ABSTRACT
The purpose of this study is to show how to detect and prevent fraud in the banking industry. Afribank Nigeria plc, now main street, being one of the top four banks in Nigeria and one of the3se classified as the old generation Banks was chosen as case study.
The findings was based one the followings: What are the causes of fraud in banking industries: How can internal control measure be effective in detecting incidence of fraud: What are the control measure put in place to detect fraud in bank:
To what extent has the various internal control measure prevent incidence of fraud.
During the course of this study, a similar questionnaire of twenty items was administered in Eighty, to the respondents and bank staff.
The method of data analysis used in the study was simple percentage and frequency counts, then the percentage was used in comparing the various responses and the result of the study led to some conclusion which are as follows:
1. National instinct and inclination to commit fraud can cause fraud in banking industry.
2. The depressing economic condition growing level of poverty can cause fraud in banking industry.
3. Large accumulation of money and Naira worship syndrome that is very common in this country can cause fraud in banking industry.
4. Mismanagement and lack of control measure on the part of banks can cause fraud in the banking industry.
5. Reckless display ill-gotten wealth and mediability irrespective of the source of those money and its attendant negative impact on the society can cause fraud in banking industry.
6. Internal control measures can be effective in detecting incidence of fraud through check and balances.
7. Internal control measures can be effective in detecting incidence of fraud through review of procedure.
8. Internal control measure can be effective in detecting incidence of fraud by doing a background check before hiring a new employee.
9. Internal control measure can be effective in detecting incidence of fraud by setting up a confirmation system of all transaction within your stock trading.
10. Internal control measure can be effective in detecting incidence of fraud by focusing on assessing and monitoring design to prevent and detect fraud.
11. One of the major ways through which control measures put in place to detect fraud in the bank is to process journal entries.
12. One of the major ways through which control measures are put in place is to examine the elements of the financial statement for inconsistencies, unusual transactions and usual variances.
13. One of the major ways through which control measures are put in place is to consolidate adjustment and reclassify.
14. One of the major through which control measures are put in place is to record document and non-recurring adjustments.
15. One of the major ways through which control measures are affected is to put in place adequate and effective security.
16. it has safe guarded the company’s assets.
17. It has reduced the incidence of fraud.
18. It has been used to increase the change of sport signs of any fraud that may still occur.
19. It has provided a starting point to investigate the issue of fraud.
20. Internal control measure has made it difficult for employee to commit or cover up fraud.
As a result of this findings, useful recommendation were made3 on the fraud detection and prevention in banking industry in Nigeria, which include that Government should ensure that the society is disciplined by promulgating appropriate statutes, establishing relevant institutions and ensuring enforcement of various legal provision. Government should keep the public aware of all individual involved in fraud cases. The National Orientation agency should be made to carry out the grassroots messages of reorientation of our value system. Message should include recognition of success, fraudulent and ill-gotten wealth by Nigerians.
CHAPTER ONE
INTRODUCTION
1.1 BACKGROUND OF THE STUDY
Fraud is a phenomenon, which is complex in nature. Given the current travails of the banking sub sector, the need to block all leakages leading to the loss of fund, more than ever before becomes compelling. The fraud which has over the years constituted substantial drain on the vaults of banks and other financial institutions, need not only to be detected on time but must be prevented and controlled.
One of the best ways of carrying out this, is to detect and control the dangers posed by fraud on the economy and the banking industry in particular.
The various interest groups comprising the shareholders, creditors, depositors, government and the public are not only interested in the financial statement of a bank, but very much interested in how the management has managed the fund entrusted to their care.
One of such internal control measures is the inspectorate division of any bank. This is purely a management technique which operates by appraising all activities of the organisation with a view to assisting management in attain the desire goals and objectives both efficiently and effectively.
It is on record that the Nigerian Banking industry has spent thousands of naira in terms of their deposits, yet it is rather disheartening that all their efforts are being thwarted by sophisticated fraud attempts.
It is worthy to note that in the bank efforts in addressing this knotty issue of fraud millions of naira are being lost to fraud syndicates that have developed efficient and sophisticated. With the bankdrop, this research will appraise the internal control systems put in Afribank Nigeria Plc now Main street with the twin aim of detecting and controlling incidence of fraud and avoiding receipt of laundered money.
1.2 STATEMENT OF THE PROBLEM
This study is to find out the problem encountered in fraud detecting and prevention in Banking Industry in Nigeria:
The internal control put in place by bank management sometimes are not strictly adhered to.
Fraudulent act by bank officials and customers is another problem facing banks in West Africa. So many banks have gone into liquidation because of the frauds are not discovered.
1.3 PURPOSE OF THE STUDY
The purpose of this research work is to disclose the various ways and methods through which frauds are perpetrated. This study was therefore carried out for the following reasons:
i. To identify the various types of fraud perpetrated in the banking industry.
ii. To examine the relationship between fraud rate and total deposit size and the effect of fraud on the banking industry.
iii. To evaluate the relevance and adequacy of internal control measures in detecting and controlling fraud.
iv. To provide solutions towards reducing the incidence of bank fraud so as to promote safe and sound banking practices thereby protecting depositions fraud.
1.4 SIGNIFICANCE OF THE STUDY
This project will be found interesting, educative and informative by several interest groups based on the fact that efforts are based on data collected to make this research work a laudable one. This study will contribute to knowledge in that it will fill a gap as per the importance of fraud control measures. This research is most timely because it will serve as a resource material and knowledge reservoir for bank management most especially in their recent campaign for the determination of the sources of customers fund.
This research will also help the potential investors to know the type of bank they are to invest in and also help the depositors in determining the security of their fund.
1.5 RESEARCH QUESTIONS
i. What are the causes of fraud in Banking industry?
ii. How can internal control measures be effective in detecting incidence of fraud?
iii. What are the control measures put in place to detect fraud in the bank?
iv. What are the relationship between professionalism and incidence of fraud?
v. To what extent has the various internal control measure prevent incidence of fraud?
1.6 DELIMITATION OF THE STUDY
The research work will be concerned with the fraud detection and prevention in Banking industry in Nigeria in Afribank Pcl now Main street.
1.7 LIMITATION OF THE STUDY
This study is limited by lack of funds available to support the research work shortage of time available for the study and in adequate materials.
1.8 DEFINITION OF TERMS
FRAUD: It can be defined as conscious premeditated action of a person or group of person with intention of altering the truth and or fact for selfish personal monetary gains.
INTERBAL CONTROL SYSTEM: Is the examination and evaluation of the adequate and effectiveness of the management control systems provided of the management control systems provided by the enterprise to direct its activities in accordance with the organisation policies and plans.
FORGERY: Doing a thing fraudulently or with intent to deceive and by means of such decent to obtain some advantage for himself of another or to cause loss to any other person.
SHAREHOLDER: Someone who has contributed some amount to a business ventures inform of equity which qualify him to be the owner of the company.
REMUNERATION: Reward, pay for services rendered.
CHEQUE: Written order to a bank, to pay the stated sum from drawer’s account to a bearer or order of named person.
FORGED CHEQUE: A written instrument issued with an international act to defraud the bank.
DORMANT ACCOUNT: An account where dormant customers balance are kept.
CALL-ORDER: daily checking of day’s work