Evaluation of Fraud Control Measures in the Nigerian Banking Sector (a Case Study of Central Bank of Nigeria, Kaduna Branch)
Chapter One
OBJECTIVE OF THE STUDY
The primary objective of the research is to evaluate the fraud control measures in the Nigerian Bank’s practical means of reducing the incidence of fraud in our bank to achieve these objectives, the following secondary objective have been specified.
- To identify the causes of fraud perpetrated inbank
- To ascertain the effectiveness of various fraud control measures adopted by
- 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.
CHAPTER TWO
REVIEW OF RELATED LITERATURE
INTRODUCTION
Fraud is a global phenomenon; it is not unique to any selection of the Nigerian economy. The Nigerian society since after the civil war has been plagued with desire to get rich quick.
An ugly aspect of this scenario is the frequencies, complexities and magnitude of these frauds. As business and society became more enlightened and complex, method of perpetrating fraud become more sophisticate.
Bank fraud is the use of fraudulent mean to obtain money assets, or other property owned or helps by a financial institution.
In many instances, bank fraud is a criminal offense while elements of a particular banking fraud law very between jurisdictions, the term bank fraud applies to actions that employ a scheme or article, as opposed to bank robbery or thief for this reason, bank fraud is sometimes considered a while – collar crime.
DEFINITION, CONCEPT AND THEORIES OF FRAUD
Fraud is very comprehensive field of crime under which exist a range of different activities, fraud is diverse in nature and as such getting a comprehensive definition is somewhat difficult.
Redzinowing and Wolgan [1989] classify fraud together with white collar crime and defined them as illegal acts characterize by quit, deceit and concealment and are not dependent upon the application of physical force or violence threats there of Adewunmi, 1987, Ojibede 1987, in their definition, they agree that fraud is an action which involves the use of deceit and trick to after the truth so as to deprive a person of something which is or something to which he might be entitled.
Fraud is an international deceitful act for gain with the concept of concealment. As such it is more than theft defalcation is thief by person in position of trust. Fraud may be perpetrated by one person and working differently and indifferent position and between a manager and someone, reporting or between an insider and outsider.
Babatunde [1996] has propounded that the motivation of fraudulent behaviors derives from a number of causes, these could be pathological greed, the desire to be with juices extreme want often characterized as dire need, culture demands or the cultivating of taste among others criminal motivation with particular reference to fraud is said to be pathological when the taste of mind of the criminal dispose and impels him to commit fraud, even though he is not in dire need of the resources.
Adewunmi [1987 ] in his explanation of fraud indentifies socio – economic lapse in society such as misplacement of social valves in the source of wealth and the using of society expectation from bank staff and the subsequent desire of the staff to live up to such expectations as contributory factor to fraud.
Another theory of fraud states that banks have become persistent targets of men of underworld mainly because banks are seen as the richest organization in any country.
Ojigbede [1986] like Adewunmi [1987 ] said the main cause of fraud in bank in Nigerian is traceable to the general dishonesty in the society. Since there is corruption in all facet of the Nigerian life, banks cannot be an exception. He also mentioned other factor such is lack of call over system, lack of regular and non – notified relation, clerks doing more than job which are incompatible and many more.
MECHANICS OF FRAUD
SOURCES
- Bell Alexis [2010] mortgage fraud and the illegal property flipping scheme, A case study of united statequinterolopez
- Com
- Federal deposit insurance corporation, electronic funds transfers[requlation –E]
- Order of china banking regulatory commission, the measures governing electronic banking
- China daily new 2012-7-17 shiyingying man wins full pay out in bank card
- ATM deposit automated, ATM processing envelops free Rogue traders.
A rogue traders is highly placed inside nominally authorized to invest sizeable funds on behalf of the bank, this trader secretly make progressively more aggressive and risky investment using the bank money, when one investment goes bad, the rogue trader engages in further market speculation in the hoe of quick profit which or cover the loss unfortunately when one investment loss is paid on to another cost the bank can running to hundreds of millions of naira there have even been cases in which a bank goes and of business due to market investment losses.
Some of the largest bank frauds ever detected was perpetrated by currency frauds, john rusnak and nick lesson, Jerome kervell, allegedly detrauded society general of 4.9 billion euro and 7.1billion while trading stock derivation.
CHAPTER THTRE
RESEARCH METHODOLOGY
introduction
The chapter deals with the systematic and planned process of collecting data for the purpose arriving to a dependable solution.
In these chapter all techniques of carrying out research to be discussed, such things are sources of data collect, technique of data analyzing and many more data to be used to test fraud to see if it will agree with the theory. In the end justification will be giving to the method used
RESEARCH DESIGN
In carrying out the study, the descriptive research was employed to the researcher. Descriptive research design is concerned with the collection, presentation, analysis and interpretation of data for the purpose of describing vividly existing conditions prevailing practical belief attitude on going processes etc. its objective are to get details and factual information about issue event problems and describe it as there are.
The researcher also employ the survey descriptive research design in gathering information .survey descriptive design is a method of gathering information about human population in which the direct contact is made with the unit of study through the means of instrument such as questionnaire, interview and guides.
population and sample size
Population-population according to osuals(1993)is the number of people living in a group whether geographic area and specialize group. The population one group a people or object is similar to one or more ways and from and it is the subject of the study in particular survey research work has been deliberately carried out. The branch has 150 senior staff and 200 junior staff and total population of Kaduna branch is 350 staff.
Sample size: the sampling means the whole portion of the entire population so as to ensure conclusion about the population in an attempt to bring out accurate information concerning the research work, the researcher endeavour to conduct these study on thirty (30) people (official) of CBN.
CHAPTER FOUR
DATA PRESENTATION AND ANALYSIS
Introduction
Analysis of data particularly primary data and the finding is the core of any meaningful research done.
The extent of application of the research depends on careful presentation and analysis of the data collection for the study.
The analysis would be represented on simple table and percentage. The researcher distributed about hundred (100) questionnaires to the respondent and collected (75).
CHAPTER FIVE
SUMMARY OF CONCLUSION AND RECOMMENDATION
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.
Accounting system and accommodation
Daily 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.
Sound and effective control of account opening procedures.
Segregation of duties
Officer that post entry should not be responsible for the checking Movement of cashiers and clerks especially those that handle sensitive transactions.
Compulsory annual holiday for all members of the staff.
Organization procedure
Development of a good organization structure and career opportunity for staff for staff so as to have dedicated loyal staff and contented with force.
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.
Staff guarding asset
Physical security of assets. Dual control system over assets.
Adequate control over vault and its contents.
Internal audit function
Operation manual should be used to guide staff in all manner of their operations.
Sporadic and element of surprise check should be put in piece on the banks transaction
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