Fraud Cases And Prevention Measure In Nigeria Financial Institutions (A Case Study Of UBA Plc)

Project and Seminar material for Accountancy

Project and Seminar material for Accountancy


This work was designed to study fraud prevention in Nigerian financial institutions, with particular reference to UBA Plc. Bank deal essentially in cash instrument and other document which are generally negotiable and easily transferable in nature. Hence, it is very appropriate to say that the exposure of banks to both internal and external fraud is very great. This practice is very common to area involving cash, cheques and fraud transfer operation.

Therefore, that was the reason the researcher carried out this study in order to find out the causes of fraud and how to prevent them in the Nigerian financial institutions. From the various articles and journals, and researcher read on fraud, causes, method detection and fraud prevention in banking industries and financial institutions.

It has roused my deep interest in this project topics. It is therefore my pleasure to write on this topic “fraud prevention in Nigerian financial institution” using UBA as a case study. fraud cannot be eradicated, it is true that all theories do not think alike. So every fraud has its own unique approach, hence there may be no unique approach to forestall fraud.

The project work contains five chapters in order to obtain as much relevant information on the this study as possibly. The researcher used primary and secondary sources of data collection. The research was carried out by direct interview with the management and staff of UBA Plc is referred to as primary data. The secondary data was obtained from textbooks, magazines, journals commercial banks, annual report/ newspaper, dictionaries etc. the instrument used in data collection was mainly questionnaire.

Table Of Contents

Preliminary Page(s)

  • Title page
  • Certification page
  • Dedication
  • Acknowledgement
  • Abstract
  • Table of content

Chapter One

1.0 Introduction

  • 1.1 Background of the study
  • 1.2 Statement of the problem
  • 1.3 Objectives of the study
  • 1.4 Research questions
  • 1.5 Significant of the study
  • 1.6 Scope of the study
  • 1.7 Limitation of the study
  • 1.8 Definition of terms

Chapter Two

2.0 Literature Review

  • 2.1 Introduction
  • 2.2 What is fraud
  • 2.3 Types of fraud
  • 2.4 Causes of fraud
  • 2.5 The legal framework
  • 2.6 What is over the counter fraud
  • 2.7 Prevention of fraud
  • 2.8 Empirical review of related literature
  • 2.9 Who commits fraud
  • 2.10 Current fraud practices in Nigeria
  • 2.11 Cheque fraud
  • 2.12 Banker code of conduct

Chapter Three

3.0 Research Methodology

  • 3.1 Introduction
  • 3.2 Research Design
  • 3.3 Sources / Method of Data collection
  • 3.4 Population and sample size
  • 3.5 Sample technique
  • 3.6 Validity and Reliability of Measuring Instruments
  • 3.7 Method of data analysis

Chapter Four

4.0 Presentation and Analysis of Data

  • 4.1 Introduction
  • 4.2 Presentation of Data
  • 4.3 Analysis of data
  • 4.4 Interpretation of Results

Chapter Five

5.0 Summary, Conclusion and Recommendations

  • 5.1 Introduction
  • 5.2 Summary of findings
  • 5.3 Conclusion
  • 5.4 Recommendation
  • Bibliography
  • Appendix
  • Questionnaire

Chapter One

1.0 Introduction

The level of fraud in the present day Nigeria has assumed an epidemic dimension. It has eaten deep into every aspect of our life even to the extent that a three years old child talks about Yahoo mail or 419, newly discovered sobriquet for advanced free fraud that is hunting our banking industry. Nigeria with al its natural and human resources talkers on the brick of destruction because of fraud. Much of what we do is cutting leaves instead of dealing with the root problem.

Generally, fraud takes its root from the human heart. It is an axion that the heart of man is deceitful above all things and is desperately wicked. The only remedy to the situation will be God’s intervention. Notwithstanding the varied meanings attached to the concept of financial fraud, so many authors addressed the subject with varying definitions.

1.1 Background Of The Study

The study entails on the rapid increase of the cases of fraud in the Nigerian financial institutions. Various procedure for preventions of ugly act exist but it seems like the most powerful remedy is the intervention of God. Different authors and researchers emerge with their definition on the concept of financial fraud. The following are most of the definitions.

What is fraud? According to Oxford Advance Learner’s Dictionary, fraud is defined as the crime of cheating in order to get money or good illegally.

According to the chartered institute of public finance and accounting, United State, fraud is defined as those intentional distortions of financial statements or other records which are carried out to conceal the misappropriation of assets or other wise for gain (Ando, 1997:50).

According to Adeniyi (2001), fraud refers to intentional act by one or more individuals among management employees, or third parties which resulted in a mis-representation of financial statement.

