The Impact of internal auditing on fraud detection and prevention in the Zimbabwean commercial banking sector. A Case study of commercial banks in the Harare CBD.

Abstract

This study investigated the impact of internal auditing on fraud detection and prevention in commercial banks operating in the Harare Central Business District (CBD), Zimbabwe. It was guided by four objectives, identifying the internal audit practices implemented to curb fraud; determining the impact of regular internal audits on fraud reduction; identifying the challenges faced by internal auditors and suggesting practical strategies to improve the internal audit function. A positivist research philosophy and deductive research approach were adopted, supported by a descriptive cross-sectional research design. Primary data were collected through a structured questionnaire administered to 44 respondents across eight purposively selected commercial banks, supplemented by documentary analysis of annual reports and Reserve Bank of Zimbabwe regulatory publications. Data were analysed using descriptive statistics through SPSS Version 26 and content analysis for documentary evidence. The study found that RBZ regulatory compliance verification was the most consistently implemented audit practice, while unannounced audits remained the weakest. Internal auditing had a measurable positive impact on fraud management through internal control strengthening and deterrence, though management responsiveness to audit findings and early detection capacity emerged as critical gaps. Technology deficiency and the rapid evolution of digital fraud typologies were the most strongly confirmed challenges, reinforced by four qualitative themes: technology asymmetry, management override, resource inadequacy, and Zimbabwe specific economic complexity. All seven improvement strategies attracted agreement, led by technology investment and fraud-specific training. The study recommends that commercial banks invest in audit technology, enforce exclusive reporting to the Board Audit Committee, and implement mandatory fraud-specific training programmes. The Reserve Bank of Zimbabwe is recommended to strengthen enforcement of audit independence requirements and update prudential standards to address digital fraud monitoring. The study contributes primary empirical evidence on internal audit effectiveness in the Harare CBD banking sector a context that remained largely unexamined in the existing literature.