THE EFFECT OF FRAUD AND PREVENTIVE MEASURES ON THE PERFORMANCE OF FINANCIAL INSTITUTIONS A CASE STUDY OF UBA, ABRAKA
This work was
designed to study the effect of fraud and its prevention on the performance of
financial institution using UBA, Abraka. The purpose of the study is to know
the causes of fraud and to know the extent in which fraud affects the
performance of these financial institutions. Questionnaires were administered
and retrieved; the simple percentage method was used to analyze the data
collected. The major findings in this work are that there is a significant
relationship between fraud and the performance of the financial institution.
The researcher recommends adequate internal control to reduce the rate of fraud
in the financial institutions.
of the Study
The study entails the rapid increase of the case of fraud in
the financial institutions and how it affects the performance of these
financial institutions. People are
scared of taking their money to banks because of fear of fraud. Although various procedures for prevention of
this ugly act exist, but it seems like the most powerful remedy is the
intervention of God.
Different authors and researchers emerge with their
definitions on the concept of financial fraud.
The followings are most of the definitions.
According to Oxford Advance Learners Dictionary, fraud is
defined as the crime of cheating in order to get money or goods illegally.
According to the Chartered Institute of Public Finance and
Accounting, United States, fraud is defined as those intentional distortions of
financial statement or other records which are carried out to conceal the
misappropriation of asset or otherwise.
Adeniyi (2001), fraud refers to intentional act by one or
more individuals among management, employees, or third parties which results in
a misrepresentation of financial
However, having closely studied these approaches from
definition of fraud, especially from the banking perspective, banking fraud can
be seen as a deliberate act by an individual or group inside or outside the
banking system to cheat, swindle or manipulate another to dispose the bank
depositors or shareholders of their funds.
Despite several definition of fraud, the authors believe
that the ones so far given are nearly appropriate, inspiring and of advantages
for the purpose in which the researcher intends to achieve.
The position of banking system in our economy cannot be
overemphasized. They act as the “conduct
pipe” through which all the financial transaction passes.
However, fraud has brought a setback to the functioning of
the roles of the banking system, people
are beginning to get worried and sooner than later may lose confidence in our
banking sector due to the mainly increasing incidence of fraud in our today
bank, properties should be on trust not fraud.
1.2 Statement of
The frequent causes of financial fraud in many financial
institutions in our country are now taken as the uttermost concern to financial
experts and macro economist. To some
banking experts, the issue of fraud is an internal vice on the Nigeria banking
system. They argue on this because a
good numbers of frauds occur among our banks without the knowledge of outsiders
and even where the public is aware, it does not affect the rate at which
customers withdraw or deposit money.
Fraud has paralyzed the roof and foundation of our banking
system. Hardly will you find a daily
newspaper which does not bring news about fraud check, the police record and
you will be surprised at the extent of bank fraud in the banking system which
has been affecting the performance of some banks. Fraud in many ways has affects the Return on
Capital Employed (ROCE) of some banks.
Therefore, the researcher is aiming at tracing fraud in the banking
system and how it affects the performance of such banks, with special reference
with UBA Plc, Asaba.
of the Study
The main purpose is to investigate the effects of fraud in
banking industry. Other specific
1. To find out
the causes of fraud in our financial institutions.
2. To know the
extent in which fraud affects the performance of financial institutions.
3. To recommend
preventive measures that may help in the reduction of financial fraud in our
The following research questions have guided this study.
1. To what extent
does the level of fraud affect the performance of financial?
2. To what extent
has financial fraud in the banking industry lead to the failure of banks?
3. To what
measure does the preventive measure taken by these banks helped to reduce
This project will be of help to readers and other
researchers who wish to make reference on this study, while undertaking similar
It will be of help to financial institutions and other
organisation both in public and private sectors to use the findings of this
research to equip the audit department.
It will serve as an eye opener to investors and shareholders on what it
takes to invest in banks.
However, this work will be of immense help to financial
institutions in Nigeria in particular and to all that may have need for
assistance in detection of these opportunities in general.
1.6 Scope of
Study/Delimitation of the Study
This research work is to examine fraud and how it affects
the performance of financial institutions and how it can be prevented with a
particular reference to UBA Plc. In
other to attain the objectives of this research, the scope of the study was
defined to embody all relevant aspects of fraud in banking industry.
The scope of the study also focused on areas relating to the
staff strength, and size of depositors, size of loans and allowances, years of
banking experience of fraudsters, the means of fraud prevention and detection,
and the punishment to be imposed on fraudsters.
of the Study
In a study of this nature, one would like to accumulate data
from many areas, but owing to the length of time allowed for this research,
such a wide range sample study was almost externally difficult. There are lots of factors that constituted
limiting factors of this project work, just to mention few which are:
Constraints: As a student, there was no enough capital to spend for transport
and fact findings, also borrowing of more relevant literature will be of help
in writing this project.
2. Attitude: The
non-challant attitude of some of the staff members regarding giving useful
information hinders the progress of the research due to fear of being dismissed
for giving out official secrets.
Information: Some information were being
coded by the organisation which was not released to the researcher.
Information: There are no comprehensive
write up or books on compulsory acquisition and compensations. There are few books and journals in search
for this topic and hence review of literature was difficult.
Factor: The short limited time given for
the compilation of this project deprived of more technical touches.
However, effort has been made to ensure that this situation
does not hinder the completing and quality of this research work.
Audit: The independent examination and expression, opinion
on the financial statement of an enterprise by an appointed auditor, in
pursuance of that appointment and in compliance with any relevant statutory
Error: Unintentional mistake in financial statement whether
of mathematical or clerical nature or whether due to over sight,
misinterpretation of the relevant facts.
Fraud: This is the
intentional distortion of the financial advantage such as the misappropriation
of assets, avoidance or evasion of tax and omission of disclosures.
Fraud Auditing: The
creation of an environment that encourages the detection and prevention of
fraud in government, public, commercial and even private establishments.
Internal Audit: This
is a management tool with which is used to appraise the activities of the
management by themselves through appointed staff of the organisation.
Internal Control System:
This is the management control which functions by measuring and
evaluating the effectiveness of other control in all areas of the organisation.
Misappropriation of Assets: This is an irregularity
involving acquisition or application of the resources of an enterprise for
one’s personal benefit without disclosure to the enterprises.