)
Frequency Percent
Total 21 100
Based on the table above these are the types of fraud under payroll fraud,
ranked according to what most of the coffee shops are aware of or have
policies against. Most of the respondents have selected Timesheet Fraud as the
common type of fraud in which they have implemented policies and practices
Legend:
1.00-1.49 = Never (Not practiced)
1.50-2.49 = Rarely (Poorly practiced)
2.50-3.49 = Often (Moderately practiced)
3.50-4.00 = Always (Highly practiced)
Based on the gathered data, the average results of the answers from the
respondents is that they always have CCTVs positioned within the premises
and utilizes the use of CCTV footage on a scheduled basis. most of the
ensure that they can monitor the actions of the personnel during working hours.
theft, cash theft, using company assets for personal use, etc as well as the
selected companies really maximize the CCTV footage obtained to check for
any suspicious occurrences happening without supervision. This helps keep
track of the activity of both customers and employees in the company during
work hours and makes employees less prone to doing anything illegal or
people to handle and check the monitoring of the CCTVs. the coffee shops do
take their surveillance practices seriously so that no one could tamper with the
CCTV footage.
Based on the gathered data, The average results of the answers from the
checking the important details before making a purchase and counter check if
the inventory received reflects what it states in the source documents by also
business operations are being met. Where the companies ensure that they are
double-check the number of items received from the supplier to make sure that
it is equivalent to the number of items ordered which was stated in the source
documents. This helps identify if the supplier either committed fraud or error
the physical inventory or if inventory theft has taken place. the coffee shops
want to see how the business operates during normal working hours to catch
them off guard and check what they normally do during business hours without
supervision, because some employees have the tendency of slacking off during
the job or doing things that are not related to their work.
Based on the gathered data, the average results of the answers from the
eventually for its people that have authorized access only and is needed in the
course of their job by also setting up controls in the computer system that will
on a company system. The selected companies strictly limit the people who
no one could easily change the data that has been encoded such as the revenue
for the day, current inventory count, etc. although majority do try to set up
controls to alert management if an unauthorized person has been trying to
access the system, but not all of the coffee shops are aware of these kinds of
controls or they are not able to provide these yet because of insufficient
resources. Some do try to make use of software’s and programs to better secure
their information, but not all of the coffee shop management are aware of these
Somehow the result of the answers from the respondents is that they
always have a secure password for the databases or any important files or
documents saved in computers. Based on the gathered data, the companies take
their security procedures seriously to ensure that only restricted people can
access the files or confidential data, so that no one could easily alter the data
Based on the gathered data, the average results of the answers from the
the actual inventory count furthermore keep the cash and checks in a locked
that there is no occurrence of theft or human error in the physical count. the
selected coffee shops regularly recounts and monitors to see whether the
the receipt, orders, etc. This helps identify if the supplier either committed
incorrect count of the physical inventory or inventory theft has taken place. the
companies maximize the use of locked cabinets or safes to ensure that their
cash, checks or other assets are secure, limited to very few with access, to
The average results of the answers from the respondents is that they often
properly disposing of confidential information but not all opt for this kind of
since majority of the coffee shops have just started their business.
Fraud Detection Practice Mea Standard Verbal
n Deviatio Interpretation
n
Based on the gathered data, the average results of the answers from the
most coffee shops are still too small to go to such extreme and costly
majority of the coffee shops have automated machines to check the attendance
always practiced regularly and it is also quite pricey for a business that is still
monitoring the attendance and schedule of employee and has less chances of
The average result of the answers from the respondents is that they always
Based on the gathered data, the coffee shops regularly update their
financial records to make sure that it is up-to-date and accurate, decreasing the
reconcile the balance sheets and payroll accounts for each quarter. Based on
the gathered data, the companies regularly ensure their balance sheets and
payroll accounts are updated so that they can have a quick view of their
might not be able to draw accurate or effective plans for the company.
