Study of fraud prevention and detection techniques in commercial banks in Sri Lanka Kennedy D Gunawardana Senior professor of Accounting Information Systems University of Sri Jayewardenepura Sri Lanka Abstract Purpose Threats posed to commercial banks by frauds have increased ever before in this century than any other potential victim, placing commercial banks at uncountable risk. Therefore the purpose of this study is to examine the use of fraud prevention and detection techniques by commercial banks in Sri Lanka and banker’s perceptions regarding the effectiveness of these methods. Method Questionnaire was distributed among 100 banking professionals based on convenient sampling technique. The respondents were selected randomly from different levels from different departments including internal audit department, risk management department, compliance department and other departments. Questionnaire was developed to reflect their opinion on fraud victimization, pressure on achievements, allocation of funds on fraud detection and prevention techniques, use of each techniques and effectiveness of each technique based on five point Likert- scales. Result The findings indicated that protection software and application as mostly used technique and also as most effective techniques and further there is significant relationship between use of each technique and their perception on effectiveness of each technique. Discussion and conclusion No bank can immune of frauds. Therefore it is required to accommodate both qualitative and quantitative mechanisms in more comprehensive manner. Degree of effectiveness of such technique and frequency of use of such effective techniques would result substantial cost saving from reducing future frauds level. Keywords: Frauds, Fraud prevention, Fraud detection, Commercial banks, Sri Lanka.