EVALUATION OF FRAUD CONTROL MEASURES IN THE NIGERIAN BANKING SECTOR (A CASE STUDY OF CENTRAL BANK OF NIGERIA, KADUNA BRANCH)


EVALUATION OF FRAUD CONTROL MEASURES IN THE NIGERIAN BANKING SECTOR (A CASE STUDY OF CENTRAL BANK OF NIGERIA, KADUNA BRANCH)  

ABSTRACT

The purpose of this topic evaluation of fraud control measures in Nigerian banking sector [a case study of central bank of Nigeria, Kaduna branch] is to aimed at finding practical means of eliminating, reducing the incidence of fraud in our banking industries and researcher used both primary and secondary source. Questionnaire and order interview were administered on a population of 350 person made up of both staff of central bank and management, the findings derives from respondents indicate that poor internet system not greed is the main cause of fraud in the Nigerian banking and recommendation and solution of fraud is a means of segregation of duties, were officer that past entry should not be responsible for checking with compulsory annual holiday for all member of the staffs and organization procedure, development of a good organization structure and career opportunity for staff so as to have dedicated loyal staff and contented with force and good training programme is important for staff at all levels.

ImageImageImageImageImageImageTitle page Approval Page Dedication Acknowledgement Abstract

Table of contents

Introduction

Background of the study

Statement of the problem

Objective of the study

Research Question

Hypothesis of the study

Significance of the study

Scope and limitation of the study

Definition Of Term

CHAPTER TWO

Review of Related Literature

Introduction

Definition, concept and Theories of fraud

Mechanism of fraud

Causes of fraud

Effect of fraud

Measures of controlling fraud

CHAPTER THREE

Research Methodology

Introduction

Research Design

Population Of The Study

Sampling Design and Techniques

Source of Data Collection

Instrument of Data collection

Justification For the choice.

CHAPTER FOUR

Data Preset and Analysis

Introduction

Presentation Of Data Analysis

Test Of Hypothesis

Research Findings

Summary

CHAPTER FIVE

Summary, conclusion and Recommendation

Summary of finding

Conclusion

Recommendation

CHAPTER ONE

Introduction

Fraud is an intentional deception made for personal gain or to damage another individual. Fraud is a crime and a civil law violation. Defrauding people of money is presumably the most common type of fraud.

Customers of banks are currently experiencing increase in fraud schemes. Scams to get a customer personal information can occur through many different means such as e-mail and telephone

Bank fraud is the use of fraudulent means to obtain money, assets, or other property owned or held by a financial institution. In many instances, bank fraud is a criminal offence, while the specific element of a particular banking fraud law varies between jurisdictions; the term bank fraud applies to actions that employ a scheme as opposed to bank robbery or theft.

Controlling bank fraud in the financial sector is a major task for all the stake holders in the sector. Every year, banks lose billions of naira to fraud which comes in all size and shapes both from external perpetrators and internal employees.

BACKGROUND OF THE STUDY

In its broadest terms, fraud means obtaining of something of value through deception. If fraud were described as an industry it would clearly be one of the fastest growing areas of the economy. One hundred criminals who serve several periods of imprisonment for armed robbery offence were recently reported that he wished he had understood earlier in his criminal career how easy it was to commit fraud. He now considers that fraud involves less traumas, the reward, are far greater and the penalties substantially fewer than in other form of crime. This study will address those forms of fraud that target the financial service sector and how the industry has responded with some measure successful in controlling this ever increasing problems and other measure that can be geared towards achieving further results.

STATEMENT OF THE PROBLEM

As earlier mentioned, the Nigerian banking industry, the back bone of Nigeria economy is one of the most profitable of higher performance and could achieved better result in output and obligation to the society. To realize this, the banking industry will have to perform lending role that can reinstate the economy.

The low level of the performance of the Nigerian banking industry is due to an array of problems, one of which is the issue of fraud which is one of the most intractable and monumental problem facing the industry.

The problem of accountability is traceable to the root cause of fraud which results from poor record keeping misappropriation forging, poor internal control, excess power given to the executive or management etc.

OBJECTIVE OF THE STUDY

The primary objective of the research is to evaluate the fraud control measures in the Nigerian Banks practical means of reducing the incidence of fraud in our bank to achieve these objectives, the following secondary objective have been specified.

1. To identify the causes of fraud perpetrated in bank

2. To ascertain the effectiveness of various fraud control measures adopted by banks.

3. To determine the effects of fraud in the banking industry and the economy in general.

By so doing, customer is better informed on the nature, type modes and various operations of the various frauds and so placed in a better position to prevent and detect any fraud led activity.

RESEARCH QUESTIONS

1. What are the causes of fraud perpetrated in banks?

2. How effective is the various fraud control measures adopted in Nigerian Bank in the prevention and detection of fraud.

3. What are the effects of fraud practices in the Nigerian banking indu

STATEMENT OF HYPOTHESIS

HO: There is no significant effect of fraud in the banking industry and the economy in general.

HI: There is no significant relation between greed by bank staff and fraud perpetrated in banks.

HO: There is no significant relationship between the effectiveness of fraud control measures instituted by banks and the level of fraud committed in the banks.

HI: There is no significant relationship between fraud committed in the banks and distress experienced in Nigerian banks.