policies against possible threats or risks to the company and the consistent
company. the companies’ management isn’t able to regularly discuss how they
comply with the policies against threats or risks of the company. The
they need to improve, etc. to ensure that they anticipate and are prepared for
The average result of the answers from the respondents is that they always
analyzes the extent of how effective they are in their practices during the
course of the business to know what they should start doing or stop doing that
Based on the gathered data, the average results of the answers from the
respondents is that they often assign and distribute the responsibilities of the
staff to avoid unauthorized access to certain resources, sensitive information,
etc. the companies don’t regularly practice delegating tasks to different staff to
resources, inventory count, etc. Especially since most companies have just
started and usually only have at least 2-3 employees it is hard to distribute
Based on the gathered data, the average results of the answers from the
employees, ensure that all the employees are oriented and briefed on the
company policies, rules and regulations by also discipline the employees who
breach the company's code of ethics and implement an 'open-door policy' for
the staff to allow them to share their opinions or concerns with regards to
business operations. The companies’ management regularly assesses and
checks every individual that they hire to know if they have had any issues in
the past that could affect their performance in the coffee shops, and how they
were with their previous employer. By regularly ensures that their employees
are made aware of the rules & regulations of the company as so that they could
adhere to the policies of the business and be able to know the consequences if
ever they fail to comply. The coffee shops regularly adheres to disciplinary
actions for those who fail to comply to company rules and policies, this is to
ensure that the employees don’t take company regulations lightly. It is where
the coffee shops’ management encourages the staff to share their opinions and
comments to their superiors or to the management, which makes the staff feel
The average result of the answers from the respondents is that they often
reward employees for ethical behavior. Based on the gathered data, the
best.
The average result of the answers from the respondents is that they always
Based on the gathered data, the companies’ management wants to make sure
that they are spending their money on the welfare of their employees, as it is
their responsibility. Since health hazards and accidents are inevitable, the
company also has the right to request for proof to ensure that the money does
Based on the gathered data, the average results of the answers from the
if it agrees with other proof documents and verify signatures before releasing
accuracy of the source documents and financial records, it doesn’t just pass
through or authorized by just the same personnel. the selected coffee shops
attempts of forgery.
The average results of the answers from the respondents is that they often
approving timesheets and overtime claims. Based on the gathered data, the
of hours the employees worked, their attendance, and if they indeed worked
4.5.1 Surveillance
Based on the table above, the researchers compared differences in the evaluation of
One-way ANOVA. The results show that the fraud detection practices of surveillance
obtained f-values greater than the 0.05 level of significance set by the study, thus the
null hypothesis is accepted. This means that there is no significant difference between
Regardless of how long the coffee shops have been operating, it does not affect their
during working hours, so this does not in any way relate to the existence of the
Table 11: Differences in the extent of practice for monitoring with regard to
years of existence
4.5.2. Monitoring
Regardless of how long the company has been operating, it does not affect how the
personnel take in performing their duties. It happens over time to observe and gauge
the progress of a business, and it does not take into account how long a business has
existed because this mostly involves how the management and staff carries this out.
(Ibraahim, 2014)
Table 12: Differences in the extent of practice for IT control with regard to years
of existence
4.5.3. IT Control
Regardless of how long the business has been operating, it does not affect the way
they handle and secure their digital data found in computers or databases. IT
implements them and how the employees comply with the methods, it does not need
to take into consideration how many years a company has existed. (Gatto, 2016)
Table 13: Differences in the extent of practice for physical control with regard to
years of existence
handle and secure their tangible assets and resources. An effectively implemented
physical control results in employees and management being able to maintain
competence in this area with the foundation of ethical values to maintain the integrity
of the work of each and every employee is doing. It is more of an ethical or habitual
factor and does not matter how long a company has been operating. (Koranteng, 2011)
Table 14: Differences in the extent of practice for accounting records with regard
to years of existence
Regardless of the number of years the company has been operating, it does not affect
how the company records, updates, or check their financial records and other source
documents. They still maintain proper accounting procedures and practices even if
