Fraud Risk Management Practices in Emerging Markets: Empirical Evidence from Pakistan’s Textile Sector
DOI:
https://doi.org/10.32350/aar.62.01Keywords:
fraud risk assessment, fraud triangle, internal control, multiple correspondence analysis, Ward's hierarchical clusteringAbstract
Purpose: Fraud remains a persistent threat to firm performance, yet empirical evidence on the actual adoption of fraud risk management practices at the entity level is scarce, particularly in Pakistan.
Design/methodology/approach: The current study administers the 51-item Risk Management Checklist of Singleton and Singleton (2010) to textile-sector organizations in Pakistan by using a survey design. Furthermore, the study also evaluates the compliance patterns using multiple correspondence analysis and Ward’s hierarchical cluster analysis.
Findings: Of the 5,049 responses, producing an average firm compliance score, and internal consistency was slightly above the threshold. The weakest practices were mandatory annual vacation, per-employee maximum opportunity levels, close supervision in smaller businesses, and management awareness of fraud. This indicates that opportunity-reducing controls lag behind awareness and policy measures. The association between checklist section and response category is statistically significant, and the high-compliance segment differs significantly from the moderate segment.
Originality: The study provides the first entity-level baseline of fraud risk management adoption for the Pakistani textile sector. Moreover, it also demonstrates the checklist's value as a measurement instrument.
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