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Effective Internal Control Of Frauds In Banks A Case Study Of Commercial And Merchant Banks In Nigeria
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CHAPTER TWO
2.0 LITERATURE REVIEW
2.1 RESTATEMENT OF THE STUDY.
Fraud is the number one enemy of business world. It is in all work of life. Fraud is a complex universal phenomenon. It is waxing in strength, it is rampant in both developed and developing, countries and varies across time and place in its magnitude, in its sources, the way it manifests itself and in its effects on administrative performances and development. Political, economical, social, and attitudinal factors combine in contributing to its incidence; the magnitude of fraud is of course, not known because much of it is undiscovered or undetected and not all that is detected is publicshed.
In every facet of human endeavour, frauds of one from or the other occur. It grows with the growing population of people, since frauds do not occur with out people perpetrating it. They are not peculier to any race, religion or sex as they occur across these, categories of people all over the world. In the words of Adewunmi (1983), “Employees as well as clients of firms in all industries engage in fraudulent practices all over the worldâ€.
The incidence of frauds is so rampant in our society that there is no day that one buys national dailies without seeing report of fraudulent acts in at least one of the dailies. Achebe(1985) while writing his book bought two dailies on a day, and the two of them carried reports of fraud. Moreover, the national concord of 16th may 1983, carried a report that the federal Government was losing N50 million every month as salaries to “ghost workers†the same day, Daily time carried a story on Nigerian importers who, having applied for and obtained the scarce foreign exchange the central bank of Nigeria ostensibly to pay for raw materials overseas, left the money in their bank abroad, and shipped to Lagos, container of toxic waste and sand.
No where is fraud more serious than in banking. It is the biggest single cause of bank failure. Prof. G.O Nwankwo in his Bank management stated “it is estimated; that about 85 billion were lost by UK companies every year, 30% of company liguidations in the united state are attributed to fraud. In Nigeria, where the statistic are non-existent it is put at about N200million perannum. A total of 42-distressed bank in Nigeria as at the end of 1994 were attributed to fraud.
According to Nigerian Deposit insurance corporation (N.D.LC) IN 1994.
N.DI.C records also show that commercial banks are most hit in this fraud virus as the growth rate of frauds in commercial bank rose by over 700 percent between 1991 and 1994.
There was a case of alleged interception and diversion of currency notes withdrawn from circulation by branches of the central bank of Nigeria and shipped to the headquarters of the bank for destruction. The notes were illegally removed from the incinerator in the process of burning at the bank and returned into circulation.
In Nigeria in 1989, according to return made by banks to the Nigerian Deposit insurance corporation (NDIC) the commercial banks lost about N15,341. 014.43 while the merchant banks lost about N6, 744, 132.00.
The higher tendency of frauds in commercial banks may be attributed to the fact that commercial banks operate from chains of branches compared with merchant bank with a small number of outlets.
The tables below show a break-down of the returns made by commercial and merchant Banks in 1989 to NDIC, the amount involved and the actual/ expected loss.
Frauds are a generic occurance. They occur in all countries of the world, in all industries within an economy, and in all banks in the banking industry, the central Bank inclusive.
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ABSRACT - [ Total Page(s): 1 ]ABSTRACTEver since banking evolved, banks have come to be seen as one of the few places where one’s treasures can be kept without fear of theft. As a result bankers all over the world were and still are seen as repositories of trust and fidelity.However, in the recent past, the integrity of bankers and the banking industry in Nigeria have come into question. An epidemic called fraud has hit the banking industry. This fraud has led to the loss of confidence by the public in banking institu ... Continue reading---
APPENDIX A - [ Total Page(s): 1 ]APPENDIX IICOMPUTATIONS FOR HYPOTHESIS ONEThe profit of your bank before this particular period as in (4) as compared with that of the period, did it show(a) An increase? (b) Economic Recession(c) Others (specify) (d) Don’t knowFrom experience, what type of bank has more incidence of fraud?(a) Commercial Bank (b) Merchant Banks(c) Development banksState why brieflyDo you have an internal control system in your bank?(a) Yes effective (b ... Continue reading---