they the company just started or has been ongoing for quite some time. (Australian
Government, 2018)
Table 15: Differences in the extent of practice for risk assessment with regard to
years of existence
Regardless of how long the business has been operating, the way they assess and
mitigate risks or the methods and procedure they implement since risk assessment is
an ongoing cycle of identifying and preparing for any internal or external risk due to
doesn’t take into account how long a company has existed. (Tan, 2013)
Table 16: Differences in the extent of practice for surveillance with regard to
annual net income
Variable F Value Sig. Value Decision on H 01 Interpretation
CS 1 .714 .557 Accept H 01 Not Significant
CS 2 1.494 .252 Accept H 01 Not Significant
CS 3 .845 .488 Accept H 01 Not Significant
4.6.1. Surveillance
Regardless of how much revenue the company earns, it does not affect their methods
Surveillance aims to increase productivity and monitor the employees during working
hours, so this does not in any way relate to how much the business earns. (Solon,
2017)
Table 17: Differences in the extent of practice for monitoring with regard to
annual net income
4.6.2. Monitoring
Regardless of how much revenue is being earned by the company over the course of a
year, it does not affect how the company keeps track of business operations,
entity and other actions personnel take in performing their duties. It happens over time
to observe and gauge the progress of a business, and it does not consider how much
the business earns because this mostly involves how the management and staff carry
Table 18: Differences in the extent of practice for IT control with regard to
annual net income
Regardless of how much the company earns, it does not affect the way they handle
and secure their digital data found in computers or databases. IT organization and
how the employees comply with the methods, it does not need to take into
Table 19: Differences in the extent of practice for physical control with regard to
annual net income
this area with the foundation of ethical values to maintain the integrity of the work of
each and every employee is doing. It is more of an ethical or habitual factor and does
Table 20: Differences in the extent of practice for accounting records with regard
to annual net income
Regardless of how much the company earns, it does not affect how the company
records, updates, or check their financial records and other source documents. They
still maintain proper accounting procedures and practices even if they gain more
Regardless of how much the company earns, it does not affect the way they assess and
mitigate risks or the methods and procedure they implement since risk assessment is
an ongoing cycle of identifying and preparing for any internal or external risk due to
doesn’t take into account how much a business earns. (Tan, 2013)
Table 22: Differences in the extent of practice for surveillance with regard to
number of employees
4.7.1. Surveillance
Regardless of the number of employees the coffee shops have, it does not affect their
during working hours, so this does not in any way relate to the number of employees.
(Solon, 2017)
Table 23: Differences in the extent of practice for monitoring with regard to
number of employees
Due to lack of personnel, since the majority of the coffee shops usually have at least 2
or 3 employees, they are not able to allow time to double-check or recount the items
delivered from suppliers, considering they have other tasks during their day-to-day
system, you are able to hold onto a closer eye on the movement of your products
deprived of making your employees feel like you’re watching their every move.
Table 24: Differences in the extent of practice for IT control with regard to
number of employees
4.7.3. IT Controls
Regardless of the number of employees hired by the business, it does not affect the
way they handle and secure their digital data found in computers or databases. IT
implements them and how the employees comply with the methods, it does not need
to take into consideration how many number of employees there are. (Gatto, 2016)
Table 25: Differences in the extent of practice for physical control with regard to
number of employees
Regardless of the number of personnel hired by the business, it does not affect how
they handle and secure their tangible assets and resources. The employees handle
these the same way they were trained or instructed, regardless of how many they are
they go through the same training and orientation. An effectively implemented
competence in this area with the foundation of ethical values to maintain the integrity
of the work of each and every employee is doing. It is more of an ethical or habitual
factor and does not matter how many employees are there. (Koranteng, 2011)
Table 26: Differences in the extent of practice for accounting records with regard
to number of employees
Keeping track of the financial standing of the business helps make sound business
decisions, manage your cash flow, demonstrate your business’s financial position to
suppliers, accountants and prospective buyers, protect your business and minimize
costs. Due to lack of employees, they haven’t been able to regularly update and review
financial records or source documents, since they also have other tasks that require
their attention. Hence, they won’t be able to fully assess or prepare for any risks that
Table 27: Differences in the extent of practice for risk assessment with regard to
number of employees
