APPRAISAL OF FRAUD CONTROL TECHNIQUES IN NIGERIA COMMERCIAL BANKS (A CASE STUDY OF FIRST BANK NIGERIA PLC)
LIST OF TABLES
- Overall distribution of question to the management cadre
- Overall distribution of question to top management and analysis of response in the branches of the bank.
- Effective of fraud control techniques
- Causes of fraud in bank
- Effects of fraud in bank
- Elimination of fraud in commercial banks
- Distribution of questionnaire to middle and Lower management candre
- Encounter of fraud in Banks
- Application of computer in fraud control
- Dispensability of management cadre in fraud commission
- Hypothetical test of on effect of fraud
- Chi – square .
- Hypothetical test on elimination of fraud
- Chi square
LIST OF FIGURE
- Causes of fraud in bank
- Causes of fraud in bank ‘
- Effects of fraud in bank
- Effects of fraud in bank
- Elimination of fraud in commercial banks
- Elimination of fraud in commercial banks
- Encounter of fraud in banks
- Encounter of fraud in banks
- Application of computer in controlling fraud
- Application of computer in controlling fraud
- Responsibility of management Candre in fraud commission
- Responsibility of management Candre in fraud commission
- Acceptance of null hypothesis
- Acceptance of null hypothesis.
CHAPTER ONE
- INTRODUCTION 1
- A SHORT BACKGROUND HISTORY OF FRAUD 3
- STATEMENT OF PROBLEM 6
- RESEARCH AND OBJECTIVES 7
- RESEARCH / HYPOTHESIS 8
- RESEARCH / QUESTION 9
- SIGNIFICANCE OF THE STUDY 10
- SCOPE / LIMITATION OF STUDY 12
- DEFINITION OF TERMS 14
- REFERENCES 19
CHAPTER TWO
2.0 REVIEW OF RELATED LITERATURE 20
- CONCEPT OF FRAUD 21
- CAUSES OF FRAUD 25
- TYPES OF FRAUD 44
- EFFECTS OF FRAUD
- CONTROL FOR FRAUD 61
- REFERENCES 75
CHAPTER THREE
3.0 RESEARCH DESIGN AND METHODOLOGY 78
- POPULATION AND SAMPLE 79
- SOURCE OF DATA 85
- INSTRUMENT FOR DATA COLLECTION 86
- METHOD OF DATA ANALYSIS 87
- METHOD OF ANALYSIS 88
- RESEARCH QUESTION 88
- METHOD OF TESTING HYPOTHESIS 88
- REFERENCES 89
CHAPTER FOUR
- PRESENTATION AND ANALYSIS OF DATA 90
4.1 RE – STATEMENT OF THE PROBLEM 91
- MAJOR FINDING 92
- DISTRIBUTION OF QUESTIONNAIRE AND COLLECTION
- PRESENTATION AND ANALYSIS FO QUESTIONNAIRE 119
- PRESENTATION AND ANALYSIS OF ORAL INTERVIEW119
- TEST FO HYPOTHESIS 122
- REFERENCE
CHAPTER FIVE
5.0 SUMMARY OF FINDING , RECOMMENDATION AND CONCLUSION 134
- SUMMARY OF FINDING 134
- RECOMMENDATIONS 136
- CONCLUSION 140
APPENDIX 143
BIBLIOGRAPHY 144
CHAPTER ONE
INTRODUCTION
The bulk of fraud required by the investing sector of most developed and developing business economics of the world is provided by the bank industry in the main, the service of mobilizing fund from the saving that is simples to the investing sector provided by the banking industry accounted for the high status the banking industry is place in the development of any economy the rate of economic development of the nation has hence been very closely associated with the effectiveness and efficiency of the banking system of the nation.
Commercial banks as a case study of this research work provided services like acceptance of deposit, size keeping of valuables offering of pieces of advice like on investment, credit create and other business published in the gizatte by the governor of Central bank designated to mean commercial banking business of all the components of the banking system. Incidence of fraud occurrence fraud is also found in other spheres of life in government in commerce government, in commerce and industries.
Special organization have been formed to control it. Interlope tries to deal with it at the international level but it has not been rechecked to the barest minimum neither has it been full eradicated .
Fraud is a complex universal phenomenon, it is rampant in both development and developing countries and varies across time and placed in its magnitude, its effects on administrative, performance development, political economical social culture and attitudinal factors combine in contributive and circular and they extend beyond the boundaries of nation state..
Fraud is matter of individual choice and opportunity. Being human, can individual usually take the advantage sees. The opportunity and he is reasonably convicted he can get always with it the banking sector provides such opportunity in abundance as they deal with cash and near money instrument.
