The purpose of this study was to investigate the effect of financial statement fraud on growth of financial sector in Uganda undertaking Centenary Rural Development Bank (CRDB). The study was based on the following 3 objectives; (i) to assess the effect of prevention of financial statement fraud on growth of CRDB; (ii) to establish the effect of detection of financial statement fraud on growth of CRDB; and (iii) to evaluate effect of response to financial statement fraud on growth of CRDB. The study adopted descriptive survey design and a sample size of 80 from a target population of 100 respondents were selected for the study. In regard to effect of prevention of financial statement fraud on growth of CRDB; the study found out that prevention of financial statement fraud is positively (~=0.389) and statistically and significantly (sig-value=0.004) affect growth of CRDB, Uganda. In regard to effect of detection of financial statement fraud on growth of CRDB; the study found out that detection of financial statement fraud is positively (~=0.549) and statistically and significantly (sig-value=O.OOO) affect growth of CRDB, Uganda. In regard to effect of response to financial statement fraud on growth of CRDB; the study found out that response to financial statement fraud is positively (~=0. 709) and statistically and significantly (sig-value=O.OOO) affect growth of CRDB, Uganda. The study concluded that; that prevention of financial statement fraud significantly affect growth of CRDB, Uganda; detection of financial statement fraud significantly affect growth of CRDB, Uganda; and response to financial statement fraud significantly affect growth of CRDB, Uganda. The study recommended that; bank hire an external auditor to assess the effectiveness of the internal control design for the financial statement process; bank's management should clearly describe what constitutes financial statement fraud to assist the individual in reporting the misconduct; the research also suggests the availability of whistle blowing and hotline channels to directly report to the bank's management; and the commitment from the bank's individuals should be done through the affirmation process.
