Effects of Fraud in the Bank Sector in Nigeria
Chapter One
OBJECTIVES OF THE STUDY
The general objective of the study is to highlight cause and various forms of bank frauds, its effect and ways of preventing them. The specific objectives which this study is designed to achieve include.
- To identify the causes of fraud in banks
- To examine the various types of fraud perpetrated in banking.
- To identify the various ways employed in defrauding banks.
- To recommend measures aimed at preventing, controlling and detecting the incidence of banks fraud.
CHAPTER TWO
REVIEW OF LITERATURE
INTRODUCTION
Our focus in this chapter is to critically examine relevant literature that would assist in explaining the research problem and furthermore recognize the efforts of scholars who had previously contributed immensely to similar research. The chapter intends to deepen the understanding of the study and close the perceived gaps.
Precisely, the chapter will be considered in three sub-headings:
- Conceptual Framework
- Theoretical Framework
CONCEPTUAL FRAMEWORK
The Evolution of Computer
According to Eze, B. [1999] in his lecture monograph, computer systems evolved as a respond to the problem solving requirement of mankind. The remarkable human characteristics of problems solving ability has not only shaped the evolution of the computer but all of civilization problem solving is an integral part of what we may call the “creative human process”. In simple terms, the process can be described as follows:
i. First and foremost, we are confronted with a problem.
ii. Out of creative thinking comes a tool to solve this problem.
iii. Finally, as knowledge and use of the tool become widespread others improve upon the tool and expand its use.
The development of computers has followed a similar path throughout the history of computing, mankind have had the tasks of performing time consuming tedious and difficult numerical calculations. One of the first mechanical devise was the Abacus, developed by the Chinese as early as 5000 B.C. In 1642, Braise Pascal [19 years old] developed Pascal‟s calculating machine. In 1967, Gottfried Wilhelm Leibniz developed a calculating device that could automatically divide and multiply. Two of the most significant developments in mechanical devices were made of Charles Babbage. He designed the different engine in 1822 and worked on the Analytical engine in the 1930‟s. Although these devices were not built during his lifetime, the principles he developed could be seen in today‟s computer system. In 1887, Herman Hollerith developed a tabulating machine that was used to tabulate the 1890 census in USA. Later the company formed International Business Machines [IBM]. The MARK I was the beginning of the computer age. This electromechancial device was device was developed by Howard Aiken along eight engineers from IBM in 1937, other early computing devices includes the Electronic Numerical Integrator and Calculator [ENIAC] an the Electronic Discrete Variable Automatic Computer [EDVAC] (Cofferamn 1982).
FIRST GENERATION – The first generation of computers started in 1951 with the introduction of the universal automatic computer 1 [UNIVAC 1]. This computer like all the computers of the first generation, used vacuum tubes and were mostly programmed in machine language. They wee large in size, generated a lot of heat, failed frequently, had low capacity internal storage, low processing speed and various models were not located.
SECOND GENERATION – The second generation computers using transistors instead of tubes dominated the period from 1959to 1965. Transistors were smaller, faster, and more reliable and produces far computer brought about the use of Magnetic tape and disks and the common use of high level language such as FORMULA TRANSLATION [FORTRAN] developed in 1957 and the common Business Oriented Language [COBOL] developed in 1961.
Third Generation –This brought about the integrated circuit, a complete electronic circuit on a silicon chip which replaced the transitory circuitry. It brought about multiprogramming and time sharing [people using the same computer simultaneously] and also the production of operations systems, a type of system software which increased rapidly by the early 1970‟s minicomputers were widely used.
Fourth Generation – In 1971, the first electronic computers were introduced that used large scale integrated [LSI] circuits- thousands of integrated circuits on a hip for main memory and logic circuitry. This period brought increase used of input devices that allowed data and instruction to be entered directly through the keyboard.
Fifth Generation –These area microcomputers with faster operating speeds, greater processing capacity and virtually unlimited memory. The fifth generation computers are believed to have circuitry based on gallium arsenide. Gallium arsenide offers a five fold speed increase and only one length of the powered that silicon uses.
