FRAUD PREVENTION AND CONTROL IN THE BANKING SYSTEM (A CASE STUDY OF THREE SELECTED BANKS IN NIGERIA)

TABLE OF CONTENT
  Chapter one
1.1 Background of the study
        1.2 Statement of problem
    Objective of the study
    Research question
    Research hypothesis
    Significance of the study
    Scope of the study
    Limitation of the study
    Definition of terms
 Chapter two
    Literature review
        Origin of background
        Theories and models
        Classification of bank fruad
        Fraud prevention/solution
        Community participation in rural development
        Current literature
        Summary of the chapter
Chapter three
    Theoretical frame work and methodology
        Introduction
        Theoretical frame work
        Rationale for choice of variables
        The methodology
        Data selection and analysis
Chapter four
    Data presentationand analysis
        Data presentation and calculation
                                                  Chapter five
    Summary ,Conclusion ,Recommendation
        Summary
        Conclusion
        CHAPTER ONE
    BACKGROUND OF THE STUDY
Banking system in our economy is a very vital sector and their position in our economy can not be over emphasized.The banking system in Nigeria was fashioned along with that of Britain the banking system act as financial intermediate for funds between the deficit and surplus sector of the Nigeria economy.
 Nigeria banking sector is made up of the central bank of Nigeria (CBN) commercial banks, merchant bank, development bank and specialized banks. This banks deal on various financial instruments and development there are transferable and desirable in nature. Not withstanding, the recent incident of fraud and forgeries tend to pose a serious bottle neck to proper functioning of the banking system, thereby incensing the association risk and business system loss report early.
 The oxford dictionaries defined fraud as criminal deception deceptive tricks cheating swindling but Longman dictionaries’ prefers to defined fraud from the view point, fraud in fact and fraud in equality.
According to Okezie (1999) 9.476 frauds involves the use of deception to obtain an unjust or illegal financial advantages or also CBN banking supervision annual report 1998 defined fraud as involving the willful misinterpretation, the deliberate concealment of material fact or the purpose of inducing another person to do something. Poss. J.A (1990) P.99 also defined fraud as a legal term for a purposeful deception that result in financial loss to another.
However, an over view of event in the law few years not helping matters at all. In this part of the world, fraud and person with questionable character are applauded and honored with chieftaincy titles and can not fight this epidemic instead, more person grow for the act daily. Frauds generally, are motivated by greed. This is true because the rise in the activities of fraudsters tend to respond due to the desire of wealth and the intention to receive and obtain benefit at the detriment of another person
 A recent survey by financial institutions forms the major part and plays the major role (Ngwu, 2012). The size of an enterprise usually determines the size of fraud perpetrated in it, the banks are the most victimized as it has leads to many bank failures in Nigeria in particular and the entire globe in Nigeria.
Going by this backdrop, the problem now is how to effectively monitor activities of these fraud, which seen to be matching their skill with rapid development in the system. Fraud has been viewed as inherent in nature of banking operations still it can be prevented or reduced to the bearest minimum. However, the report of December 2002 prepare by the financial institution investigated (that in the fourth and also affect the economic growth in Nigeria) quarter, 36%m of the banks that rendered returns repeated, experienced one forgery and fraud or other of the total of 176 cases. And amount involved in the case was N 802.07 million
  On the forgoing, I wish to adopt chi-square technique and to analyse the report of data collected from the three selected bank visited for my study.
1.2 STATEMENT OF THE PROBLEM
 Many banks today have suffered a great financial loss in the end of numerous financial transaction and unsecure loan. Fraud has become sophisticated as to make a forged cheque look good for the owner to confirm it was his own signature, frequent occurrence of fraud ultimately distracts the attention of the management and leads to increased running cost. However, the major problem face in this study is that
                         Fraud brings about unwanted losses for bank and  equally put the anagement on a confused state of mind and also effects the economic growth   of Nigeria while spending hard earned control.
Any case of bank fraud clips of a bit of public truth in financial institution and as well, so down the development of banking habits. Moreover, it can easily be noticed that if nothing is done to control these ugly incidence, sooner than letter fraud could lead to total collapse of the economy as a whole and the wind up of bank if care if were not taken   
    OBJECTIVE OF THE STUDY
Having successfully indicated the numerous problems obtained on finance fraud in the Nigeria banking system, the main objectives in caring out this research work will now be stated.
    To study critically how fraud in banks could be prevented and controlled.
    To evaluate the easiest way ration of fraud and other fraud committed could be electronically captured.
    Ways to reduce the spread of fraud in our banking system, through effective monitoring control procedure and efficient monitoring electronic transaction until properly executed.
    RESEARCH QUESTION
Considering the importance of this study, it has become imperative for the researcher to postulate the following question.
    Is it true that fraud is inherent in banking operation?
    Does fraud have any impact on the bank?
    Why is it that it takes months for fraud to be dictated?
    RESEARCH HYPOTHESIS
 The research on fraud prevention and control in the banking system is a fact finding one therefore, the research hypothesis did not just emerge from the blue was draw from the nature of the problem at hand for emphasis purpose, it is described as a tentative statement about the variable stated below. Therefore the hypotheses are as follows
Ho1: financial fraud in banking system is difficult to be prevented and controlled in banking system.
Ho2: bank fraud has negative effect on the profitability of the banking system.
Ho2:Bank fraud hassignificantimpact on depositors confidence in banks
Ho1:Bank fraud has no significantimpact on depositors confidence in banks
     SIGNINFICANCE OF THE STUDY
 Although this research work is not exhaustive one because of the non availability of some important information and limited time all part of this work is to financial institution.
 Moreover, this study is prepared for these who may be interested or willing in carrying out further investigation on fraud with special reference to financial institutions. However the banks will benefit greatly from this research work in preventing and controlling of frauds in their banks and this they cab achieve by adopting and implanting the different ways suggested by this study in management control system.
1.7 SCOPE OF THE STUDY
Due to financial and time constraints usually associated with studies of this nature, the scope of this study is Access  bank plc, Spring bank plc and first bank plc; all are selected banks in Nigeria.
1.8 LIMITATION OF THE STUDY
Finance was one of the major constraints that limited the work intended to be undertaken by the researcher. The fact that there is inadequate fraud at my disposal accounted for the un-intensive fact finding in the course of my study.
Time constraints are also another factor that limited this research work. The purpose of this study is so small but above all the result of this work falls above the mediocrity.
Finally the unco-operative attitude of staff of the selected banks become problematic, as three was no access to source for information required for the study.
1.9 DEFINITION OF TERMS
Control: Control in the context implies taken to minimize occurrences such as fraud.
Document: A document according to 5.467 of the commercial code include, register, and paper paramount or other material whatsoever used for writing, printing , which is marked with and letter or any letter or any other signs capable of conveying definite meaning to persons conversant with them but does include trademarks on goods. A document is not only in writing papers and in voucher, cheques etc but include writing based on words stone or metal etc.
E-fraud:   these are financial fraud committed through the use of bank information technology facilities.
False Documentation: Documentation is said to be false if it contains alteration in any material part.
Fraud: This is a legal term for a purposeful deception that results in financial loss to another.
Fraudster: these are persons who professionalized in defiantly people of their earned income and legal acquired properties.
Forgery: This is falsification of document or instrument purport to be real when it is not.
Prevention: This refers to measures taken to avoid occurrence e.g something.