Regardless of how many employees they hire, it does not affect the way they assess
and mitigate risks or the methods and procedure they implement since risk assessment
is an ongoing cycle of identifying and preparing for any internal or external risk due to
doesn’t take into account how many staff are employed. (Tan, 2013)
Regardless of the amount of revenue earned by the company within a year, it does not
affect the way they distribute workload or responsibilities among the staff or how they
maximize the delegation of task. When an organization set an opportunities for the
employees through uses delegation to develop them at a better placed and to know
who has the competencies in place to take on higher duties. It does not matter how
Table 29: Differences in the extent of practice for supervision of duties with
regard to years of existence
4.8.2. Supervision
Regardless of how long the business has been operating, it does not affect how the
management supervises the employees or the steps taken into ensuring how well they
handle their staff. They are responsible for the establishment of internal control
policies and procedures and responsible for providing governance, guidance and
oversight and all personnel are responsible for reporting problems, such as policy
violations or illegal actions. It has nothing to do with how long a company has been
Table 30: Differences in the extent of practice for independent verification with
regard to years of existence
Regardless of how long the business has been operating, it does not affect the methods
the business. This would depend on the assigned people carrying out this task and not
Table 31: Differences in the extent of practice for segregation of duties with
regard to annual net income
affect the way they distribute workload or responsibilities among the staff or how they
maximize the delegation of task. When employees are getting opportunities to develop
and to challenge themselves, their loyalty and productivity will most likely improve,
or at the least, not decrease. When an organization uses delegation to develop their
employees they are better placed to know who has the competencies in place to take
on higher duties. It does not matter how much the business earns as long as the
Table 32: Differences in the extent of practice for supervision with regard to
annual net income
4.9.1. Supervision
Regardless of how much the business earns annually, it does not affect the methods of
supervision taken by the management on how they handle their employees. They are
responsible for the establishment of internal control policies and procedures and
Personnel are accountable for reporting problems, such as policy violations or illegal
actions. It has nothing to do with the net income of the company because it depends
Table 33: Differences in the extent of practice for independent verification with
regard to annual net income
Regardless of the amount of net income, it does not affect the methods or procedure of
would depend on the assigned people carrying out this task and not how much a
Table 34: Differences in the extent of practice for segregation of duties with
regard to number of employees
Regardless of how many employees they hire, it does not affect the way they
distribute workload or responsibilities among the staff or how they maximize the
challenge themselves, their loyalty and productivity will most likely improve, or at the
least, not decrease. When an organization uses delegation to develop their employees
they are better placed to know who has the competencies in place to take on higher
duties. It does not matter if the company only has few staff as long as the management
Table 35: Differences in the extent of practice for supervision with regard to
number of employees
4.10.2. Supervision
Regardless of how many employees they hire, it does not affect how the management
supervises the employees or the steps taken into ensuring how well they handle their
staff. It is their obligation for the occurence of internal control policies and
precautions and responsible for providing governance, guidance and oversight and all
Personnel are in charge for reporting problems, such as policy violations or illegal
actions. It has nothing to do with the number of employees because it depends on the
Table 36: Differences in the extent of practice for independent verification with
regard to number of employees
Due to the fact that majority of the coffee shops only have at least 2 to 3 employees
make it difficult to have some other personnel to verify important documents without
managers or supervisors of employee timesheets and overtime claims, due to the lack
of staff, the current employees have no other alternative but to have to verify it
Based on the findings of the study, the researchers therefore conclude the following:
a. Majority of the coffee shops have only existed for at least 1-5 years. This is
because most of the coffee shops in Las Piñas have just started out in venturing
in the coffee shop business. Coffee is enjoyed no matter what age, race or
background. In this day and age, a growing market of people who enjoy
community never really goes out of style. Which explains why a lot of
entrepreneurs have decided to start opening up coffee shops over the past
couple of years?.
b. Majority of the coffee shops have an annual net income of less than P100,
000. The café and bar industry is saturated with choice, so it can be hard,
equipment, produce, and licensing are all large and ongoing expenses. You
may say that you are a very small business and cannot afford to have many
employees.
