EFFECT OF FRAUD MANAGEMENT ON A SURVIVAL OF A COMPANY
(A CASE STUDY OF FIRST BANK NIGERIA PLC, UGHELLI BRANCH)
ABSTRACT
This topic is on “Effect of Fraud Management on a Survival of a Company” with special reference to First Bank Nigeria Plc. Ughelli branch.
Indeed, fraud which have been a feature of Nigeria society today has cause a lot of damages to business organization in general. The trend of bank fraud started on a small scale enterprise after the Nigeria Civil War and has since increased in geometric progression. The effect is so large that huge amount of financial los in both banks and their customers, the depletion of shareholders fund and bank capital base. Extreme embezzlement to banks funds cannot be quantified in terms of monetary. The main objectives of this project work is to look for practical ways of reducing the cases of fraud in our business most especially the banking sector. Under the research authority regard causes of fraud, types of fraud, modes of execution and recipes of the management of fraud in banks were discussed in details. The researcher presented useful recommendations which include that internal control measure should be put in place to checkmate all financial transaction concern staff and management of the organization. It also recommend on the important of accountability to the success of the business.
TABLE OF CONTENTS
CHAPTER ONE: INTRODUCTION
Background of the study
Statement of the problem
Research question
Objective of the study
Scope of the study
Significance of the study
Research Hypothesis
Limitation of the study
Definition of terms
CHAPTER TWO: LITERATURE REVIEW
2.1 Introduction
2.2 The nature of Financial Institution
2.3 Functions of Financial Institution
2.4 The Definition of Fraud
2.5 Types of fraud and ways of defrauding Banks
2.6 Cause of Bank fraud
2.7 Statutory law relating to fraud and financial malpractices in Banks
2.8 Effects of Fraud in Banks
2.9 Measures for controlling Fraud in Banks
2.10 Survival of Banks in Nigeria
CHAPTER THREE: RESEARCH DESIGN AND METHODOLOGY
3.1 Research Design 3.2 Population of the study
3.3 Sample Size
3.4 Sampling technique
3.5 Method of data collection
3.6 Area of the study
CHAPTER FOUR: DATA ANALYSIS AND PRESENTATION
4.1 Data Presentation and Analysis
4.2 Analysis of questionnaire
5.1 Summary of findings
5.2 Conclusion
5.3 Recommendations
References
Appendix
Questionnaire
CHAPTER ONE
INTRODUCTION
Background of The Study
The issue of fraud in company especially the banking industry in Nigeria and indeed, all over the world is receiving more attention now than even before because of it’s effects in eroding customers confidence and partly because of the frequently and the amount involve which have serious impact on the profitability of banks in question indeed, fraud which has been a feature of Nigeria social today is endemic to the business being part of the financial system which is the fulcrum on which any economic fraud”.
The trend of bank fraud started on a small scale immediately after the Nigeria civil war and has since increased in Geometric progression. This is as a result of the oil boom expansion in the 1970s which led to the massive expansion of economic activities and consequent increase in the number of banks complied with the indigenization policy of the federal government at a time.
It has to be noted that a fraudulent act without damage or damage without fraudulent act is not actionable. But fraud is actionable if it leads to the expenses of another.
The state of condition of ours should not be allowed to go on as this may cripple very seriously into the financial system of the country. This is, if not properly addressed, the need to properly check this pervasion therefore geared this research work. Therefore, the work is based on a survival of the company without First Bank of Nigeria Plc Ughelli branch as case study.
This type of fraud, modes of execution, causes a fraud and recipes are all going to be examined.
Statement of the Problem
Banks are industries that are mainly dealing with cash and other financial instrument; therefore the degree of the fraud will be much higher than any other industry, this has exposed banks to a persistence target for fraudsters.The effect of fraud on the survival in our banks cannot be over emphasized. The effect is so large that huge amount of financial loss of both banks and their customers, the deflation of shareholders fund and bank capital based sources of extreme embezzlement to bank cannot easily be qualified in terms of monetary.
The time, money energy and other measurable equity use to checkmate the fraudulent attitude would have been explained in improving customer’s services and also the staff of the bank, in fact all the shareholders. Very unfortunately, all these can lead to increases in running cost and major setback for the nation’s effect at promoting bank habit.
Frankly speaking, it is on read that had led to the closure of banks and financial pains in other part of the world and this may not be possible if the current trend is not checked.
The rate of occurrence has reached a dangerous height in which all shareholders find way if not eliminating it but minimizing it as a reasonable consideration. This project, by way of contribution is designed to examine the effect of fraud management on a survival of a company with First Bank Plc, Ughelli Branch as a case study.
Research Question
The work is guided by the following;How can the problem be controlled in our bank?
What is the magnitude of fraud in the banks?
How effective are fraud control measures in our banks?
Can we ever have sufficient information to predict the occurrence of fraud?
What are the causes of fraud in bank?
What are statutory laws relating to fraud and financial malpractice in bank?
