ABSTRACT

The above industry average gross non-performing loans ratio in RHB Capital Berhad is a
major concern because non-performing loans directly deteriorate asset quality and as such
reflects the condition, worth and functioning of RHB Capital Berhad. The lack of data
due to information asymmetry and the control environment effectiveness in credit lending
activities are both key issues due to the risk taking in credit lending business. This
applied research aims to investigate whether the established Statement on Auditing
Standards No. 99 fraud risk factor framework issued by American Institute of Certified
Public Accountants are able to facilitate the indication of material misstatement risk in the
financial statements of client companies in order to reduce the information asymmetry
after the conduct of credit analysis at RHB Capital Berhad. Its second aim is to assess the
control framework design and its effectiveness at RHB Capital Berhad on risk awareness
and credit culture in the credit lending activities. Survey questionnaires and case study
approach by examination of records were the instruments used for mixed methodology
with descriptive and content analysis performed on the collected data. The two
methodologies used for data collections are. The study suggested that the additional
evaluation criterion of pressure, opportunity and rationalization fraud risk factors can
facilitate credit analysis process. The results also suggested that enhancement of control
framework in RHB Capital Berhad is required for raising the risk awareness and
successfully achieving its defined control objectives over the credit culture in the credit
lending activities.

ii