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EFFECTIVE INTERNAL CONTROL AS THE BASIS FOR PREVENTION AND DEDUCTION OF FRAUD IN BANK IN NIGERIA

ABSTRACT

Fraud and forgery are gradually becoming daily occurrence in our banking industry., much as it around be admitted that they have always been part of our financial system. It is obvious that they are in lost assumes perplexity proportion millions of naira are lost through the machination of either account holder or bank official   or account holder in collaboration with bank official. The offences range from falsification of entries forgery of signature of account holder or theft by bank cashier and customer. A most serious dimension has been adding to this practice by the so called taken fraud where by false message in respect of millions of naira are transmuted to form fictions account oversea, cashed on by oversea collaborator and they by daring Nigeria of foreign exchange and creating an appalling image of our internal control system. Therefore the objectives of this work is to identify the result of internal control in a basis for prevention and detection of fraud secondary the project study various from of internal control as well as it effectiveness on Afribank plc and Nigerian banking industry as this has been use toward checking and preventing fraud in our banking industry. The researcher also delves into deterring the legal loopholes in the Nigeria legal system that facilitate fraud. In studying then above problem primary data and secondary data were used. The primary source includes the use of questionnaire and oral interview while the secondary source includes the use of questionnaire and oral interview while secondary source includes test books article and other white up in various journals. The analysis of the secondary and primary data was based on statistical distribute ion table of Francis, percentage, bar chart and histogram. Hypothesis were established and tested in conformity with accept reject criterion. From the funding the finding of the analysis recondition and conclusion were made.

CHAPTER ONE

INTRODUCTION

1.1  BACKGROUND OF THE STUDY

Even since the inception of the first three successful indigenous banks in Nigeria, the National Bank of Nigeria established on February 11th 1933, the Agbommagbe Bank (now wema Bank Nig Plc) in 1945, The African continental Bank Plc in 1947 and others subsequently established in the country  during the period from  1952 when the first banking ordinance was enacted to regulate  and control the activities of commercial banks in the country till present day, brand have remarried a permanent feature in our banking industry.During the free banking era (between 1892 and 1952) there was no form of banking act or ordinance to regulate the stabilities shipment and operation of commercial bank.

There are as it is presently supervised. Many bank were registered. Some of did not open their doors for  business ever for a day while some simply collected customers deposits and varnished. This had resulted to the deprivation of our economy an as a whole the much needs fund for development and  depriving individual the hard earned funds, this also brought about loss of faith trust on the commercial banks by Nigeria and the subsequent under developed banking habit in the country. However, with the introduction of the first banking ordinance in 1952 and the central bank of Nigeria (CBN) ordinance in 1958 to regulate and control the activities of commercial banking in the country fraud in commercial banks have rather increased in size, and method used by fraudster acquires greater  sophistication day by day.

Presently with the introduction or modern banking procedures i.e improved communication system, automatic electronic gadgets and computers networks into our banking system coupled with various precautionary measures taken by banks. To prevent fraud in the banks fraud have rather taken unclear dimension and the six and form involved increase in a geometric progression. Other Amptiam in his articles obstacle o growth of baking industry saw that it was discovered during investigation that bank now take extra precaution before clearing a cheque because of rampant incident of fraud and forgeries the form of fraud has placed banks loss on the average of # 1m per each working day of the year in Nigeria Asimi kola in his own article “The cash economy phenomenon” also observed that fraud has become sophisticated as to make forget cheque book good the owner to confirm it as his own signature recently in the bid curb the grand fraud, CBN issued a directive to bank to increase it capital base to # 25 billion. Previously section a of the decree 1990 state that, the minimum paid up capital for bank is #50 million for commercial bank. This directive come up after several bank has been discovered to have defrauded it is customers mostly foreign investors. In this required .

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