Internal Control System as a Basis of Fraud Prevention and Control in Nigeria Financial Institutions: A Case Study of First Bank of Nigeria Plc Enugu Main)
Chapter One
PURPOSE OF THE STUDY
- To identify possible defects and loopholes (if any) in the system.
- To offer useful recommendation based on the findings on how best to prevent the occurrence of fraud through an effective internal control system
- To ascertain the degree of compliance of the bank staff with the internal control measures
- To examine the relevance and appropriateness of the presently adopted control measures in preventing fraud.
CHAPTER TWO
REVIEW OF RELATED LITERATURE
INTRODUCTION
An internal control according to (Boulescu M., 2003) refers to a permanent review of the economic activity of an entity; an independent activity of assessing on behalf of the economic entity’s management that involves examining the financial, accounting, and other kind of operations concerning the services as a whole; an evaluation of tasks and conformity of the accounting entries, reports, assets, capitals, and results; or an attestation or certification of financial accounting documents. There is a clear distinction between internal auditors and specialists in fraud investigation, both from the point of view of their roles and responsibilities, as well as in the case of their professional training and specialty. The role of the internal auditor depends, of course, on his professional training and practical abilities, as well. The internal auditors must have a superior level of theoretical knowledge and practical experience in order to successfully accomplish their role. They must know the possible fraud schemes and scenarios that are specific to an organization’s field of work (for example insurances, retail, telecommunications, etc.) and be able to recognize the signs of a possible fraud scheme. Although the internal control cannot completely prevent fraud, but it can adapt its work method and procedures so that it can increase the chances to identify and correctly interpret the signs of fraud (Munteanu V., Zuca M., Zuca g., 2010, p. 35).
Accountability is a process whereby an organization are held responsible for the decisions and actions including the stewardship of funds, fairness and all aspect of performance. New public management (NPM), an international public reform movement formulates significant improvement in the management of public treasures in many countries, to promote good management system that will work towards efficiency, effectiveness and proper accountability, which can only be realized through effective internal control system. However, Internal control system is a process, effected by entity’s board of directors, management and other personnel, designed to provide reasonable assurance regarding the achievement of organizational objectives According to, internal control system is a process designed and effected by the board member, administration and staff of an organization to effectively and efficiently achieve operational financial and compliance objectives. Effective internal control system involves regular review of quality of financial and operating information, review of policies regarding the control of assets, employee’s assessment and compliance with organizational policies, procedures, laws and regulations.
CHAPTER THREE
RESEARCH METHODOLOGY
Introduction
This chapter deals with the method used in collecting data required in carrying out this research work it explains the procedures that were followed and the instrument used in collecting data.
SOURCES OF DATA COLLECTION
Data were collected from two main sources namely:
- Primary source and
- Secondary source
Primary source:
These are materials of statistical investigation which were collected by the research for a particular purpose. They can be obtained through a survey, observation questionnaire or as experiment, the researcher has adopted the questionnaire method for this study.
Secondary source:
These are data from textbook Journal handset etc. they arise as byproducts of the same other purposes. Example administration, various other unpublished works and write ups were also used.
POPULATION OF THE STUDY
Population of a study is a group of persons or aggregate items, things the researcher is interested in getting information for the study internal control system as a basis of fraud prevention and control in Nigeria financial institutions. The researchers randomly select 200 staffs of First Bank Plc Enugu Main as the population of the study.
CHAPTER FOUR
PRESENTATION ANALYSIS INTERPRETATION OF DATA
INTRODUCTION
Efforts will be made at this stage to present, analyze and interpret the data collected during the field survey. This presentation will be based on the responses from the completed questionnaires. The result of this exercise will be summarized in tabular forms for easy references and analysis. It will also show answers to questions relating to the research questions for this research study. The researcher employed simple percentage in the analysis.
CHAPTER FIVE
SUMMARY CONCLUSION AND RECOMMENDATION
INTRODUCTION
It is pertinent to note that this research was aimed at assessing the contributions of internal auditing in the detection and prevention of fraud, thus the topic “internal control system as a basis of fraud prevention and control in Nigeria financial institutions”.
In the preceding chapter, the relevant data collected for this study were presented, critically analyzed and appropriate interpretation given. In this chapter, certain recommendations were made which in the opinion of the researcher will be of benefits in addressing the challenges associated with fraud prevention in Nigeria.
SUMMARY
The overriding purpose of this study was to establish the relationship between internal control system and fraud control in financial institutions in Nigeria. To accomplish this purpose the researcher developed some research questions based on the scope and area of study which is First Bank Plc Enugu main. Internal control system, as a tool for management control an assurance service, represents more than a legal requirement. Timely detection of irregularities is important for all economic and financial market players, for all users of financial information. A well-implemented internal control structure and internal control activities conducted carefully and conscientiously could signal potential dangerous situations due to poor management of assets (this should include all categories of resources, including human resources) with negative, if not so disastrous consequences for the company’s own business and also with implications over the economic environment. Development, implementation and continuous monitoring of internal controls system and procedures are the responsibility of the entire management and not just the auditor alone. Premchand (1999) sees public financial management as the link between the community’s aspirations with resources, and the present with future, Management of every organization has the line responsibility for designing, implementing and monitoring their internal controls system. The study revealed that there is no regular review of financial transaction by management and adequate segregation of duties.
CONCLUSION
The area of internal control system is probably one of the most dynamic and yet important subjects to come to our attention. Internal control is currently at a crucial stage in its development as there is a growing demand for audit services. What has yet to be formed is a consensus among theory and practice. This research did not have the intention of concluding the discussions over this matter; however, it is expected to be one more element to help the formation of opinions and to diffuse other discussions on the subject. This study has made a first and successful attempt to establish the positive relationship between the broad attributes of corporate governance and internal control. The main limitation of this study is that it is just focused on a specific industry sector. Taking into consideration that the interest in this field of research is rather new, it is necessary that the future orientation of the academics as well as of the practitioners be focused on the evolution of those governance mechanisms which will limit these troubles. From the above it is clear, that internal control system develops ever-new approaches to internal auditing, devises new auditing products and services, and helps fulfill increasingly more complex demands that management nowadays faces. Related to that, it can be expected that internal auditing will be increasingly oriented towards advising the management on efficient corporate governance on management control.
RECOMMENDATION
Haven successfully completed the study; the researcher therefore makes the following recommendations that:
Future research should take a more focused approach by examining the matters reported in this research work in different areas of industry sectors and organizational size, and evaluate the development of individual elements and steps of the approach.
Management should ensure that there are adequate organizational controls and that each staff knows his duties and equally ensures effective segregation of duties so as to reduce interference in terms of funds; and assets management and controls.
There should be a good communication between auditors and management for a maximum of effectiveness of internal control, so that the management would be open to the proposed recommendations. It is very important for the auditor to properly diagnose a situation (it is ideal as the auditor has knowledge and receive complex explanations necessary to understand the work properly).
Internal control function should be strengthened more in order to provide reasonable assurance for all audited domains/activities, which will add value to the company. It’s more than obvious that this economic crisis, characterized by some specialists without precedent, will have a significant impact on the development of several areas, one being the internal control.
Taking into consideration that the interest in this kind of research is rather new, it is necessary that the future orientation of the academics as well as of the practitioners be focused on the evolution of those governance mechanisms which will limit these challenges.
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