(branch). This is probably due to the fact that since the selected coffee shops
have just started their businesses and still have insufficient budget to provide
salaries for more employees, as they only have an annual net income of less
than P100,000. They can’t employ workers with the same level of skill at the
required starter salaries, inhibiting their ability to grow and offer the same
2. The types of fraud that the coffee shops may have experienced:
This indicates the rank of frauds in which the coffee shops are aware of or
have policies and practices against, it does not necessarily imply that these are the
specific frauds that the companies are experiencing. This just shows their level of
accounting fraud, and payroll fraud, and if they have methods or procedures against
these.
a. In terms of asset misappropriation, majority of the coffee shops are aware and
have policies or practices against cash theft. Most of the respondents have selected
cash theft as the common type of fraud in which they have implemented
mean that the selected coffee shops may not have experienced an instance
where they didn’t have a very secure method of keeping their cash, lack of
supervision of superiors, and possibly failed to segregate duties among the
staff.
b. In terms of vendor fraud, majority of the coffee shops are aware and have
selected billing schemes as the common type of fraud in which they have
This could be because there have been cases of counterfeit money being
distributed and circulated, also some employees have the tendency to get a
fictitious vendors in which the orders will be paid for by the company without
c. In terms of accounting fraud, majority of the coffee shops are aware and have
policies or practices against fake supplier fraud. Most of the respondents have
selected fake supplier fraud as the common type of fraud in which they have
Especially in small businesses with only few employees with less supervision,
accounting fraud could take place. Financial records could easily be altered, source
d. In terms of payroll fraud, majority of the coffee shops are aware and have
policies or practices against timesheet fraud. Most of the respondents have selected
Timesheet Fraud as the common type of fraud in which they have implemented
3. The extent of the practice for fraud detection that is being implemented by the
coffee shops:
answers from the respondents is that they always have CCTVs positioned
within the premises and utilizes the use of CCTV footage on a scheduled basis.
Most of the companies make use of the surveillance policies that they
implemented to ensure that they can monitor the actions of the personnel
misappropriations such as inventory theft, cash theft, using company assets for
personal use, etch as well as the selected companies really maximize the
without supervision. This helps keep track of the activity of both customers
and employees in the company during work hours and makes employees less
prone to doing anything illegal or against company policy knowing that there
often allows authorized people to handle and check the monitoring of the
CCTVs. the coffee shops do take their surveillance practices seriously so that
answers from the respondents is that they always verify the authenticity of the
the standards of business operations are being met. Where the companies
ensure that they are making purchases to legitimate suppliers by checking their
details to check for their authenticity before committing to place an order. The
supplier to make sure that it is equivalent to the number of items ordered which
was stated in the source documents. This helps identify if the supplier either
taken place. The coffee shops want to see how the business operates during
normal working hours to catch them off guard and check what they normally
the tendency of slacking off during the job or doing things that are not related
to their work.
c. With regard to IT control, it is moderately practiced. the average results of
the answers from the respondents is that they often restrict access to company
proprietary information to only those who have authorized access and need it
in the course of their job by also setting up controls in the computer system
limit the people who handle confidential information found in their databases
or computers, so that no one could easily change the data that has been
encoded such as the revenue for the day, current inventory count, etc. although
person has been trying to access the system, but not all of the coffee shops are
aware of these kinds of controls or they are not able to provide these yet
programs to better secure their information, but not all of the coffee shop
the answers from the respondents is that they always practice regular inventory
checks and consistently countercheck for the invoice of the inventory bought if
it matches the actual inventory count furthermore keep the cash and checks in a
make sure that there is no occurrence of theft or human error in the physical
count. The selected coffee shops regularly recounts and monitors to see if the
items ordered which was stated in the receipt, orders, etc. This helps identify if
the supplier either committed fraud or error in terms of their services, or one of
theft has taken place. the companies maximize the use of locked cabinets or
safes to ensure that their cash, checks or other assets are secure, limited to very
few with access, to avoid the chances of theft from taking place.
e. With regard to accounting records, it is highly practiced. the average results
of the answers from the respondents is that they often assign a trusted outside
outside contractor probably because most coffee shops are still too small to go
to such extreme and costly precautions to ensure the safety and accuracy of
biometric scanners but it is not always practiced regularly and it is also quite
more efficient way of monitoring the attendance and schedule of employee and
has less chances of alterations since it cannot easily be changed like a written
form of attendance.
results of the answers from the respondents is that they often conduct meetings
to discuss adhering to the policies against possible threats or risks to the
regularly discuss how they comply with the policies against threats or risks of
their weakness, areas they need to improve, etc. to ensure that they anticipate
and are prepared for certain scenarios that could take place.
