INTERNAL CONTROL SYSTEM AS A MEANS OF PREVENTING FRAUD IN FINANCIAL INSTITUTION A Case Study of First Bank of Nigeria Plc
ATTENTION:
BEFORE YOU READ THE
PROJECT WORK, PLEASE READ THE INFORMATION BELOW. THANK YOU!
TO GET THE FULL
PROJECT FOR THE TOPIC BELOW PLEASE CALL:
08068231953,
08168759420
TO GET MORE PROJECT
TOPICS IN YOUR DEPARTMENT, PLEASE VISIT:
INTERNAL CONTROL
SYSTEM AS A MEANS OF PREVENTING FRAUD IN FINANCIAL INSTITUTION
A Case Study of First
Bank of Nigeria Plc
ABSTRACT
The focus of this
work is to examine the importance of controlling fraud internally in financial
institution through some tactic measures, a case study of First Bank of Nigeria
Plc, Benin. Fraud in financial institutions in particular and in organizations in
general has been a major challenges and threat to the growth and development of
organization/ institutions and the country in general.
It is an undisputable
fact that many financial institutions has failed in the past and some are
staggering today because of their inability to manage and control fraud
internally in their institutions.
Therefore this very
work aimed at providing necessary hints for financial institution on how to
carry out effective measures in curbing internal fraud in order to achieve
organizational objectives among other things. Also, the study provide data
(secondary data) for further studies in the related course of study.
Necessary literatures
were deliberately received in which relevant existing studies were critically
examined for appreciations and criticism and of course the theoretical
framework of the subject matter was received, in which various aspect of
curbing fraud internally were extensively and intensively looked at.
Subsequently the data
gathered through the questionnaire administered were presented, analyzed and
duly interpreted.
TABLE OF
CONTENTS
CHAPTER ONE
1.1
Background/History of the Study
1.2
Statement of the Problem
1.3
Purpose of the
Study
1.4
Scope/Delimitation of the Study
1.5
Need/Significance of the Study
1.6
Research Questions
1.7
Definition of Terms
CHAPTER
TWO: LITERATURE REVIEW: THEORETICAL RATIONALE
2.0
Introduction
2.1
Types and Causes of Bank Fraud
2.2
Internal Control and Types of Control
2.3
Internal Control System in Financial Institutions
(First Bank of
Nigeria Plc)
2.4
Internal Control Measures for Controlling Fraud
in Financial Institutions
(First Bank of Nigeria Plc)
2.5
Expected Qualities of a Bank for Effective Internal
Control System
CHAPTER THREE
3.1
Research Design
3.2
Area of Study
3.3
Population of Study
3.4
Sample and Sampling Techniques
3.5
Instrumentation
3.6
Validation of the Instrument
3.7
Reliability of the Instrument
3.8
Method of Data Collection
3.9
Methods of Analysis
CHAPTER
FOUR:
Empirical Analysis, Presentation and
Analysis of
Regression Results
CHAPTER
FIVE: DISCUSSIONS, CONCLUSION AND RECOMMENDATIONS
5.1
Discussion of the Results
5.2
Data Findings
5.3
Conclusion
5.4
Implications of the Findings
5.5
Limitations of the Study
5.6
Recommendations of the Study
5.7
Suggestion for further Studies
Bibliography
Appendix
CHAPTER ONE
1.1
BACKGROUND/HISTORY OF THE STUDY
Financial institutions are
organizations which deals primarily in money, they constitute the financial
framework of an economy, they also help to pool savings and excess liquidity.
In 1969 the Nigerian
Banking Decree specified four types of financial institutions which carry out
banking business, they are the commercial banks, discount houses, acceptance
and finance houses.
The origin of First
Bank in Nigeria as commercial bank in 1892 a company known as Elder Dempster
was registered in London and was given the sole authority to distribute coins
in Nigeria later in that same year, the bank had its headquarters office in
South Africa known as Africa Banking Corporation (ABC). This became the first
British bank oversea and indeed in the whole West Africa, ten (10) months later
of it’s operations, the Lagos branch was faced with both internal and external
operations constrains.
In 1894, Elder
Dempster and Company bought over the Africa Banking Corporation to form a new
bank in London known as Bank of British West Africa (B.B.W.A) with authorized
share capital £100.00. It opened a branch office in Lagos, the bank’s name was
changed to Bank of West African Limited (BWA) in 1959.
In 1966 Bank of West
African Limited (BWA) merged with Standard Bank Limited (SBL) London to form a
single bank known as Standard Bank West Africa Limited (SEWA). In 1969 Standard
Bank West Africa Limited was incorporated with Nigerian Standard Bank Limited,
which gave raise to the present name bank as First Bank of Nigeria Plc in 1979
(Dr. Unugbro 2007, p. 85, Money and Banking).
Prior to 1952, there
was no form of Banking Act or Ordinance to regulate the establishment and
operations of commercial banks or a central bank to supervise the control of
banking in Nigeria. During that time many banks was registered some of which
never operated and ever since that period, fraud has remained a permanent
feature in our banking industry.
However, with the
introduction of the first Banking Ordinance in 1952 and the Central Bank of
Nigeria Act in 1959 and other subsequent Acts and Ordinances with their
amendments over the years used to regulate and control the activities and
operations of financial institutions in the country, fraud in financial
institutions have rather increased in magnitude and the methods used to
perpetrate them acquire greater sophistication day after day.
