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, frauds 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.
of The Study
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
1.2 Statement of
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.
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.
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.
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
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.
of the Study
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
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
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
To identify the means through which the recommendation can
be effectively be implemented.
1.5 Scope of the
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
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.
fraud has long been perpetrated in our bank identified and classified as
Theft of cash suppression of lodgement
Opening and operating of fraudulent loans account
Falsification of account
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
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.
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.
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.
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.
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.
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.
of the Study
In as much
as the study of a research work, it is met with a lot of difficult as effort
that were with geared towards obtaining relevant statistical data on fraudulent
activities in the bank. Though First Bank (NIG) Plc is not ever being victim of
frauds, but they declined for their very vital. Some of the reasons they
advised for their refusal include, such data on fraud are official secret of
the bank and should not made public.
And attempt to
discuss this official data will result in the loss of public confidence in the
As a matter
of strategy, no bank likes its competitors to know how much it loses annually
to fraudulent activities because it is parameter with the internal control
system efficiency is measured.
In spite of
the above listed difficulties, some data were collected and they are to be
Fraud: 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.
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.
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.
Malpractices: 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.