THE ROLE AND STRATEGIES OF AN AUDITOR IN FRAUD PREVENTION AND DETECTION AND DETECTION IN BANKING INDUSTRIES IN NIGERIA (A Case Study Of First Bank Of Nigeria Plc, Nigeria)

TABLE OF CONTENTS

Title Page

Dedication

Acknowledgement

Table of Content

Abstract

CHAPTER ONE:

• Background of the study
• Statement of the Study
• Objective of the Study
• Scope of the Study
• Significant of the Study
• Limitation of the Study
• Research Methodology
• Plan of the Study

CHAPTER TWO:

• Literature Review
• Nature and Types of Fraud
• Causes of Frauds
• Effect of Fraud
• Frauds Control policy and fraud control framework
• Frauds Prevention Strategies
• The Strategic Method of Fraud Detection

CHAPTER THREE:

• Research Methodology
  • Introduction
  • Population under Study
  • Sample and Sampling
  • Sources of Data
  • Methods of Data Collection
  • Methods of Data Analysis
  • Research Limitation

CHAPTER FOUR

• Introduction
• Presentation and Analysis of Data
• Data Analysis based on past Journal of Fraud Case in Bank
• Presentation of Responses on the Oral Interview Conduct

CHAPTER FIVE

• Summary
• Conclusion
• Recommendation
• Bibliography

 

 

 

CHAPTER ONE

• INTRODUCTION

Fraud detection is becoming increasingly important to managers of organizations, to internal and external auditors, and to regulators. Recent events, such as revelations of fraud-related problems at HEALTHSOUTH, Enron, and WorldCom, and the Sarbanes-Oxley Act stress the importance of early detection of fraud.  Financial statement frauds have weakened investor confidence in corporate financial statements, led to a decrease in market capitalization, and have contributed to four of the 10 largest bankruptcies in history.

Case of Fraud, Several years ago, a senior vice president of a bank embezzled nearly $14 million over a 16-year period[1].  When the fraud was discovered through a customer complaint, the bank sued its external auditors for negligence in not detecting the fraud.  The fraud had been committed by manipulating, looting and abusing customer accounts and maintaining several slush accounts with sufficient funds to handle problems when customers complained.

To determine whose responsibility it was to detect the fraud, a strategic approach was used.  For this fraud, the various kinds of symptoms[2] that could have been present were identified and catalogued.  Once the possible symptoms were known, 16 years of bank records (from microfiche and corporate databases) were combined into a searchable database.  Using the searchable database, queries for possible symptoms previously identified were made.

• BACKGROUNG OF THE STUDY

In the primitive days, man started his transaction with his follow man with the methods of “Trade by Barter” the need for recording, keeping or auditing did not rise, however, the advert of money and the consequent increase in the number of transaction made keeping of record and accounts and their audit avoidable.

In those days keepers need “to account to the selected men integrity who listen to oral evidence, who heard them and testifies to their correctness or otherwise, later on the complexity of the modern business transaction necessitates the voluminous account keeping and intimately the scientists examination of account now called modern auditing.

The origin of auditing is as a result of the separation of ownership from control. It is instituted to protect the interest of the owners by ensuring the financial statement is justified. Because of the separation of ownership from control, it becomes necessary for those managers entrusted with owners financial resource report (Stewardship Reports) to their employer(s). The presented might contain errors, refusal to disclose fraud and irregularities.

The audit of the book and records of a bank is similar to the audit of any other commercial organization in the sense that the audit has to report to the account present at true and fair view of the state of the affairs of the banks and of the profit and loss covered by the account. However, because of the peculiarities of a banks operation, which are governed by the bank and financial institutions Decree 25 of 1991 as amended, the audit procedure for a bank defers from that of a typical commercial organization.

• STATEMENT OF THE PROBLEM

Fraud is a phenomenon, which cut across all sphere of business society. Recently; the incidence of fraud has got attention of all sundry and has been the focus of government attentions.

In this project, we attempt to say the role and strategies of an auditor in fraud prevention and detection. Also to analyze bank fraud causes, effect on the growth of the banking system in particular and the overall socio-economic development and likely solution.

• OBJECTIVE OF THE STUDY

The main aim of this study is to find a practical means of minimizing the incidences of fraud in Nigeria banks. While specific objectives are to :

1. Identify various means employed in defrauding banks.
2. Determine the effects of fraud on the banking business.
3. Determine the magnitude and frequency of fraud in banks.
4. Suggest measures of reducing the incidence of bank fraud.
5. To acquire the readers with menace of fraud in the banking industry with a view to assist banks and customers in minimizing and trading the risks in their day to day transaction.
6. To guide and educate the general public as to the role and impact of auditor in fraud prevention in commercial banks of Nigeria and strategies by the auditors to reduce the effect of fraud to the minimum.
7. To have in-depth knowledge of manifestation and causes of bank frauds.
8. To identify and outline various types and nature of frauds.

 

 

1.4     SCOPE OF THE STUDY

In the course of this study, an attempt would be made to look critically at the role of an auditor in fraud prevention in banking. First Bank Nigeria Plc as a Case Study.

The study will also attempt to look at the role customers and staff in preventing fraud in Nigeria Banks.

The adverse effects of frauds to banks customers and public will also be known.

The measure been taking at First Bank Plc will be highlighted which may be of benefit to other Banks and the general public.

1.5     SIGNIFICANCE OF THE STUDY

The study is particularly significant taken into consideration the current development in the banking industry. The study will invariably have an impact on the company under study. Individuals or customers and whole economy at large.

The study will be beneficial to the company under study i.e. First Bank Nigeria Plc, in that if the problem of fraud could be prevented by an auditor it will afford the opportunity of having a very sound financial base there by protecting them from running into untimely liquidation

It will also encourage the general public to embark on saving and also give the customer rest assurance that their money is in good order and condition.

Also, to the economy at large, if the commercial bank could maintain liquidation at all time, they will have enough cash to lend to investor, importers and exporters developments of the economy.

• LIMITATION OF THE STUDY

In the various stages involved in putting together this research work some problems arose which limited the area of the study. These were of course imposed by costs and time.

As a result of this topic being universal the research work will be limited to First Bank Nigeria Plc. Because the research work is sensitive, the researcher will not be able to get adequate statistics and figures, because those to be questioned may regard the question as strictly confidential to their organization.

• RESEARCH METHODOLOGY

This deals with the method and procedure of data collection.

In order to obtain the needed data for this research work both primary and secondary data were conducted.

This secondary data: These are data obtained from various journals, financial reports, periodical bulletins and information relevant to the research study.

The primary data: These are data collected through oral interview, direct observation and responses from the interview conducted.

A well structure oral interviews was conducted for the purpose of the study, which was an instrument used to know the opinion of the participant of the interview was conducted and selected element of the population using the sample random sampling techniques which endures that equal opportunity was given to all element within the population selected.

1.8     PLAN OF THE STUDY

For the case of the study and proper understanding. The write up is planned and organized in five chapters.

Chapter One: These contain the background of the study, statements of the problem, objective of the study, scope of the study, and significance of the study, limitation of the study.

Chapter two: It contains the literature review, nature and types of fraud, causes of fraud, frauds control and prevention.

Chapter three: It contain research methodology, introduction, population under study, sample and sampling, sources of data, methods of data collection, methods of data analysis, Research limitation.

Chapter four: It contain Introduction, presentation and analysis of data, Data analysis based on past journal of fraud case in bank, presentation of responses on the oral interview conduct.

Chapter five: This contains the Summary, Conclusions, Recommendations and Bibliography

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