From above questions of the problems of this work there need to provide a workable solution.
Objectives of the Study
The main objectives of lives research work is to look for practical ways of reducing the incidence of fraud in our companies especially the banking system using first of Nigeria Plc, Ughelli branch as a case study of the immediate objective of the following;
To review the existing literature in respect of frauds in the banking system.
To examine the internal control system with respect to the selected banks in Nigeria, and evaluate the appropriateness and effectiveness of the system as a tool for fraud control.
to ascertain degree of companies of the banks staff with the internal control measures.
To identify possible defects or loopholes (if any) in the system.
To offer useful recommendation based on the finding on how best to curb the incidence of fraud in the banking system.
To examine the relevance and appropriateness in preventing fraud.
To identify the means through which the recommendation can be effectively be implemented.
Scope of the Study
The topic has been chosen to highlight the effect of fraud management on a survival of the company. However, the study covers banking segment of the banking industry in Nigeria with reference to FIRST BANK (NIG) Plc Ughelli Branch as a case study.As at the end of the December, 1998, there were 64 commercial banks in Nigeria with 229 branches nationwide that are insured with the Nigeria deposit insurance cooperation. But because of the negative use of human ingenuity and endowment, most of the banks collapse.
Indeed, fraud has long been perpetrated in our bank identified and classified as follows;
Theft of cash suppression of lodgement
Opening and operating of fraudulent loans account
Clearing fraud
Falsification of account
Cashiering fraud
Forged cheque with forged signature
Cross firming of cheque and kite flying
Many measures have been introduced especially at the individual bank level to combat this menacing problem with much success. The most threatening aspect; however is that the control of identified types of fraud is destructive indication of the negative use of human ingenuity and endowment.
The need to provide effective solution that is dynamic to the justified way of this work. The type of fraud, method of perpetrating, fraud, cause of bank fraud nature of fraud, magnitude of fraud and recommendation ways of fraud prevention and minimization will be highlighted in this research work.
Significance of the Study
It is a general consensus that the financial system in any economy is the fulcrum around which the economy resolves without this preview banks strategically occupy on indispensable position in the economy. This is a result of their primary function of servicing as channel or intermediary between the surplus economic unit hence the efficient functioning of the economic.
In carrying out this study, the researcher intends to highlight the applying and benefit of cost effectively applying appropriate and correct fraud and prevention and detection measure. This will serve as a bench mark particularly to the distressed banks whose unfortunate fraud and other malpractices. Analysis will definitely be of importance to the policy makers in that it will help them in assessing the effectiveness and efficiency of the existing statutory loans and policy and highlight the areas that need further efforts.
The study also aims at treating how a well designed, carefully installed and a resolutely implemented internal control system will aid in checking the incidence of fraud internal control is strongly believed will be important not only to the regulatory and supervisory authorities and companies or bank management but the banking system for the country.
The study will at its end to be important to the general public who’s confident and trust have been vehemently shakes as result of the alarming magnitude of fraudulent activities failure and distress syndrome in our in our banking system. It will make them to be aware of unrelenting concerted efforts that have been made and being made by government and the regulatory authorities to bring an end to the cankerworm called frauds.
Furthermore, the study is designed for all those who may be interested in carrying out further study on the interest control system as it relates to fraud prevention in Nigeria companies.
Research Hypothesis
Research on fraud risk explains frauds as the interaction of three causal influences affecting a potential perpetration, incentive, opportunity and attitude. Incentive or motivation results from a perceived pressure on a person to commit fraud. For example, management may be given large incentive bonuses based on accounting income. Alternatively, an employee may have significant obligations that exceed his or her earning power. Opportunity results from conditions or situation that would allow a person to commit fraud. For example, lack of sufficient board oversight may allow to in appropriately manipulating reported earning to reach analysis forecasts. Alternatively, lack of appropriate monitoring or segregation of duties may allow an employee to embezzle funds. Attitude or character is what allows a person rationalize selfish gain at the expenses of the others will commit fraud when incentive and opportunity exist. Importantly each of these factors is necessary but not a sufficient condition for fraud effect assessment should consider the interaction of these factors.
Definitions Terms
It is act courses of deception deliberately practice to gain unlawful and unfair advantage. Such as deception is directed to be that detriment of another
Accounting system:Accounting system is a method and record established to identify, assemble, analyze, and classify record and report entity transaction and maintaining accountability for asset and liabilities.
Internal control:It is the forces that guide activities towards some predetermined goal. It is concerned with the guidance of the internal operations of the business to provide the most satisfactory projects at lowest cost.
Errors and Irregularities:Errors are unintentional actions, example, errors of judgment etc. while irregularities result in an immediate loss of assets is referred to as deflation.
In books they are mission of any functionary of banks which is contrary to the promotion of safe and sound banking practice or which is in flagrant disregard to the laws, rules and regulation or guidelines made for the promotion of safe and sound banking practices, and which in financial loss to the bank.