4. The extent of the practice for fraud prevention that is being implemented by the
coffee shops:
results of the answers from the respondents is that they often assign and
Especially since most companies have just started and usually only have at
background checks on new employees, ensure that all the employees are
oriented and briefed on the company policies, rules and regulations by also
discipline the employees who breach the company's code of ethics and
implement an 'open-door policy' for the staff to allow them to share their
management regularly assesses and checks every individual that they hire to
know if they have had any issues in the past that could affect their performance
in the coffee shops, and how they were with their previous employer. By
regularly ensures that their employees are made aware of the rules &
regulations of the company as so that they could adhere to the policies of the
business and be able to know the consequences if ever they fail to comply. The
coffee shops regularly adheres to disciplinary actions for those who fail to
comply with company rules and policies, this is to ensure that the employees
management encourages the staff to share their opinions and comments to their
superiors or to the management, which makes the staff feel like their inputs are
valued.
results of the answers from the respondents is that they always cross-check
copies of source documents to see if it agrees with other proof documents and
company verifies the authenticity and accuracy of the source documents and
financial records, it doesn’t just pass through or authorized by just the same
when grouped according to the profile, specifically the practices of monitoring and
counter-checking if the inventory received reflects what it stated in the source documents. Due
to lack of personnel, since majority of the coffee shops usually have at least 2 or 3
employees, they are not able to allot time to double-check or recount the items
delivered from suppliers, considering they have other tasks during their day-to-day
you be able to have a closer eye on the movement of your products without making
your employees feel like you’re watching their every move. Having an automated
inventory system reduces the risk of fraudulent reporting by having multiple users
reviewing the financial records (source documents, journals, ledgers) on a regular basis. Due
to lack of employees, they haven’t been able to regularly update and review financial
records or source documents, since they also have other tasks that require their
attention. Hence, they won’t be able to fully assess or prepare for any risks that are
financially related.
6. There is a significant difference in the extent of the practice for fraud prevention
authorized signatures from managers or supervisors before approving timesheets and overtime
claims. Due to the fact that majority of the coffee shops only have at least 2 to 3
documents without any bias. Specifically in terms of verifying the authenticity of the
to the lack of staff, the current employees have no other alternative but to have to
verify it themselves.
5.3. Recommendation
According to the findings and analysis from the data gathered, And therefore
system to help track or monitor the inventory, without the hassle of physically
counting it every now and then. This inventory system would be accessible to
management or even the business owner without having to check in on the employees
or the inventory. They could also assign specifically someone to counter-check the
inventory on a regular basis. This will ensure an accurate count of the company’s
resources.
2. The coffee shop management should set a scheduled day during the week
where they could update and review all of the financial records that accumulated over
the course of the week. They could also make it a policy to update the sales, expenses,
budget tracker, etc, before the business day ends to ensure the accuracy of the
financial records and be aware of the real time standing of the business.
3. The coffee shop management should assign specific people to a
specific task, taking into consideration the fact that there is a limited number of
employees, they could segregate duties and distribute the tasks among the
available staff. With each one of them assigned to a certain task that does not
involve the other, especially with regards to sensitive tasks like updating
This would help ensure the authenticity and accuracy of the records.
4. To the owners of the coffee shops, they should take into consideration to
indeed doing the best that they can to prevent and detect risks that may occur
risk management. Since they play a role in ensuring that the business carries
out the processes smoothly and orderly, they would have to be hands on and
6. To the customers of the coffee shops, they can be assured that the coffee
shops that they are buying from have secure and effective risk management
methods. They could also check the extent of their surveillance, physical
controls, etc.
7. To the future researchers, they could further this study and research more
performance.