HO: There is no significant cause of fraud perpetrated in banks. HI: There is a significant causes of fraud perpetrated in banks.

SIGNIFICANCE OF THE STUDY

The significance of the research study is hinged on the fact that the fate of the Nigerian economy is inevitably tied to the structure, direction and survival of the banking and financial system, it follows therefore that any serious destruction in the system will not only affect the system alone but the  Nigerian economy and the

public in general and the consequences which could leave the economy in jeopardy. Therefore, the remediation will help take the problem of fraud thereby reducing bank failures and stabilize the industry.

The research study will go a long way to show the effect of fraud in banks, its implication on the industry and possible remedies. It also shows the impact of those remedy on the economy and society in general. Banks and other financial institutions are expected to gain double from this study. First the study will highlight operations, lapses and others that give room for fraudulent activities in the banks and secondly will also stimulate self assessments by banks the research work will also go a long way in increasing the knowledge of students of banking financial management accounting, administration and other related discipline.

SCOPE OF STUDY

The scope of this study research will however be limited to only banking using central bank of Nigeria (CBN) as a case study.

The study is primarily concerned with the investigation and evaluation of fraud control measure in the Nigerian banking sector with regard to central bank of Nigeria (CBN).

DEFINITION OF TERM Fraud:

Fraud is an act of or course of deception deliberately practiced to gain unlawful or unfair advantage deception directed to the detriment of another.

Financial Services Sectors:

This involves all financial institutions such as banks, insurance company etc.

Bank: Is an establishment saddled with keeping money and valuable safely, the money being paid out of the customer order?

LIMITATION OF THE STUDY

The following are the constrains faced by the research in the course of carrying out the work.

1. Finance was a major problem since the researcher is a student and because of the sample size which is attributed to transportation, photocopying, typesetting etc.

2. Time constraint is another major problem faced as the researcher has to carry out the work within a short time given by the school for the submission. Time would have spent in personal observation but time was a problem in spite of the foregoing, the

researcher was still able to carry out the necessary research and got useful date and information.

CHAPTER FIVE

SUMMARY OF CONCLUSION AND RECOMMENDATION

5.0 SUMMARY OF FINDINGS

The banking industry is the corner stone of each country‟s economy. The industry in Nigeria is made up of central bank of Nigeria, development bank etc.

Fraud is the unlawful appropriation of assets from an organization which makes it the number one enemy of the business world (the banking industry in particular for it drains the nation‟s economy of its substance and renders bank balance sheet inappropriate

As stated in the earlier chapters there are various causes are prime move of both to the customer and staff it is also clear that there are many faces of fraud and no end to its ingenuity and the havoc it can cause to the Nigerian economy. Fraud occurs in bank due to the inordinate ambition of the perpetrator either the bank staff, customer or third party. In all the cases of reported fraud in banks, they occur due to the inadequate internal control system and management ineptitude to a sound organizational control. The system control been put in place in the banks goes a long way in minimizing the incidence of fraud and as such put the bank in a good stead for financial prosperity.

CONCLUSION

The summary of the findings has identified two basic factors. Firstly, the frequency of fraud in banks and other organizations and secondly the possible causes and types of fraud that existed. The careful analysis shows how internal control help in preventing fraud in bank, management is seen as having that control to establish sound organization institution that prevent fraud did exist in every organization and no matter how hard control are place fraud can only be minimized and not totally eliminated.

Fraud is entrenched in the fabric of our society and as long as it cannot be eradicated in the society eradicating it In the banking section will be a mirage support can only be spared by the management of the banks to put in place measures and products that can minimize the incidence of fraud so as not to destroy the bank.

RECOMMENDATION

“Prevention is better than cure”. This slogan is very relevant to the subject matter of this study.

Evidence shows that it is cheaper to prevent fraud than to bring down the perpetrators, the cost of detection, investigation and endless prosecution can be avoided if sufficient resources and attention are geared toward prevention in the first instance.

Therefore, the following is recommended to put in place by the bank.

1. Accounting system and accommodation

ImageImageImageDaily call over, reconciliation and auditing at every level Surprise internal cash count.

Regular review and cleaning of all surprises accounts preparation of monthly account and board of central bank return.

Image  Sound and effective control of account opening procedures.

2. Segregation of duties

ImageImageOfficer that post entry should not be responsible for the checking Movement of cashiers and clerks especially those that handle sensitive transactions.

Image  Compulsory annual holiday for all members of the staff.

3. Organization procedure

Image  Development of a good organization structure and career opportunity for staff for staff so as to have dedicated loyal staff and contented with force.

ImageImageImageImage  Staff of the organization should be competent, honest and high moral character.

Good training programme is important for staff at all levels. Supervision method should be developed.

All transaction should have authorization by appropriate office.

4. Staff guarding asset

ImageImageImagePhysical security of assets. Dual control system over assets.

Adequate control over vault and its contents.

5. Internal audit function

Image  Operation manual should be used to guide staff in all manner of their operations.

Image  Sporadic and element of surprise check should be put in piece on the banks transaction

.

EVALUATION OF FRAUD CONTROL MEASURES IN THE NIGERIAN BANKING SECTOR (A CASE STUDY OF CENTRAL BANK OF NIGERIA, KADUNA BRANCH)



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