- A SHORT BACKGROUND / HISTORY OF FRAUD IN FIRST BANK
In the history of Nigeria banking. If total of 185 bank were registered by the financial secretary to the colonial administration to carryout banking business. From 1892 –1952 was know as the era of free for all banking. Between this point banking business blossomed, there were high expectation that trend will continue to improve as a matter of time, but because high expectation never observed. As in the first half of 1950s the industry collapsed. Many banks folded up and involved in frauds in commercial banks alone rose to N1,3777-15 million in 1993 whereas the actual / expected loss from N68.8 million to N241.0 million.
We are aware that frauds out across all sectors of the economy an that the size of an enterprises usually determines the value of fraud penetrated we are also not unaware manpower and manpower training poor internal control system inadequate incentive and unsuitable legal framework for dealing with offenders playing the perpetration of frauds.
In addition to these lack of commitment on the part of staff and the employment pollicies of some banks tend to make frauds and forgeries. Attractive.
Br that as it may , we consider the higher rate of fraud in bank as clearly unacceptable, some thing Adriatic ought to be done so urgently stem the tide in view of its image implication for the banking industries and the crises of confidential which it could engender bank customers.
We therefore large executive and to management of bank to as a mater of urgency to adopt strategies that will block all loopholes that encourage frauds in their organization.
In specific terms we counsel that banks should critically examine option for prevention and timely detection of fraud and forgeries as these are likely to scare would be perpetrator’s adequate internal control such as re-deployment of staff and adequate internal without notice should be put in place . Staff should be kept abreast of sophisticated and other development through continuous training.
Bank staff should be adequately remunerated and novitiates to give the best while working with satisfaction. Poorly remunerated in a banking environment may constitute a menace to the system as temptations are likely to be quited and the urge to a succumb becomes irresistible.
I believe that computerization can go a long way as a strategy for internal control in banks I therefore urge all bank to embrace and install computers in their organizations. Banks must always build into their plans at the beginning of the year. Based on their experience, the expected amount of loss through frauds during the year in order to anticipate and geared against destabilization of their operations.
No effort should be spared in the fight against this hydraheaded phenomenon in order to reduce to the barest minimum the crisis of confidence that fraud occasion.
1.3 STATEMENT OF PROBLEM
Fraud in bank has become so recurrent in the headlines of our daily paper in such a profuse manner that they have ceased to be good captions on these paper in going through paper on flip over pages with headlines of fraud. That not with standing fraud committed has direct or indirect effect on individual or collectively, on the while fraud has contributed the liquidation of so many banks.
Many bank employees have been deprive of their benefits and in liquidation situation, total less of their job is observed on the contrary deposition loss their money as well, the shareholder of the bank loss their money.
Along side, the great role of the banking industry play (which is being challenge by frauds through loss of fund and liquidation of bank) with the degree of fraud observe now if allowed to thrive without the development of new control techniques to prime down the incidence of fraud occurrence in the banking system, the future of the Nigeria economy is bound fail.
Recognition of the aforementioned facts the researcher intend internal pouch back the frontier of human ignorance (investigation) evaluating the fraud control, techniques employed by commercial bank in Nigeria. The effectiveness and efficiency of the fraud, types and effect of fraud will be viewed.
- RESEARCH AND OBJECTIVES
The objective of this study is to evaluate the degree of effectiveness and efficiency of fraud control techniques employed by commercial bank in Nigeria (the strength and weakness of these techniques)
This study also will determine the extent by which bank management intends to hold fast or take to new fraud control of interest bank management has put in handling cases of fraud.
- RESEARCH HYPOTHESIS
That is one major hypothesis that forms the root of this study. The finding will lead to acceptance of rejection of the these hypothesis i.e mull hypothesis (H0) which will be rejected or accept the alternative hypothesis (H1) For the purpose of this study the under listed statement of hypothesis will be tested.
- Null hypothesis (H0): Fraud control techniques employed by frost bank is not effective.
Alternative hypothesis (H1): Fraud control techniques employed by first is effective.
- Null hypothesis (H0) fraud in commercial bank cannot be eliminated.
Alternative hypothesis (H1) fraud in commercial bank can be eliminated.
- RESEARCH QUESTION
- Are fraud control techniques in use by commercial banks in Nigeria effective and efficient ?
- What are the causes of fraud in commercial banks ?
- What are the effects of fraud in commercial banks ?
- What step can be taken to improve upon the fraud control techniques in use ?
- Who are responsible for fraud commercial in the bank ? the top management middle management or low management or customers ?
- Are there frauds cases in Nigeria commercial banks currently ?
- Can use of computer help in controlling fraud in the commercial bank.
- SIGNIFICANCE OF THE STUDY
The intention of these research work is to help relegate the incidence or menace of fraud to a minimal level never to extermination. Therefore this research work will be of immense help to all commercial banks operation in Nigeria. Equally will b of great help to other disciplines of endeavor that have the need to control the incidence of fraud.
The recommendation and suggestion made in that research employed by commercial banks will help in controlling the inenance of fraud with positive and proper utilization of the suggest and recommendation, efficiency and effectiveness in banking business will be forestall and no doubt the lost glory of bank will be restored.
