ABSTRACT
Banks deal essentially in cash
financial instrument and other documents which are generally of a negotiable
and easily transferable in nature. Hence it is very pertinent to say that the
exposure of banks to both internal and external fraud is very great. This
practice is very common to area involving cash, cheque and fraud transfer
operation. Much research and thought are increasingly being directed towards
the study of the causes of fraud in Banks because of its affects on Banking and
the entire economy.
Recent study carried out by
financial institutions training centre, Lagos, showed that causes of fraud
reported annually between 1989 and 1998 was about 500 and the annual average
money involved in attempted fraud was thirty-six money naira while the annual
average lost to banks and customers was sixteen million naira. It may not be
said to be an over statement that these figure may have risen geometrically
upwards afterwards when about seventy eight percent of our banking operations
are going to rural areas where poor institutional and infrastructural factors
militate against efficient and effective checks on the branches in these rural
areas.
Another problem facing our
nations banking system is that of long cheques, frustrations, delays and disappointments
being experienced in the banking halls by customers while either paying in or
withdrawing their hard earned money. These associated problems and deficiencies
have in recent years resulted to disencouraging growth of banking habit among
the public. This our society has been turned into a mere “cash societyâ€.
My personal experience as an
accounting personal in one of the private companies and various articles I read
on the problems of our banking system have aroused my deep interest in this
project topic. It is therefore my pleasure to carryout this e on ‘detection and
control of financial fraud in Nigeria
banking system†using U.B.A plc as a case study.
Chapter one of this research work
deals with introduction and over view on financial fraud.
The second chapter reviews the
previous write-ups on the subject matter.
The third chapter assesses the
work procedures on banks and focuses the loopholes inherent in there that aid
fraudsters carryout the nefarious activities.
Chapter four of this work did on
analysis of financial frauds by examine the methods used by fraudsters
indefrauting the banking system. It establish that falsification of accounts
and forged cheques and signatures ranked highest as means of perpetrating
frauds.
An examination of categories of
persons involved in the preparation of fraud reveals that bank staff are in the
majority. This chapter also focuses on the final incidence consequence of bank
fraud.
Chapter five discusses the
general prevention techniques (solution) available to bank management in
checking financial fraud, while the last chapter evaluates and concludes the
with personal economic on the issue of financial frauds in our banking
industry.
TABLE
OF CONTENTS
Title Page II
Approval page III
Dedication IV
Acknowledgement V
Table of contents IX
List of figure
Abstract VI
CHAPTER
ONE: INTRODUCTION
1.1
Background
of the study 1
1.2
Statement
of the problem 4
1.3
Objective
or purpose of the study 5
1.4
Scope
or delimitation of the study 6
1.5
Research
questions 7
1.6
Hypothesis
7
1.7
Significance
8
CHAPTER
TWO: REVIEW OF LITERATURE
2.1
Who
are the bank fraudsters 13
2.2
Fraud
and fraudulent practice in banking services 16
2.3
The
legal framework 20
2.4
What
is fraud 25
2.5
Causes
of fraud in U.B.A bank 29
2.6
The
effects of fraud in U.B.A. Bank 31
CHAPTER
THREE: METHODOLOGY
3.1
Research
design 33
3.2
Area
of the study 44
3.3
Sample
and sample procedure 45
CHAPTER
FOUR
4.0
Data
presentation and result 50
4.1 Summary of results/findings 50
CHAPTER
FIVE
5.0
Discussion
implication, recommendation 74
5.1 Discussion of result 75
5.2 Conclusion 80
5.4 Recommendations 84
5.5 Suggestions for further research 87
5.6 Limitation of the study 88
References
89
Appendices
91
CHAPTER
ONE
INTRODUCTION
1.1 BACKGROUND TO THE STUDY
There has been no single accepted definition of term
“fraudâ€. Fraud in whatever form is limitless on classification. This is why
courts and writers on fraud shirk or try to escape away from giving a decisive
definition. Notwithstanding, the varied meanings attached to the concept of
financial fraud the author addressed the subject with the following working
definitions.
Oxford and Chamber dictionaries
define fraud as a criminal deception, act of deceptive trick, cheating
swindling person or thing that deceives.
Longman
dictionary define fraud as “an act of deceitful behaviour for the purposes of
gain which may be punishable by law.
In the mind of civil court
of justice, fraud may be said to cover “all acts, omissions and concealments which involve a branch of legal
or equitable duty trust or confidence justly reposed and injurious to another
or by which an undue influence or available is taken off.
Brmifagbeni
define banking fraud to mean an act or cause of deception deliberately
practiced to gain unlawful or unfair advantages such deception directed to the
detriments of another. The goes further to define fraud to mean depriving a person
dishonestly or some thing which is his or of something to which he or would or
might but for perpetration of the fraud be entailed.
Having
closely studies these approaches to definition to fraud especially from the
banking perspective. One may correctly see bank financial fraud as a deliberate
act by an individual or group within or without the Nigeria banking system to
cheat, swindle, deceives or manipulate in other to disposes the banks
depositors/shareholders of their funds.
Therefore
fraud and forgone in banking transactions can be perpetrated through
falsification of entire in accounts of customers with a view to take advantages
of the excess proceed.
Despite
several definitions of frauds, the author believes that the ones so far given
are rater appropriate, advantages and inspiring for the purpose in which the
research work intends to achieve. This is because, they contain the basic elements of fraud which include that:
a)
There
must be decent or deception directed to the detriment of another or entirety.
b)
A
false representation has been made knowingly or without belief in its truth or
recklessly, carelessly, whether it true or false.
c)
To
obtain damages for deceits, it must be proved that the defendant intended that
the plaintiff should act on it an suffered damages in consequences.