Anikpitan 2006, a
bank of repute maintained;
“that, discoveries
during investment show that banks now take extra precaution for clearing a
cheque because of rampant incident of fraud and forgery”.
Ashimi 1976,
maintained;
“that fraud has
become sophisticated as to make a forged signature on a cheque leaf look god
enough for the rightful owners to think that it was his signature”.
Ughamadu .N. on his
article on celebrating bank fraud “in that business times 29 July, 1991
observed that;
The logic for
establishing a viable and enabling environment for any country will be
meaningless if it’s banking sector is very porous of fraud”.
Ojo A. T. 2002
emphasized that;
“As an open secret
financial institution do not have very large resources of their own in relation
to the total resources at their disposal. They depend in the remains on other
people’s funds which have been entrusted to them because of the confidence the
people have on them as models of responsibility and safety”.
To establish a sound
internal control system various organization adopt various devices and methods
based on their nature of business and the scope of their operations. Internal
control system requires a continuous check and rechecking of day to day
activities of the business in order to ensure the correctness and fairness of
the accounting records, and to detect and expose any deviation when it has
accord.
There is therefore a
great need to minimize the defects or loopholes and make money effective and
operational to guard against the occurrence and re-occurrence of fraud in our
financial institutions.
1.2
STATEMENT OF THE PROBLEM
In our daily newspapers there are
reports of fraud in financial institutions, for instance the recent frauds that
was unveil by the central bank governor Lamido Sanusi involving some banks
chiefs.
Also Business Concord
(Jan. 27, 2000) noted with utter dismay that “Robbers are making nonsense of
the various types of security measures in banks by employing scientific means
of gaining access to their strong rooms.
Business Times (23rd
Jan. 1990); “the rising incidence of bank fraud has created a lot of distrust
between banks and their customers”, not only that there are increase numbers of
reported cases of fraud but also the sums involved are staggering.
Fraud leads to
unwanted loss of public funds and put the management of the affected bank on
its loss. Bank fraud incidence, reduces public confidence in banking and
consequently slows down development of banking habit in Nigeria.
However, despite the
steps and measures taken by banks to prevent the occurrence of fraud, the
situation still remains largely unchanged. It is therefore necessary to
appraise and establish an adequate and effective internal control system in the
financial institution for their orderly and efficient operations so as to guard
against ever-increasing incidence of fraud.
1.3
PURPOSE OF THE STUDY
The main purpose of this work is to
examine the internal control system in the operations of First Bank of Nigeria
Plc. Also to identify possible loopholes (if any) in the system, to also
ascertain the degree of compliance of the banks staff with these measure and to
offer useful recommendations based on the findings.
1.4
NEED/SIGNIFICANCE OF THE STUDY
Even though this study is not a very
comprehensive and exhaustive one as a result of some limitations are aspects of
the work is very relevant in one way or the other to the Nigeria banking
industry as a whole primarily this study is designed for all those that may be
interested in carrying out further study on internal control system as it is
related to fraud prevention in financial institutions in Nigeria.
Moreover, banks in
Nigeria will derive great assistance from this internal control system and
subsequently preventing and minimizing fraud. This they can achieve by adopting
and implementing the various suggestions and recommendations made in this study
in their control system.
1.5
RESEARCH QUESTIONS
1.
Does the present internal control system of financial institution appropriate
in present world of technology and sophistication of the First Bank of Nigeria
Plc?
2.
How effective is the internal control system in First Bank of Nigeria Plc?
3.
What techniques, if any can internal control system in banks used to prevent
fraud in First Bank of Nigeria Plc?
4.
Have your Bank (First Bank) experienced fraud in the past one, two or three
years?
5.
Do you think that the introduction of computerized internal control system in
all the branches of First Bank will eradicate banking malpractices fraud?
6.
Does the internal control measures adopted by First Bank to prevent and control
fraud effective in the prevention and detection of fraud?
7.
Does the present control system measures in your Bank prevents fraud?
8.
Are all bank instruments like drafts, cheques books, certificates of deposit
etc under the control of at least two bank officials?
9.
Do you think the photograph of every customer withdrawing up to a certain
amount is taken in First Bank of Nigeria Plc?
10.
Do you think that fraudulent acts are possible because of lapses in your
internal control system?
11.
Do you think the use and adoption of computers will help in a great way in
fighting or preventing the rate of fraud in First Bank of Nigeria Plc?
1.6
DEFINITION OF TERMS
Most words used in this work are
technical and may not easily be understand by all, thus an attempt is here by
made to define some these terms.
1.
Internal Control System (ICS): It is the whole system of control both
financial and otherwise established by management in order to carry on the
business of the enterprise in an orderly and efficient manner.
2.
Public Limited Company (PLC): They are public companies registered in
the Nigeria Stock Exchange, they opened to every member of the public and
through purchasing of a share one can become a member/owner of such.
3.
Bank: It is an establishment that deals especially with money; they give
out loans, extension of credit, give advices to customers, etc.
4.
Fraud: It’s a criminal act, it’s an act of deception. It involves tricks
cheating, swindling of an individual money or property.
AFFILIATE LINKS:
Comments
Post a Comment