Also, the research work be a great material to study bankers that wish to conduct further study on fraud generally or even as a diversion and limitation it to commercial and banks and any other related discipline. Fraud control techniques which this research work is basically carried on ,is a diversion from the central concept (FRAUD)
It will also be of good help to small scale individual who are planning to improve in their business. Also to limited inability companies in order to defect and control fraud easily in the organization. This research will also be of good help to government. It will enable government to defect fraudsters in society as well as preventing the incidence of fraud entirely.
- SCOPE / LIMITATION OF STUDY SCOPE OF THE STUDY
The scope of this research work covers all commercial banks other banks., related discipline and companies the scope is board, only specific emphasis is made on commercial bank subject to the fact that incident of frau is pronounced in commercial bank and as such enough relegation is made about the kinds of fraud carried out in commercial bank than discipline.
LIMITATION OF THE STUDY
Despite the efforts put in this research work certain constraint have been encountered. These are as follow:
- TIME : The time given for this research work was so short that I Was unable to visit most bank and other financial institution to obtain information in fact, time factor is one of the major constraint I encountered in predicating this research work..
- NATURE OF THE RESEARCH : This is one the inherent in this research work fraud is not well know to every body. Even some who heard of it can not say exactly what fraud is all about. This made it possible for proper information no to be obtained from these people.
- UNWILLINGNESS: Unwillingness of the respondent to offer information’s another limitation for instance bank and some financial institution are on the oath that no staff should disclosed certain information to outsiders. In this case it is very possible that all the information needed by the research from the bank will not be given to him again this issue of fraud is one of the most information that kept secretly in the bank or customers who are fraudsters.
- FINANCE: – Without money it is impossible to carry out research work lack of enough money has contributed so much to the limitation of this research work. Some times money to buy some material needed for the research will not be available. Non availability of transportation fare to the area where information will b obtainable.
- LOCATION :- Mots bank are locate in area while very far from the researches devilling. This make it difficult for research to get all the information he needed. Some of the real to the area are very bad that the means of transportation is difficulties.
- ILLITERACY: Many Nigeria are illiterates many can neither reads nor write and these have contribute so much in the constraint of this research work.
However, effort was made to ensure an equitable representation of the town by the use of sound and effective sampling techniques. More so, it is believe that most of the commercial bank in Nigeria have the same method of operating . They by the needs of their research will be met from the study of the samples of the two branch of first bank situated in Enugu and Onitsha respectively.
1.8 DEFINITION OF TERMS FRAUD
The term fraud is used sparingly in (Practical) auditing the ferried term is irregularity. Fraud however, is defined as the international distortion of the financial such as the misappropriate arises involving the criminal deception to obtain an illegal unjust advantage. It may be perpetrated with the intention making money or obtaining goods or it may be perpetrate when a person decision other by pretending to have abilities or still that he does not relay have.
The existence of fraud is an indication that proper accounting records have not been kept, weakness exist in the system of internal control and financial statement do not shown trial and fair view.
CONTROL
Control simply means check or prevention or to put to and end internal control are design part to defect and control fraud. The management has duty to ascertain the banking system of recording and processing transaction and assets its adequacy as a basis for the preparation of financial statement. In so doing he will inevitable examine also the internal control since they are inextricably liked with the system of recording and processing. The management may wish to place reliance on some internal control and must them ascertain and evaluate those control and performance compliance test on their operation this the management is most likely to acquire some knowledge’s of the existence and effectiveness of internal control and its knowledge may be very extensive.
This review of internal control may indicate potential or actual instances of fraud which may lead to the management determine by audit tests if fraud has taken place and to what extent. In say event,. The management should pass information on any potential or actual fraud in the management letter.
TECHNIQUES
Techniques is the method use in controlling fraud in the bank and other financial institutions. The responsibility for prevention of fraud rest with the management therefore the method used be management to control fraud are state below. :
- INTERNAL CONTROL: Control are designed in part to control fraud.
- BY GOOD ORGANIGRAM: By good organigram we means good organization, a good chart i.e a good system of internal control animation, a good chart i.e a good system of internal control
- Impending visit of both internal and external auditors
- Motivation of the workers
- By punishing fraudsters.
COMMERCIAL BANKS
Commercial banks are privately owned banks. They are established for the purpose of making profit for their owners. Commercial bank accept deposit from the public and use their funds to lead at call are short notice to the discount market to acquire treasury bills. Short and medium term government securities to invest in other financial institution and most important to make advance to customers. A most important feature of commercial bank is that the banking system as a whole is confined to accepting deposits in order to lend and acquire securities. Apart from accepting deposit commercial bank grant loan and overdrafts to their customers discounting bills of exchange finance have purchase transaction and miscellaneous services.
REFERENCES
Dr. Orjih, John (1998) Business research methodology Aguo;o, Osita (19998) Fundamentals of auditing Millichamp A.H (1990): Auditing An instruction manual for accounting student
Journal charted Instituted of Bankers of Nigeria December . 1994.
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