The purpose of the study is to identify the determinants of employee frauds in public sector entities in Sri Lanka. The study employed the elements of fraud triangle, opportunity, pressure and rationalization as independent variables and employee fraud as dependent variable. The data is collected from Government Accountants who are working for public sector entities in Sri Lanka and it was analyzed through structural equation modeling with AMOS statistical software. It is found that opportunity and pressure are stisticaly significant in determining employee frauds in public sector entities in Sri Lanka. As such, it is recommended that to design and implement sound internal control and governance framework in public sector entities in Sri Lanka in order to combat against employee fraud. This paper aims at broadening knowledge of top level management of public entities, policy makers, auditors, forensic accountants, regulators and other stakeholders on combating employee frauds in public sector entities in Sri Lanka.
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