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INTERNAL CONTROL AS AN EFFECTIVE TOOL FOR CHECKING FRAUD IN BANKING INDUSTRY

ABSTRACT

The focus of this research work is on the Internal Control as an effective tool for checking of fraud in the banking industry. The increased occurrence of fraud in the banking industry in Nigeria brings to question the effectiveness of the internal control for checking of fraud in the banking industry in Nigeria. This study therefore, reviewed the degree of compliance of bank staff with internal control measures, examined relevant details or loopholes (if any) in the system and also examined the appropriateness of the presently adopted measure in preventing fraud. A survey of Wema Bank Nigeria Limited in Enugu were conducted to facilitate the study. The questionnaire returned were subjected to simple statistical treatment using the percentage formulae. Empirical generalization was made of all the other commercial banks based on the result obtained from the Wema Bank Nigeria visited. Findings from the study show that the banking industry in Nigeria adopts various measures to detect and prevent fraud.These measures include: proper control over the custody of the banks result by at least two bank officials so that a transaction is not started and completed by one person, effective periodic check by inspectorate department; periodic rotation of bank staff; regular classification of formant account; limit to amount of loans and overdraft granted and proper authorization of such; effective periodic check by inspectorate department. We also examine the possible problems faced by the banks in implementing fully these problems faced by the banks in implementing fully these control measures.The result of dishonestly of some bank staff; shortage of the time due to large volume of work and personal problems. Finally, we recommend that the staff strength of the banking industry should be increased especially professional in the field of banking and more sophisticated equipments should be adequately provided in the banks; provision of adequate supervision and assistance should be given to the bank staff in solving some of their personal problems.