| Summary: | The purpose of this paper is to develop an understanding about the internal control and fraud problem
in the Malaysian construction industry. It is believed that the construction industry is one of the riskiest industries
regarding internal fraud due to its complex and costly nature, and dense third-party contract relationships. If this
situation is left untreated, it will lead to more serious problems in the future of construction industry in Malaysia.
Therefore, this study is aimed to discuss the fraud phenomenon, lack of internal control and the reasons behind
fraud in construction industry. It also proposes that organizations should periodically perform formal risk
assessments and internal control reviews to reduce fraud activities. It is recommended to all parties to promote
and practice effective internal control in their project to minimize the occurrence of fraud and failures.
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