ABSTRACT
This
project/term paper is designed to critically analyse the fraud on bank failure
and its role in Nigeria
financial Institutions with reference to the banking system.
Fraud in
both private and public sector of Nigeria economy is an age long
phenomenon that has for a long time
being threatening the growth and development of the Nigeria Nation State. It
has defiled the very professional expertise know-how due to its continuous increase.
The effect
of fraud on the Nigeria
financial institutions mainly regarded as the life-wire of the nations economy
is to say the least devastating. Found outs across the length and breath or the
Nigerian financial institutions and has resulted in resulting many well
established firms to mere existing level, while so many others have been
completely liquidated. It is this ugly development in the “Power house†of the
financial sector of our economy that altercated my interest hence my choice of
the topic: Fraud and its role on bank failure; with particular reference to the
banking system.
This work
will dig deep into the
1.
Types of fraud.
2.
Caused of fraud
3.
Extent of involvement of insiders and outsiders in the
preparation of fraud.
In this project/ term paper chapter explain the term fraud,
it tries to explain the fact that fraud is and to continues to trouble the
financial sector of the economy unless great efforts are put together to fight
it. Chapter one starting with the introduction which is the scope of the study.
Chapter two is the literature review which embraces the subheading; Types of
fraud, foreign exchanges malpractices, tilex fraud, fraud against the company,
Advance free fraud (419), Bank fraud, and the effect of fraud on banks. Chapter three is the solution to the menace
of fraud. Further, the summary of the whole finding recommendation by research
and possible conclusion on the topic.
The
bibliography is also there.
TABLE OF
CONTENTS
Title page
Approval page
Dedication
Acknowledgement
Abstract
Table of content
CHAPTER ONE
1.0 Introduction
CHAPTER TWO
2.1
Types of fraud
2.2
Foreign exchanges malpractices
2.3
Telex fraud
2.4
Fraud against the company
2.5
Advanced free fraud (149)
2.6
Bank fraud
2.7
The effect of fraud on banks.
CHAPTER THREE
3.1 Summary
3.2 Recommendation
3.3 Conclusion
3.4 Bibliography
INSTITUTE OF MANAGEMENT AND
TECHNOLOGY
(I.M.T), ENUGU
NAME: OBIEKWE VICTOR OBINNA
REG.NO: AC/N2003/149
SCHOOL: FINANCIAL STUDIES
DEPT: ACCOUNTANCY
LEVEL: ND II
DATE: 5TH APRIAL
2005
SUPERVISOR: J.C. EZE
TITLE
PAGE
FRAUD
AND IT’S ROLE ON BANK FAILURE
A TERM
PAPER PRESENTED TO THE DEPARTMENT OF ACCOUNTANCY.
SCHOOL OF FINANCIAL
STUDIES,
INSTITUTE OF MANAGEMENT AND
TECHNOLOGY
ENUGU
BY
OBIEKWE VICTOR OBINNA
REGISTRATION
NO AC/N2003/149
IN PARTIAL
FULFILLMENT OF THE REQUIREMENT FOR NATIONAL DIPLOMA IN ACCOUNTANCY
APPROVAL PAGE
This is to
certify that this term paper undertaken by Obiekwe Victor Obinna has been
approved. In the department of accountancy, school of financial studies, Institute of Management
and Technology (IMT), Enugu.
……………………… ……………………..
MR. J.C EZE Mr.
W.U. ANI
Project
Supervisor Head
of Department
………………………..
MR. OKORIE
ONOVO
Director School of
Financial Studies
DEDICATION
I am
dedicating this piece of writing to God almighty for giving me the strength to
carry on an also to my humble and able supervisor Mr. J.C Eze for his wonderful
support and encouragement. Moreso, to my department for their support.
Obiekwe
Victor. C.
Accountancy
Dept.
AC/N2003/149
ACKNOWLEDGMENT
I give
thanks to God almighty for strength and ennoblement he gives me. My special
thanks also goes to all the IMT library staff for their attendant and support
for giving me the needed materials.
Also, to my
parents who supported me financially and otherwise to ensure that this work is
fully completed. I must not forget my friends who aided me in one way or the
other to see that this work is in accordance most especially miss celestina
Ibe.
In a
special way I remain indebted to my project supervisor in the person of Mr.
J.C. Eze for his moral and academic encouragement, my able HOD, Mr W.U Ani and
the Director of school of financial
studies Mr. Okorie Onovo for their motivation.
With this,
I say thank you all and God bless.
ABSTRACT
This
project/term paper is designed to critically analyse the fraud on bank failure
and its role in Nigeria
financial Institutions with reference to the banking system.
Fraud in
both private and public sector of Nigeria economy is an age long
phenomenon that has for a long time
being threatening the growth and development of the Nigeria Nation State. It has
defiled the very professional expertise know-how due to its continuous
increase.
The effect
of fraud on the Nigeria
financial institutions mainly regarded as the life-wire of the nations economy
is to say the least devastating. Found outs across the length and breath or the
Nigerian financial institutions and has resulted in resulting many well
established firms to mere existing level, while so many others have been
completely liquidated. It is this ugly development in the “Power house†of the
financial sector of our economy that altercated my interest hence my choice of
the topic: Fraud and its role on bank failure; with particular reference to the
banking system.
This work
will dig deep into the
4.
Types of fraud.
5.
Caused of fraud
6.
Extent of involvement of insiders and outsiders in the
preparation of fraud.
