CHAPTER ONE

INTRODUCTION

1.1 BACKGROUND OF THE STUDY

The level of fraud in the present-day Nigeria has assumed an epidemic dimension. It has eaten deep into every aspect of our life to the extent that 3-years-old child talks about yahoo mail or 419, newly discovered sobriquet for advanced free fraud that is hunting our banking industry. Nigerian with all of its natural and human resources together on the brink of destruction because of fraud. Much of what we do is “cutting leaves” instead of dealing with the root problem (David, 2014). Generally, fraud takes its roots from the human heart. It is an axiom that the heart is deceitful above all things and is desperately wicked. Fraud is the number one enemy of the business world, no company is immune to it and it is in all works of life, (Adeyemo, 2012). The fear now is rife that the increasing wave fraud in the financial institutions in recent years, if not arrested might pose certain threats to stability and survival of individual financial institution and the performance of the industry as a whole and no area of the economy is immured from fraudsters and even the banking system (Abubakar, 2004).

A system of fraud control is a critical component of bank management and a foundation for the safe and sound operation of banking organizations. A system of strong fraud control can help to ensure that the goals and objectives of a banking organization will be met, that the bank will achieve long-term profitability targets, and maintain reliable financial and managerial reporting (Markowski & Mannan, 2008). Such a system can also help to ensure that the bank will comply with laws and regulations as well as policies, plans, internal rules and procedures, and decrease the risk of unexpected losses or damage to the bank’s reputation.

The Basel Committee, along with banking supervisors throughout the world, has focused increasingly on the importance of sound fraud control. This heightened interest in fraud control is, in part, a result of significant losses incurred by several banking organizations. An analysis of the problems related to these losses indicates that they could probably have been avoided had the banks maintained effective fraud control systems. Such systems would have prevented or enabled earlier detection of the problems that led to the losses, thereby limiting damage to the banking organization.

A system of accounting and records keeping will not succeed in completely and accurately processing all transaction unless controls known as fraud control are built into the system (Opromolla & Maccarini, 2010). Fraud control are processes designed to provide reasonable assurance that management achieves effectiveness and efficiency of operations, reliability of financial reporting and compliance with applicable laws and regulations (Grant, Miller, & Alali, 2008).

A system of fraud control potentially prevents errors and fraud through monitoring and enhancing organizational and financial reporting processes as well as ensuring compliance with pertinent laws and regulations (Rae and Subramanian, 2008). Reasonable assurance is provided when cost effective actions are taken to restrict deviations, such as improper or illegal acts to a tolerable level. The internal audit reviews the effectiveness of the fraud control system to ascertain whether the system is functioning as intended (Fadzil, Haron & Jantan, 2005).

The system of fraud control should emphasize on, proper identification measurement and monitoring of risks, control activities for each level of operation, creation of reliable information systems that promptly reports anomalies and detailed reporting of all operations and monitoring of all the activities (Opromolla & Maccarini, 2010).

Fraud control are affected by a company’s board of directors, management and other personnel and are designed to ensure effectiveness and efficiency of operations, reliability of financial reporting and compliance with applicable laws and regulations (Spira & Page, 2003).

The management should assess and report the effectiveness of an institution’s fraud control to its stakeholders (Rezaee, 1995). Fraud control should have the following as its components, control environment, risk assessment, control activities, information and communication and monitoring activities (Basel Committee, 2011). These interrelated components of fraud control must be present and functioning properly in order to have an adequate and functioning fraud control system (Rezaee, 2005).

1.2   STATEMENT OF THE PROBLEM

The regularity of fraud and misappropriation of funds is creating fear, anxiety, and a loss of confidence in the minds of bank customers. Also, poor fraud control system may lead to increase in bank losses and more so, incompetency in the part of fraud control systems could as well lead to fraud in bank.

It could also be that some organizations finds it difficult to understand the implications and impact of the different fraud control on fraud detection and prevention, that might possibly assist in the organizations in cost minimization in terms of fraud control and at times challenges may arise in knowing which of the fraud control tools which must be given priority in the course of the design of fraud control into the accounting systems. Finally, several researches have been carried out on the fraud control and fraud prevention in the other sectors of the Nigerian economy but not even a single research has been carried out on the impact of fraud control measures on fraud prevention and detection in Nigerian banking sector.

1.3   AIMS AND OBJECTIVES OF STUDY

The main aim of the study is to determine the impact of fraud control measures on fraud prevention and detection in Nigerian banking sector. Other specific objectives of the study include;

1. to determine the effect of fraud control measures on the detection and prevention of fraud in access bank plc.
2. To evaluate the roles of forensic accounting and audit as a measure to curb fraud in access bank plc
3. to determine the factors affecting fraud control measures and its effect on the detection and prevention of fraud in access bank plc.
4. to determine the extent to which fraud control measures system affects the detection and prevention of fraud in access bank plc.
5. to proffer possible solutions to the problems.

1.4   RESEARCH QUESTIONS               

1. What is the effect of fraud control measures on the detection and prevention of fraud in access bank plc?
2. What are the roles of forensic accounting and audit as a measure to curb fraud in access bank plc?
3. What are the factors affecting fraud control measures and its effect on the detection and prevention of fraud in access bank plc?
4. What is the extent to which fraud control measures system affects the detection and prevention of fraud in access bank plc?
5. What are the possible solutions to the problems?

1.5   STATEMENT OF RESEARCH HYPOTHESIS

H0:   Fraud control measures system has no significant effect on the detection and the prevention of fraud in access bank plc.             

H1:    Fraud control measures system has a significant effect on the detection and the prevention of fraud in access bank plc.             

1.6   SIGNIFICANCE OF STUDY

        The study on the impact of fraud control measures on fraud prevention and detection in Nigerian banking sector will be of immense benefit to the entire Access bank plc in the sense that it will enable the management of the Access bank plc to maintain an enhanced controlled environment by helping management and employees to establish and maintain an environment throughout the bank that sets a positive and supportive altitude towards fraud control measures, reliable management, operating personnel for effecting fraud control measures and internal audit for evaluating whether appropriate controls have been implemented and whether the fraud control measures are functioning as intended. Finally, the study will contribute to the body of existing literature and knowledge to this field of study and basis for further research.

1.7   SCOPE OF STUDY

The study on the impact of fraud control measures on fraud prevention and detection in Nigerian banking sectors is limited to Access bank plc.

1.8   LIMITATION OF STUDY

Financial constraint- Insufficient fund tends to impede the efficiency of the researcher in sourcing for the relevant materials, literature or information and in the process of data collection (internet, questionnaire and interview).

Time constraint- The researcher will simultaneously engage in this study with other academic work. This consequently will cut down on the time devoted for the research work.

1.9   DEFINITION OF TERMS

Impact:   A marked effect or influence.

Fraud control: Fraud control, as defined by accounting and auditing, is a process for assuring of an organization's objectives in operational effectiveness and efficiency, reliable financial reporting, and compliance with laws, regulations and policies

Detection: Is the act of noticing or discovering something.

Prevention: The act of stopping something from happening or of stopping someone from doing something

Fraud: Wrongful or criminal deception intended to result in financial or personal gain.