According to Okorie, fraud is a type of irregularity. The word fraud is used to refer to irregularities involving the use of criminal deception to obtain unjust or illegal advantage, however, having closely studied these approaches from definition of fraud especially from the banking perspective one may correctly see banking fraud as a deliberate act by an individual or group inside or outside the Nigerian banking dispose the bank depositors or share holders of their funds. Despite several definitions of frauds, 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 over emphasized. They act as the “Conduct pipe” through which all the financial transaction passes. However, frau has brought a b sensor bottleneck to the lope functioning of the roles of the banking system to the Nigerian economy people are beginning to get worried and sooner than later may loose confidence in our banking sector due to the mainly increasing incidence of fraud in our today’s bank properties should be on trust not fraud.

1.2 Statement Of The Problem

The frequent causes of financial fraud in many financial Institutions in our country are now taken as the utter most concern to financial experts and macro economist. To some banking experts the issue of fraud is an internal vice on the Nigerian banking system. They argue on this because a good number of fraud occur among our banks without the knowledge of outside even where the public is aware, it does not affect the rate at which customers withdraw or deposite money.

These experts are inclined to believe this because the nation is under banked the populace are at no option but to sue the available banks especially the foremost and well established bank like UBA Plc, even if there are glaring inefficiencies in the operations in competence and laziness among most bank staffs giving birth to fraud.
Fraud has paralyzed the roof, the foundation and crushability of our banking system. Just pick up any national daily newspaper of from the police record and you will be alarmed at the extent and magnitude of bank fraud in Nigerian banking system many banks have gone on distress. Therefore, the researcher is aiming at finding or training fraud in the Nigerian banking system which has to offer to these deficiencies aforementioned with special reference with UBA Okpara Avenue, Enugu.

1.3 Objectives Of The Study

The overall objective of this work is towards ascertaining the effects of financial fraud, have had on Nigeria banking system or banking industry since its inception is in the Nigeria industry. Furthermore, the subsidiary objectives include:

  1. To find out the causes of fraud in our financial institution.
  2. To identify the problems faced as a result of the introduction of financial fraud
  3. To recommend solutions that may help in the eradication of financial fraud in our banking system.

1.4 Research Question

The following research question have guide the study:

  1. What are the causes of financial fraud, can this be checked and controlled?
  2. Has financial fraud in the banking industry help to impede problems towards their failure?
  3. What measure does the bank adopt to check financial fraud?

1.5 Significant Of The Study

The significance of the study is divided into two namely:

  1. Academic significance
  2. Practical significance
Academic Significance:

These will readers and those who any wish to make reference on this study while undertaking similar research work, for potential auditors and accountants, it is a material of reading they should be able to understood what is fraud, what is audit, how and why auditing and internal control system is an ingestible ambent of business system.

Practical Significance:

This project will equally be of immense help to other establishment and organization both in public and private sector. The need to establish a visible internal audit unit as a means of internal control should not be over- emphasized.

It is of help tat the management of UBA, Okpara Avenue, Enugu in particular should use the finding of this research to equip the audit (ie audit department and inspection) investor, promotes and shareholders would find this very useful. This will serve as an eye opener to them on what it takes to invest in banks.

However, this work will be of immense help to financial institution in Nigeria in particular and to al that may have need for assistance in detection of these opportunities in general.

1.6 Scope Of The Study

This research work is to examine fraud and how it can be prevented in Nigeria financial institutions with a particular reference, 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 staffs strength, bank size of depositors, size of loans and allowance, years of banking experience of fraudsters the means of fraud prevention and detection and punishment to be imposed on fraudsters.

1.7 Limitation Of The Study

In a study of the 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 a lots of factors that constituted limiting factors to this project work, just to mention few which are:

1. Financial constraints:

As a student, there was no enough borrowing of more relevant literature will be of help in writing this research work or 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 giving out officials secrets.

3. Unreleased Information:

Some information were being coded by the organization which was not released to the researcher.

4. Death Information:

There are no comprehensive write up or books on compulsory acquisition and compensations, there are few books and journals in searching for this topic and hence review of literature was difficult.

5. Time factor:

The short limited time given for the compilation of this project deprived it of more technical touches.

However, effort has been made to ensure that this situation does not hinder the completion and equality of this research work.

1.8 Definition Of Terms

Misappropriation Of Assets:

This is an irregularity involving acquisition application of the resource of an enterprise for one’s personal benefit without disclosure to the enterprise.


This is the intentional distortion of the financial statement to secure a particular advantage such as the misappropriation of assets, avoidance or evasion of tax and omission of disclosures.

Fraud Auditor:

A fraud auditor is an expert who by this specific scientific and technical training, exposure and experience knows more and more about fraud.


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 obligation.

Fraud Auditing:

fraud auditing may be defined as the creation of an environment that encourages the detection of prevention of fraud in government, public, commercial and even private establishment.