CHAPTER THREE
RESEARCH METHODOLOGY
INTRODUCTION
In this chapter, we described the research procedure for this study. A research methodology is a research process adopted or employed to systematically and scientifically present the results of a study to the research audience viz. a vis, the study beneficiaries.
RESEARCH DESIGN
Research designs are perceived to be an overall strategy adopted by the researcher whereby different components of the study are integrated in a logical manner to effectively address a research problem. In this study, the researcher employed the survey research design. This is due to the nature of the study whereby the opinion and views of people are sampled. According to Singleton & Straits, (2009), Survey research can use quantitative research strategies (e.g., using questionnaires with numerically rated items), qualitative research strategies (e.g., using open-ended questions), or both strategies (i.e. mixed methods). As it is often used to describe and explore human behaviour, surveys are therefore frequently used in social and psychological research.
POPULATION SAMPLING SIZE
The population for the study will consist of executives and their subordinates in the organization which is charged with the application of management by objectives to attain organizational goals in the organization.
This study was carried out on the effects of fraud in bank sector in Nigeria using First Bank of Nigeria Plc as a case study. Hence, the population of this study comprises of the employees of First Bank of Nigeria Plc, Enugu, Enugu State.
CHAPTER FOUR
DATA PRESENTATION AND ANALYSIS
INTRODUCTION
This chapter presents the analysis of data derived through the questionnaire and key informant interview administered on the respondents in the study area. The analysis and interpretation were derived from the findings of the study. The data analysis depicts the simple frequency and percentage of the respondents as well as interpretation of the information gathered. A total of fifty(50) questionnaires were administered to respondents of which all were returned and validated. For this study a total of 50 was validated for the analysis.
CHAPTER FIVE
SUMMARY, CONCLUSIONS AND RECOMMENDATIONS
Introduction
This chapter summarizes the findings on fraud and fraud control in a computerized accounting system using First Bank of Nigeria Plc as a case study. The chapter consists of summary of the study, conclusions, and recommendations.
Summary of the Study
In this study, our focus was on fraud and fraud control in a computerized accounting system using First Bank of Nigeria Plc as a case study. The study is was specifically carried out to find out the role of computer in fraud detection, determine how computer can be used to prevent fraud, identify the causes of fraud, suggesting measures of preventing fraud, ascertain the consequences of fraud in business organization, and make recommendation based on the findings..
The study adopted the survey research design and randomly enrolled participants in the study. A total of 5 responses were validated from the enrolled participants where all respondent were employees of First Bank of Nigeria Plc, Enugu, Enugu State.
Conclusions
Based on the findings of this study, the researcher concluded that;
- The use of computer plays a significant role in organizational crime detection.
- Computer can be used to prevent fraud through; the use of passwords or repeated authentication codes, the use of computer virus protection, encryption of internal and external messages, sophisticated cyber security, contingency plan in the event of fire, persistent record keeping, and persistent record storage and retrieval.
- The causes of fraud in business organization comprises of lack of transparency in financial record and reporting, poor quality of management information, poor skills and techniques of cyber security and accountants of an organization, lack of an efficient internal control or compliance system, diminishing ethical values, and senior management override of controls.
- The consequences of fraud in business organization encompassess of high mortality rate of business organizations, the consequent losses of revenues, damages the company’s reputation, loss of brand image, and business liquidation and bankruptcy.
Recommendation
Recommendation on the basis of findings the researcher made the following recommendation with the belief that when studied and applied, would help to increase the standard already at hand
- All banks and other financial institutes in Nigeria (including the Community banks and finance companies) should computerize all their operations.
- Computers should be used by the bank and other financial institutions in Nigeria should have an in- built fraud detection devices.
- The federal government should subsidize the cost of electronic computer so as to make affordable by some banks that have how asset 1 capital base e.g. the community banks.
REFERENCE
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