Internal Control Of Nigerian Banking Sector

Internal fraud consists in “a type of fraud that is committed by an individual against an organization. [Furthermore], a perpetrator of fraud engages in activities that are designed to defraud, misappropriate property, or circumvent the regulations, law, or policies of a company”[8]. Not only has the incidence of internal fraud increased in frequency because of the availability of sensitive information such as client details or confidential business documents; moreover, this type of fraud is found in various types of organizations, ranging from corporations, public service institutions and financial institutions. Our analysis will concentrate on the most common and prolific types of internal fraud, namely identity theft, insider trading, loan fraud and wire fraud. Interestingly, PriceWaterhouseCooper conducted a survey that revealed that the “demographics of a typical fraudster are as follows: males (85% of cases), 31-50 years (72% of cases), reached high-school level (50%), Bachelor’s or post graduate degree (50%) and middle or senior management (52%)”[9].

It is important to first gain an understanding of the various types of fraud, in order to aid understanding in regards to the prevention of fraudulent activity. This paper begins with a review of the definition of financial fraud, and identification of the different fraud types. Further, included is an examination of what motivates individuals to commit fraud, including an identification of some of the method in which people commit fraud. A discussion of the importance of the fraud triangle, and how rationalization contributes to fraud is a key area of focus. Finally, there is an examination of some controls that prevent and detect fraudulent behavior, including the value and importance of understanding the nature of fraud for

According to the more than 5300 Wells Fargo’s former bank staff, direct cause of fraud is the bank directly linked employee compensation and sales performance. To face the difficulty of matching the sales aim, they had no other choices but to take a risk, and ultimately will inevitably damage to the interests of customers as the

There are various forms of cash fraud. One of the common schemes is cash larceny. Cash larceny refers to employees intentionally taking away cash from their employer without the employer’s knowledge and consent (Wells, 2014). Employees who have direct access to cash are more likely to commit cash larceny (Wells, 2014). Cash larceny is more likely to occur if there are weak internal controls in an organization. Weak internal controls make it difficult to prevent and detect an occurrence of fraud. This paper seeks to evaluate a recent case of cash larceny by a former employee at Glen Aubrey Fire Company.

Employee fraud often takes place when pressure (motivation), opportunity and rationalism are present. In fact, employee perception where failure to meet sales target might leave them unemployed and unable to settle bills for their family (Kelly, 2016). Furthermore, watching other co-worker committing fraud will most likely influence the employee to do the same because their mindset tends to persuade themselves that it is one of a way to meet their quota plus “everyone is doing it.”

The point of this article is to inform business owners of the dangers of embezzlement, and heists performed by employees inside the business. Some businesses find corruption within itself. The article provides statistics that state embezzlement is common within a business, and the owner must be careful when trusting other employees. The article is proficient, focusing on the importance of fraud prevention programs.

5.6.1 There are several factors that can contribute to fraudulent activity. Firstly, the presence of the motivation for an employee to commit fraudulent action, such as being under financial pressure, having unmanageable debt or an addiction. Secondly, an opportunity to carry out fraudulent activities, such as poor internal controls implementation or wrong segregation of duties, coupled with a lack of physical security measures like CCTV cameras, locked money tins and boxes. Low ethical and moral standards of managers can lead to employees following the same pattern. Also, a lack of effective communication within the organisation, so that employees do not feel appreciated, or that their work is not valued. Common types of fraud are: illegal

The author of this report is asked to present a report that covers a real corporate fraud and how to help prevent it through techniques and metrics. The author is asked to present five major answers. The first answer is to how to implement the investigation and thus help fetter out who is the culprit and how deep and wide the fraud goes. The second question asks the author to detail what types of surveillance and review will be undertaken including techniques that are covert and unknown to the people being watched up to and including the highest executives of the firm. Red flags that would arise suspicions are to be identified as well as key practices to be used interviews with people with potential knowledge or even involvement in such crimes. In conclusion, a fraud prevention plan will be articulated.

3. The current global recession is so severe that all these factors (motivation / pressure of external circumstances, the ability to commit fraud, and the ability to justify action) became more relevant than ever. A threat to the economic survival of the company or person, the line between acceptable and unacceptable behavior may seem to some people is much less clear. Now is becoming more common this type of fraud, as a distortion of the financial statements. A significant increase in crimes of this type can be explained by failures in the control system, which occur as a result of cost reductions. Impact and pressure associated with the need to achieve the targets against the background of an increasingly complex situation.

Occupational fraud or corruption can be defined as showing the divergent behavior in the workplace due to break in the psychological contract. Occupational frauds are of three types includes asset misappropriation, corruption and fraudulent statements. Holtfreter (2005) asserts that asset misappropriation and corruption are equally likely to be committed by males and females, whereas fraudulent statements are distinctly linked to male and also connected to employees holding higher positions in organisations. Insider manipulation and

Occupational fraud is broken down into three main categories with each of them carrying a different risk and associated prevalence. It is also imperative to understand the overall risks as well as which types are more common than others. These realizations are what is needed before it can be detected and prevented. It can help determine specific internal controls are needed to be in place within a company.

“Today’s fraudster is clever and operates in an environment ripe for criminal activity. Economic unrest is making it easier for employees to find ways to set fraud in motion – and a new breed of offenders is finding cunning ways to do so. After more than 60 years, the classic fraud triangle of three elements or events that motivate an employee to cross the line has morphed

Occupational fraud can be defined as “the use of one’s occupation for personal enrichment through the deliberate misuse or misapplication of the employing organization’s resources or assets” (ACFE, 2016). Asset misappropriation proved to be the most common form of occupational fraud with 83% of cases but it has the smallest median loss of $125,000 whereas the Financial statement fraud occurs in less than 10% of cases but its median loss of $975,000 (ACFE, 2016). This figure only shows the amount of losses caused by the known fraud cases, as it is impossible to know the undetected and unreported cases (ACFE, 2016). However, it is essential to determine the cost of fraud as it helps to understand the scope and impact of the problem and helps the organizations to quantify the fraud risk and assist in deciding the allocation of antifraud resources and programs. The financial losses are also related to the length of time the fraud remain undetected. The 2016 study by ACFE finds that the median duration of a fraud goes undetected was 18 months and in some extreme cases more than five years (ACFE, 2016).

The history of First Bank of Nigeria Plc dated back to 1894 when it was founded and incorporated as a limited liability company on 31st March 1894 under the corporate name of the bank of British West Africa (BBWA). At that time, it operation was in Lagos but had its head office in Liverpool. The bank worked closely with the colonial government to the extent of performing the traditional functions of a Central Bank in the West Africa sub-region.

Data captured for this study, were analyzed through descriptive and inferential statistical methods. The descriptive analysis involves the use of percentage, tabulation presentation. While the inferential statistical method involved the used of the chi-square. The functions of fraud prevention, detection and control are interwoven, as the three works together to eliminate fraud and fraudulent tendencies. Therefore, internal control is highly significant in fraud detection and preventions in banking sector.