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 organization.

Internal Auditing:

This is the independent appraisal of the activities within an organization for the review of accounting and other operations as the basis for service to management.

Internal Control System:

This is the management control which functions by measuring and evaluating the effectiveness of other controls ( in all areas of the organization)


This refers to the intentional distortion of financial statement for whatever purpose and misappropriation of assets.


This is the examination of certain statement covering the transactions over a period and the financial position of an organization on a certain date in order that the auditor may issue a report on them.


The word error is used to refers to unintentional mistake in financial statement whether of mathematical or clerical nature or whether due to over sight misinterpretation of the relevant facts.

Chapter Five

5.0 Summary, Conclusion And Recommendation

This chapter deals on the summary of findings, conclusion as well as recommendation would be drawn on the findings been made in the previous chapters.

5.1 Introduction

This research study has been on fraud cases and preventive measures in the Nigerian financial institutions using UBA Plc as a case study.

This chapter will deals on summary of findings as well as conclusions and recommendations.

5.2 Summary Of Findings

From my overall study on fraud prevention in Nigerian financial institutions, it was discovered that each bank has its own of preventing financial fraud. When one looks at financial fraud at its dimension, one will undoubtly ask how can there be a solution to the problem, if even the police are ill-equipped, the court dilatory and bank executive submerged, prospects are not good, certainly there can be no professional solutions to financial fraud in banks. But certain practical measure and result (devise) can be adopted by banks minimize the incidence of financial fraud.

These devices include:

  1. Internal control mechanism: One of the most and effective means of abating financial fraud is through control mechanism good internal control mechanism is designed to divide responsibilities so that one person’s work is checked by another and be authorized at a higher level.
  2. Inspection and auditing department: every bank should strengthen it inspection and auditing department. The department should operate strictly as an independent unit and should always live above board.
  3. Bank employment procedures: People of undoubted integrity must be employed in the banking system. Officials responsible for recruitment must ensure that all relevant forms be completed by the employee and are very well scrutinize and all details satisfactory filled.
  4. One of the measure also discovered is inter-bank co-operation.

5.3 Conclusion

Banks have a duty to promote and maintain adequate reasonable banking services for the public via the restoration for banking confidence through the ensuring of banks towards the people.

But it is unfortunate that this duty cannot be achieved in Nigeria due to the incessant incidence of financial fraud.
Financial fraud in banks is very wide and gery subject indeed and it assumed that various forms are discussed earlier, and business organization like banks has a goal to be achieved, effective management of human, money and material resources must be put in place.

Financial fraud is far worse than straight forward –day- light robbery. It destroys the very society we are trying to create. It destroy the dignity of the banking sector and the confidence between the banks and their customers. It threatens the whole economical public of the society because it is perpetrated by the intelligent peope.

The problem of financial fraud is not limited to UBA Nigeria Plc station road Okpara Avenue, Enugu not to the banking system as a whole but to the entire society as financial fraud in UBA Plc, Enugu.

It is duty of the bank to employ all reasonable and practical measures to protect the depositor and shareholders money otherwise fraud could discourage banking habits.

The new question is the prospect of eliminating financial fraud in UBA Plc and the banking sector in gernal.
Going by our society, is the acceptance of crime as a means to get wealth quick, financial fraud to rise with the growing complexities of our society.

Fraudsters are intent on devising more sophisticated means of perpetrating fraud away from the law and management control.

5.4 Recommendation

The researcher has been exposed in reviewing ways of preventing and controlling of financial fraud in UBA Plc and other banking system in general makes the following recommendation in the hope that they could help the management to find solution to this problems.

It has sometimes been observed that people commit crime without actually renewing the researcher recommends public enlightenment (awareness) for bankers and customers on the evil of financial fraud.

As has already been noted, it is the duty of the police to prosecute crime in the bank while banks are not allowed to conduct private prosecution of fraudsters. There should be an enhancing police bank relationship.

Another area is the judiciary which is being severally accused of delayed justice and setting criminals free on more technicalities.

The personnel department with whose jurisdiction is to recruit, should recruit qualified staff. The bank should not be made a home for never-do-well or what part or rate has a graduate of history of geography has to play in the banking profession. This kind of employment should be considered a rid of non-qualified staff. Promotion should be based on hardworking and faithfulness to study.

Furthermore, exposition of fraudulent acts should be highly rewarded as it makes the eagles –eyes staff or customer who made the discoveries and exploitations have a sense of belonging. Also, management should readily come to the aid or help of the staffs who have genuine pressing family problems. Scholarship should be awarded to the deserving children of the staffs, as well as other incentives like free medical services to the staffs, and the immediate family.

Finally, continuous vigilance should be the watch-dog if fraudulent practice are to be curtalled or possibly eliminated.

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