In this project/ term paper chapter explain the term
fraud, it tries to explain the fact that fraud is and to continues to trouble
the financial sector of the economy unless great efforts are put together to
fight it. Chapter one starting with the introduction which is the scope of the
study. Chapter two is the literature review which embraces the subheading;
Types of fraud, foreign exchanges malpractices, tilex fraud, fraud against the
company, Advance free fraud (419),
Bank fraud, and the effect of fraud on
banks. Chapter three is the solution to
the menace of fraud. Further, the summary of the whole finding recommendation
by research and possible conclusion on the topic.
The
bibliography is also there.
TABLE OF
CONTENTS
Title page i
Approval page ii
Dedication iii
Acknowledgement iv
Abstract v
Table of content vi
CHAPTER ONE
1.0 Introduction 10
CHAPTER TWO
2.8
Types of fraud 15
2.9
Foreign exchanges malpractices 16
2.10 Telex
fraud 16
2.11 Fraud
against the company 20
2.12 Advanced
free fraud (149) 21
2.13 Bank
fraud 22
2.14 The
effect of fraud on banks. 23
CHAPTER THREE
3.1 Summary 28
3.2 Recommendation 29
3.3 Conclusion 31
3.4 Bibliography 33
CHAPTER ONE
1.0 INTRODUCTION
The period
between 1947 and 1952 witnessed a rapid growth of indigenous banks in Nigeria. The
increase in the number of indigenous banks was correspondingly followed by a high rate of collages of such
banks. By 1954 about 21 out of 25 indigenous
bank operating then in Nigeria
had folded. The experience of banks failures was a sad affair for both
officials, depositors and regulator.
However,
since the establishment of CBN IN 1959 the government had ensured through
direct support mechanism that the banking public was no longer exposed to the
hazards of bank failures. The government active involvement in banking and
other economic scenes, were both for socio-economic and political
consideration. The issue of efficiency in both the allocation and utilization
of resources in these sectors where government actively participate, was
therefore, relegated behind other considerations that were mainly socio political.
However,
charge in the country’s fortunes coupled
with increased competitive demand for resources in these sectors called for a
review of government participation in the economic scene, in particular the
liability and efficiency of its investments hence the deregulation of the
entire economy, as well as the banking
industry.
The deregulation of banking industry
marked a turning point in the causes of bank failures. The proliferation of
banks, relative growth of the industry, provision of improved services offered
and higher wages to bank workers, among other fulled the issue of fraud in financial institutions.
Fraud is arguably the fastest growing
phenomenon in Nigeria,
millions of Naira are undoubtedly lost each year to fraud in Nigeria and
other countries of the world. This raging distress sydrome, which is not
uncurious now in finance houses and banks has its roots in several fraudulent
practices.
The international Auditing Guidelines
(IAG) define fraud as a particular type of irregularity. This refers to the
involving the use of deceit’s to obtain an illegal unjust advantages and may involves the following:-
1.
Manipulation, falsification or alteration of records
or document.
2.
Misappropriation of asset.
3.
Suppressing or omitting transactions from records or
documents.
4.
Recording transaction without substance and
misapplication of accounting policies if this is intentional and deceitful.
Anyanwu
1993 defined fraud generally as an act or course of deception deliberately
practiced to gain inlawful or unfair advantage, such reception directed to the
detriment of another. According to him, it therefore suggests unfair dealings
and could be against the bank by its customers or by third parties against the
customers by the bank officers, or against the bank by its officers etc.
In this sense, it could take then form
of falsification of entires in the
accounts of the customers with a view to take benefit of the excess proceeds or
the shortfalls. It could be through forgery of signature of account holders and
unlawful withdrawal of money from their accounts or involving cash thrift by
bank officials (e.g cashier, cash
officers etc) as well as customers.
Banking industry in the country
recorded higher incidence of fraud and forgery in their operation years back.
The Nigeria Deposit insurance
corporation (NDIC) Annual report 1994 has it that banks with fraud and forgery
cases climbed from 33 in the first quarter of 1994 to 45 in the last quarter.
These figures are frightful development on the 28 cases recorded in the last
quarter of 1903 and 29 cases in the last
quarter of 1993 and 229 in the last quarter of the same year.
The amount of money involved also rose
sharply form 426.3 million in the last quarter of 1994 to 1.4 billion.
Statistic based on the returns of
commercial banks on fraud and forgeries showed that the aggregated amount N1.3 billion in 1993 compared with N 2.6 billion in 1994 while the actual
expected loss in 1993 was N2.41 million
and N883.6 million in 1994 while fraud and forgery cases went up in commercial
banks, the situation with merchant bank was better 337 bank workers lost their
jobs the previous year due to fraud related crimes NDIC 1991 decoded that about
22, 203 staff lost their jobs in the National Bank due to frauds in subsequent
years.
The role of the banking industry
cannot be over emphasized in the growth and development of a country. In the
nation economy, it is an important bridge between deficit and surplus. The
objective of this paper is to study the banking system, the causes of bank
failure with emphasize on fraud, types of bank fraud, their roles presentation
and control. This paper is divided into five sections. It starts with the
introduction section which treats the general introduction of subject matter,
comprising the treatment of the meaning of fraud and cases of banking failure.
It also treats the objectives of the
entire study, scope and structures of the study as well as the structure of the
study. The second section; literature review. This section is divided into two
parts the first parts deals with the types of fraud and the various causes of
bank failure in the past as well as the present time.
The third section is the data analysis
and presentation. This section attempts designing the framework in the form of
a model to text the effect of fraud in bank failures. Focus will be entered and
bank performance and the inception of failure in the banking sector on the
basis of this data will be collected for chapter. Under this, the role of fraud
or bank failure will be evaluated and its multiplier effect on the economy.
The conclusion ended with a summary,
recommendation and of course the conclusion proper.
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