The Appraisal Of Fraud Control Techniques In Nigeria Commercial Bank (a Case Study Of First Bank Nigeria Plc)

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        Appraisal of fraud control techniques in Nigeria commercial banks (a case study of first bank Nigeria plc) is principally the basis of this research work conducted to showcase the level of efficiency and inefficiency in Nigeria commercial bank. In doing this work, the efficient and effective control techniques in Nigeria commercial bank (first bank) should not be over looked. This is because; management role is very significant to the well being of functional unit or area of any commercial bank in Nigeria. Sometimes commercial bank in Nigeria is drawn to negative idea or intention and non-accountable venture thereby loosing so much integrity required of them.



Title page-        -       -       -       -       -       -       -       -               i

Certification page-   -       -       -       -       -       -               ii

Dedication-      -       -       -       -       -       -       -               iii

Acknowledgement-  -       -       -       -       -       -               iv

Abstract-  -       -       -       -       -       -       -       -               vii

Table of content-      -       -       -       -       -       -               viii


1.1      Background of the study                                          1

1.2      Statement of the problems                                       7

1.3      Objective of the study                                              8

1.4      Research hypothesis                                                        8

1.5      Research  Question                                                  9

1.6      Significance of the study                                          10

1.7      Scope and limitation of the study                            11

1.8      Definition of terms                                                   13


2.1   Nature of frauds                                                       14

2.2   Classification of Fraud                                             18

2.2.1        Insider or Employer Frauds                                    20

2.2.2 Outsiders Frauds                                                    25

2.3   Causes of frauds in Nigeria Banks                           25

2.3.1        Institutional Factors                                                        25

2.3.2 The Environmental or social factors                               27

2.4   Management fraud                                                   28

2.5   Effects of Frauds on Nigeria Banks                          30

2.6   Prevention and control of bank frauds and forgeries       32


3.1      Research design                                                       37

3.2      Area of Study                                                           37

3.3      Population of the study                                            38

3.4      Sample and sample size                                          39

3.5      Instrument of data collection                                   40

3.6      Validation and Reliability of  instrument                 40

3.7      Sources of  Data                                                      40

3.8      Method of investigation                                           41





4.1   Presentation and analysis of result                          44

4.2   Test of hypothesis                                                    48


5.1  Findings                                                                  56

5.2   Conclusions                                                             58

5.3   Recommendations                                                   59

        Bibliography                                                            62

        Appendices                                                              65





1.1      Background Of The Study

        Among the Nigerian industrial sectors today, one can say that the banking industry is the most visible and arouses the most public interest. The importance of the banking sector in any economy stems from its role of financial intermediation, provision of an efficient payment system and facilitation of the implementation of monetary policies. In intermediation, banks mobilize savings from the surplus units of the economy and channel these funds to the deficit unit, particularly private business enterprises, for the purpose of expanding their productive capacity.

        Today, the very integrity and survivability of these laudable functions of Nigerian banks have been called into question in view of incessant frauds and accounting scandals.

        According to Oseni (2006:16), “the incessant frauds in the banking industry are getting to a level at which many stakeholders in the industry are losing their trust and confidence in the industry”.  Corroborating the views of Oseni, Idolo (2010:63), stressed that “the spate of fraud in Nigerian banking sector has lately become a source of embarrassment to the nation as apparent in the seeming attempts of the law enforcement agencies to successfully track down culprits”.

        Although the incidence of fraud is neither limited to the banking industry nor peculiar to Nigeria economy, however the high rate of fraud within the banking industry, calls for urgent attention with a view to finding solutions. Fraud in its effect reduces organizational assets and increases its liabilities. With regards to banking industry, it may engender crises of confidence among the banking public; impede the going concern status of the bank and ultimately lead to bank failure.        The Central Bank of Nigeria (CBN) reported that cases of attempted fraud and forgery in banks, as at half-year 2007 exceeded what was recorded in the whole of 2006. For instance, the CBN half-year report for 2007, disclosed that a total of 741 cases of attempted fraud and forgery, involving N5.4 billion (US $34.8 million), were reported as at June, 2007. Whereas in 2006, the entire cases of fraud reported were 1,193, involving the sum of N4.8 billion (US $30.97). The CBN also maintained that the dwindling situation is occasioned by weaknesses in the internal control system of the affected banks. The foregoing statistics clearly unfolds the extent to which fraud had eaten deep into the financial strength of Nigeria banks.

The bulk of fraud required by investing sector of most developed and developing business economies of the world is provided by the bank industry in the services of mobilizing fund from the saving that is simple to the investing sector provided by the banking industry accounted for the high status the banking industry is placed in the development of any economy. The rate of economic development of the nation has hence been very closely associated with the effectiveness and efficiency of the banking system of the nation.

        Commercial banks as case study of the research work provided services like acceptance of deposit, sake keeping of valuables, offering of pieces of advice like investment, create credit and other business published in the gazette by the governor of central bank designed to make commercial banking business of all the components of the banking system.   Incidence of fraud occurrence is also found in other spheres of life, in government and in commence and industries.

Fraud is a complex universal phenomenon, it is rampant in both developed and developing countries and varies across time and place in to magnitude, it effect on administration, performance development, political, economical, socio-cultural and attitudinal factors combine to contribute and circulate beyond the national boundaries. Fraud is a matter of individual choice and opportunity. The banking sector provides such opportunity in abundance as they deal with cash and near money instrument.

        In the history of Nigeria banking, a total of 185 banks were registered by the financial secretary to the colonial administration to carryout banking business. From 1892-1952 was known as the era of free for all banking. Between this point banking businesses, there were high expectation that trend will continue to prove as a matter of time, but because high expectation never observed. As in the first half of 1950s the industry collapsed.

        Many banks folded up and involve in frauds in commercial banks which rises to N1, 377 -15 million in 1993. Whereas the actual loss from N688million to N241.0 million.

        We are aware that fraud are across all sectors of the economy and that the size of enterprises determine the volume of fraud penetration. We are also unaware of manpower training, poor internal control system, inadequate incentive and unsuitable legal framework for dealing with offenders protracting frauds in addition to these lacks of commitment on the part of staff and employees, policies of some banks tend to make frauds and forgeries attractive.

        We consider the higher rate of fraud in bank as clearly unacceptable; some thing attractive ought to be done so urgently. We therefore, call the management of bank to adopt strategies that will block all loopholes that encourages frauds in their organization. In specific terms, we advice that banks should critically examine option for prevention and timely defection of fraud and forgeries as these are likely to scare the perpetrators. Adequate internal control such as redeployment of staff and adequate internal check without notice should be put in place. Staff should be kept abreast of sophisticated and other development through continuous training. Bank staff should be adequately remunerated and motivated to give the best while working with satisfaction.

        Poor remuneration in banking environment may constitute a menace to the system as temptations are likely to occur and the urge to succumb becomes irresistible. I believe that computerization can go a long way as a strategy for internal control in banks. I therefore urge all banks to embrace and install computers in their organizations.

        No effort should be spared in the fight against this crime in order to reduce it to the barest minimum.


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The Appraisal Of Fraud Control Techniques In Nigeria Commercial Bank