QUESTIONNAIRE - [ Total Page(s): 1 ]QUESTIONNAIREHave you ever learnt of fraud in the banking industry?(a) Yes(b) No(c) Don’t knowHow regular have you had cases of and in our bank?(a) Always(b) Fairly always(c ) Sometime(d) Seldom (e) Not at allFrom your experience, which category of employees engage, more in fraud?(a) Management (b) Supervisors(c) Clerks and Cashiers (d) Messengers, Drivers etc.In your own opinion, do you think that fraud in your bank is usually a ... Continue reading---
APPENDIX C - [ Total Page(s): 2 ]APPENDIX 4COMPUTATIONS FOR HYPOTHESIS THREE ... Continue reading---
APPENDIX B - [ Total Page(s): 2 ] ... Continue reading---
LIST OF TABLES - [ Total Page(s): 1 ]LIST OF TABLE PAGE2.1. Returns of commercial banks on frauds and forgeries, 1989.2.2. Return of merchant Banks on frauds and forgeries, 1989.2.3. Return of all banks on frauds and forgeries, 19892.4. Number of commercial banks operating in Nigeria as at Dec. 1994.2.5. Number of merchant banks operating in Nigeria as Dec. 19942.6. Typology of frauds3.1. Failed banks in as at 19943.2. Response rate to questionnaire4.1. Knowledge of frauds ... Continue reading---
LIST OF FIGURES - [ Total Page(s): 1 ]LIST OF FIGURES4.1. Regularity of Bank frauds4.2. Category of staff engaging more in frauds4.3. Effect of fraud on profit of banks4.4. Effectiveness of internal control systems in banks4.5. Effectiveness of respondents bank with other banks. ... Continue reading---
APPENDIX D - [ Total Page(s): 2 ]APPENDIX 5COMPUTATION FOR HYPOTHESIS FOUR ... Continue reading---
TABLE OF CONTENTS - [ Total Page(s): 1 ]TABLE OF CONTENTPageTitle page Certification Dedication Acknowledgment Abstract Table of content List of table CHAPTER ONE1.1. Introduction 1.2. Statement of problems 1.3. Objective of the study 1.4. Hypothesis 1.5. Significance of study 1.6. Limitations and scope of study CHAPTER TWO2.0. Literature review 2.1. Restatement of the study 2.2. Meani ... Continue reading---
VITA - [ Total Page(s): 1 ]VITADIMEJESI, TIM IFESINACHI was born to Mr. and Mrs. Okpalanozie Dimejesi hail from Uga in Aguata Local Government Area of Anambra State. Being one of the nine surviving children of the family, he was born after the Nigeria civil war in Uga in Aguata Local Government Area Anambra State in 1993.Dimejesi Tim Ifesinachi was employed in Union Bank of Nigeria in 1984 as a clerk and after a year with them, he got admitted into the University while in School, he had done his industrial training progra ... Continue reading---
CHAPTER ONE - [ Total Page(s): 2 ]CHAPTER ONE1.1. INTRODUCTIONBanks, especially commercial banks, are the major mobilizers of saving in any economic system by offering savings facilities to the public. Some of the functions of the banks include the acceptance of deposits from the public and channeling such deposits to the deficit sectors of the economy who are in need of inventible funds. These two related and dependent functions bring the banks face to face with the public who come to obtain their services. This implies t ... Continue reading---
CHAPTER THREE - [ Total Page(s): 2 ]3.4. VALIDITY AND RELIABILITY OF MEASURING INSTRUMENTSValidity of a measuring instrument refers to the degree to which an instrument (test) measures what it is supposed to measure, while reliability refers to the degree to which an instrument (test) consistently measure what it is supposed to measure.In the present study, both validity and rdlianility of the measuring instruments have been ensured.1. The questions contained in the questionnaire have been structured to elicit the exac ... Continue reading---
CHAPTER FOUR - [ Total Page(s): 15 ]We can represent this data in a pie chart as shown below: Figure 4.3 category of staff congaing more inForm the above data, most of the respondents were of the view that clerks and cashiers were the category most prone to engage in fraud. This is not surprising because the cashiers for instance, handle raw cash over the counter and the temptation to commit fraud will come to them more than other that deal with ordinary papers. Furthermore, for the fact that a majority of people in their cadre re ... Continue reading---
CHAPTER FIVE - [ Total Page(s): 3 ]CHAPTER FIVE5.0 FINDINGS RECOMMENDATIONS AND CONCLUSION5.1 FINDINGSHaving collected and analyzed data pertaining to the present study, the researcher found the following:i. Fraud is know to all banks in the banking industry of Nigeria, as earlier stated in the literature review, fraud is universal as cases of it are reported in almost all fields of human endeavour. Thus, the researcher was not surprised that when it was found that all the respondents that answered the questionnaire w ... Continue reading---
REFRENCES - [ Total Page(s): 2 ]REFERENCES1. Prof G.O Nwankwo Bank management principles and practice (Matt house pushing UK limited 1991)2. Achebe C. the trouble with Nigeria.3. Fourth Dimension publishing company, Enugu, 1985,4. Adegbite S.I Fraud in Banks†Nigeria institute of Banker (landmark publications Lagos 1986)5. Adekanye F. “fraud in Banking transactions. The Nigerian Bank Vol. 6 No 1 19866. Ademji O.A the law and practice of banking in Nigeria (University of life pres ... Continue reading---
