Enhancing Internal Control and Fraud Detection in Small and Medium Enterprises through Digital Technology Adoption: Empirical Evidence from Nigeria

This study investigates the impact of technology adoption on the effectiveness of internal control systems and fraud detection mechanisms within SMEs in Ibadan North Local Government, Oyo State, Nigeria. Adopting a descriptive survey research design, the study draws on a sample of 356 SMEs from a population of 3,200 registered SMEs selected through stratified random sampling. Data were collected using structured questionnaires and analyzed using descriptive and inferential statistics, including regression analysis. The findings reveal a statistically significant positive relationship between technology adoption and internal control system effectiveness (R = 0.674, R² = 0.454, p = 0.000). Specifically, SMEs utilizing digital tools, such as computerized accounting software, electronic audit trails, real-time monitoring platforms, and cybersecurity measures, demonstrated enhanced financial transparency, reduced human error, and improved fraud detection capabilities. The study further highlights that technology adoption strengthens real-time monitoring, increases fraud detection rates, and reduces financial losses. Empirical and theoretical reviews underscore the role of digital tools, such as cloud-based systems, artificial intelligence (AI)-driven analytics, and blockchain technology, in fortifying internal controls and mitigating fraud risks. The research concludes that technology adoption is not merely an operational upgrade but a strategic imperative for SMEs to ensure financial integrity, regulatory compliance, and sustainable growth in increasingly digitalized economies. Targeted training programs, government-supported digital incentives, and the adoption of integrated, scalable fraud detection technologies are recommended