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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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MEANING OF FRAUD IN THE BANK INDUSTRYA major cause is the absence of a commonly accepted meaning or definition of fraud. It is at times used synonymously with, or as a subset of the much broader concept of corruption. The U.K financial services act, 1986, defined fraud as an irregularity involving the use of crininal deception to obtain for in instance as injust or illegal advantage. It added that “fraud is only established as having been committed following a verdict to that effect in the courtâ€
The dictionary of banking defined fraud to mean an act, or course of deception directed to the detriment of another, viscount Dilhorne observed that to defraud means to deprive a person dishonestly of some-thing which is his or of something to which he would or might, but for the perpetration of the fraud, be entitled. Furthermore, wole Adewunmi (1986), defined action of a person or a group of person with the intention of altering the truth and/or fact, for selfish personal monetary gain. He said that this involves the use of deceit and trick and sometimes, highly intelligent forgery, falsifycation of document and authorizing signatures and outright theft.
2.3 SOURCES AND CAUSES OF BANK FRAUDS
2.3.1 SOURCES OF BANK FRAUDS
The sources of bank frauds can be broadly categorized into internal and external sources. Musa(1985) recognized and explained below:
(a) Bank Accounts
(b) Entries and vouchers
(c) Cheque Books
(d) Clearing Cheques
(e) Transfer Cheques
(f) Drafts and payment orders
(g) Ledger cards
(h) Telex message and Telephone calls
(i) Bank Tellers
(j) Dormant, Loan or Overdrawn accounts
(k) Suspense/ miscellaneous ledgers
BANK ACCOUNT
A prospective account holder, especially current account is required to cite some referees. However, in some cause, in collaboration with bank staff, some customers open fictitious bank accounts without proper referencing.
ENTRIES AND VOUCHERS
These are banks’ cheque which when properly drawn are as good as cash, however, when the signature on these drafts and payment order are forged, they become an effective source of frauds.
Ledger cards.
The customers’ ledger cards can be a major source of fraud. Since machinists and ledger keepers can fraudulently alter the balances on these ledger cards.THELEX MESSAGES AND TELEPHONE CALLS
Telex messages and telephone calls are non physical means by which banking transactions are effected. Coded messages are used in telex messages while telephone calls are used to effect transactions. Since these messages and calls can be inpersonated and intercepted, with the funds involved they constitute a source of fraud in bank.
BANK TELLERS
Bank tellers which are used in making lodgements into the current account.
Vouchers are usually used to effect a credit or debit to a customers account, Experience has shown that fraudulently drawn carefully, unless the customer observer that irregular transactions have occurred in his bank account.
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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---
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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---