The position of banking system in
our economy cannot be over emphasized. They act as the ‘conduct pipe’ through
which all the financial transactions pass. However, fraud has proved a serious
bottleneck to the proper functioning of the roles of the banking system to the Nigeria
economy. People are beginning to get worries and sooner than later may loose
confidence in our banking sector due to mainly the very increasing incidence of
fraud in our today’s banks. Banks as the store house of the public funds and
properties should be on trust not fraud.
1.2
STATEMENT OF PROBLEM
The frequent cases of financial
fraud in many financial institutions in our country is now taken as the utmost
concern to financial experts and micro encomiasts. This has also initiated that
task of seeking solutions to eliminate its occurrences. To some banking
experts, the issue of fraud is an internal vice in the Nigeria banking system. They argue
on this because a good number of fraud occur among our banks without the
knowledge of outsiders even where the public is aware it doe’s not effect the
rate at which customers withdraw or deposit money.
These experts are inclined to
believe this because the nation is under-banked, the populace are at no option
but to use the available banks like especially the foremost and well
established banks like UBA plc even if there are glaring inefficiencies in the
operations incompetence and laziness among most banks staff give birth to
fraud.
Fraud has paralysed the roof, the
foundation and creditability of our banking system. Just pick up any national
daily or from police record and you will be alarmed at the extent and magnitude
of bank fraud in Nigeria
banking system. Many banks have gone on distressed. Therefore the researcher is
aiming at finding out if there is any significant effect or solution to
financial fraud in the Nigerian banking system which has to offer to these
deficiencies aforementioned with special reference with UBA plc station road, Enugu.
In summary, the major problems of
this study are as follows:
a)
The
incessant/consistent casa of financial fraud
b)
Weakness
this has attributed to banking industry prior to the introduction of effective
control of financial fraud.
1.3 PURPOSE OF THE STUDY
This research work is general set towards
ascertaining the effects finical fraud have had on Nigeria banking system or
banking industry since its inception in the Nigeria industry .furthermore, the
study is;
1) To determine if any lost of
bills the banking have in relationship with the financial fraud in banking and
to what extend.
2) To examine the facts contained
in the detection and control financial fraud issued.
3) To research into the reason why people
involve in financial fraud
4) To
diagnose the banking procedures with a view to fishing out loopholes and
suggesting way of plugging them.
5) To examine the various management and
government controlling devices geared towards alimentation or checking
financial fraud in our banking system.
6) To recommend solutions that may help in
checking financial fraud in our banking system.
7) To identify the problem banks face as a
result of the introduction of financial fraud.
1.4 SCOPE OF THE STUDY
This
research work on detection and control of financial fraud is with a particular
reference to UBA plc station Road (okpara Avenue) Enugu and its cover facts on the issue. This
research work has a lot of difficulties. Firstly, top officials of bank were
reluctant to give away relevant statistical data on financial frauds that
occurred in the organisation.
RESEARCH
QUESTIONS;
Owing to the need for a
compressive study of this topic, the researcher demands it necessary and
reasonable to postulated the following research questions. This research has no
doubt that the awares to these questions will help him to draw conclusions and
recommendations are necessary.
The following question are the
research questions
1) What is the commonest causes
of financial fraud, can this be checked and controlled.
2) Has the financial fraud in the banking
industry helped to impede problems towards banks failure (distressed)
3) What measure do the bank adopt to check
financial fraud.
4) To what extend can the customers wait before
being attended and assume they are being attended promptly, do they have
adequate banking services available to them.
1.6 RESEARCH HYPOTHESIS
To fulfill the above outlined
purpose, the research declares the following propositions.
Ho1: Most financial frauds have not succeeded
because of the complexity of banking activities.
Ha1: Most financial frauds have succeeded because
of the complexity of banking activities.
Ho2: Auditing and investigations are not
indispensable weapons in the efficient management of the banking industry.
Ha2: Auditing and investigations and indispensable
weapon in the efficient management of the banking system.
Ho3: The problem of financial fraud is not limited
to UBA station Road, Enugu
nor to banking system as a whole but to the society.
Ha3: The problem of financial fraud is limited to
UBA station Road, Enugu
nor to banking system as a whole but to the society.
Ho4: Commercial banks do not place any value on the
auditors reports.
Ha4: Commercial banks place adequate value on
auditors reports.
1.7 SIGNIFICANCE OF THE STUDY
This
study is intended to highlight the indispensable position of an auditor and
those concern to work in an enviable financial houses like banks.
This
project will equally to be of immense help to other establishments and organisation
both in public and private sector. The dive need to establish a visible
internal auit unit as a means of internal control should not be
over-emphasised.
It
is helped that the management of UBA of Nigeria plc station road, Enugu in particular
should use the findings of this research to equip the audit the audit
department (i.e audit department and inspection). This department being the
watch – dog of bank should be given more teeth to bile than more banking
prospective investors, promoters, shareholders would find this study very –
useful. This will serve as an eye opener to them on what it takes to invest in
banks.
This
will also help readers and those who may wish to make reference on the topic of
study may be while undertaking similar research work.
Government
agencies can install adequate internal control measures to avert the incessant
frauds and embezzlement rampant in financial houses, ministries and parastals
today.
For
prospective auditors and accountants, it is a material of reading. They should
be able to understand what is fraud and where to audit, how and why auditing
and internal control system is an invertible ambient of the business system.
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