Fraudulent Practice And Its Effects On The Performance Of Nigerian Banks (A Case Study Of Stock Exchange Onitsha)

Project and Seminar material for Accountancy

Project and Seminar material for Accountancy

Table Of Contents

Preliminary Page(s)

  • Title Page
  • Approval Page
  • Certification Page
  • Dedication
  • Acknowledgement
  • Table Of Contents
  • Abstract

Chapter One

1.0 Introduction

  • 1.1 Background of the study
  • 1.2 Statement of problems
  • 1.3 Objective of the study
  • 1.4 Research question
  • 1.5. Statement of hypothesis
  • 1.6 Significance of the study
  • 1.7 Scope and of study
  • 1.8 Limitation of the study
  • 1.9 Definition of terms

Chapter Two

2.0 Literature Review

  • 2.1 Introduction
  • 2.2 What is fraud
  • 2.3 Methods through which perpetrators use to defraud banks
  • 2.4 The role of the branch manager in fraud
  • 2.5 Forms of fraud
  • 2.6 Effects of fraudulent practices in banks
  • 2.7 Reasons of committing fraud
  • 2.8 Techniques of fraud control in banks

Chapter Three

3.0 Research Design and 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 instrument
  • 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 Test of hypothesis
  • 4.5 Interpretation of result

Chapter Five

5.0 Summary, Conclusion and Recommendation

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

Chapter One

1.0 Introduction

Fraud generally refers to an act of course of deception deliberately practiced to gain advantage, such deception is directed at the detriment of another. It suggest unfair dealing which could be perpetrated against the bank by its customers or by third partied or by bank officers or by other interest groups.

Fraud can be described as chricerous premeditated action of a person or group of persons with intention of attending the truth of fact for selfish monetary gain. It involves the use of deceit and trick and sometimes highly intelligent cunning and knows how. The action usually takes the form of forgery, falsification of documents and forgery of signature an out right theft.

Employees and well as clients of firms in all industries engage in fraudulent practices all over the world although the existence of fraud in our banks is not an uncommon or unexpected phenomenon, it is worrying because banking industry, that of fraud is easily the most intractable. The banking industry worries more about fraud because of the rather obvious damaging consequences acts on health and for the existence of the institutions. A fraud in banks nearly always leads to loss of money mockers that ordinarily belong to someone other than the banks.

1.1 Background Of The Study

The operation of the banks, according to Nigeria deposit insurance corporation (NDIC) annual report (2002) shows that 707 cases of fraud was reported in commercial banks and the amount involved is N12,919.55 million.

In every bas cases where fraud occur with clipping frequency and in wholesales size the banks may found to closedown as a result when the bank loses money and it is wound up, the customers lose money. This leads to loss of confidence in the banks and reduces patronage in our kind of financial environment where banking habits is being encouraged this could result in a major set backs for the effort.

Fraudulent practices and its effects of programme in Nigeria banks is therefore of special concern to the monetary control and supervisory authorities who are charged with the safety of individual banks and the soundness of the banking industry.

1.2 Statement Of The Problem

Banks operate on the pivot of public confidence and trust on the ability o deliver as and when demanded. The Nigeria society’s bedeviled with the desire for get rich quick so as to feel important, as Nigeria believe that wealth is the measure of power and importance. It is in realization of this fact that these “get rich quick” mind set of people direct their attention fraudling the banks.

Frequency occurrence of frauds ultimately distract the attention of the management and leads to increased running cost, time and energy that would have been spent improving customers services should be expanded on preventing frauds monies that would have also gone into services improvement activities should be expended in setting fraud control procedure and systems.

Moreover, during the years 2003, total of 23 banks cost N333.3m to theft and fraud according to the Nigeria insurance association (NIA) 2003, annual report.
Another reason why the banking industry like any other worries about fraud is that it varies widely in nature character and methodology.

There are two main sources of fraud in banks. The internal and external sources though distinguishable in theory these sources are very often not separately in practice. That is or says a successful often thanks place and succeeds as a result of the collaboration, international or miniterntional ie due to carelessness or error of judgment of an insider bank employee believed that most fraud in bank are with the active convenience of bank staff otherwise how does anyone explain for example, how a cheque drawn in favour of Nigeria is paid some private account and funds withdrawn? Or how does one explain a draft prepared in the name of an institution or a completely different institution of individual collects individual?

Fraud has caused the loss of whopping amount of money contribute to the liquidation of several banks and consequently unemployment and similar problems. This study is therefore be set by the acute problem of discovering the fraudulent practices in the Nigeria banks.

1.3 Objectives Of The Study

  1. To find out how bank staff can help in preventing fraud
  2. To discover ways of checking bank fraud
  3. To find out why people commit bank fraud
  4. To find out whether bank fraud can be reduced.

1.4 Research Question

  1. How can bank staff help in preventing fraud?
  2. What are the ways of checking bank fraud?
  3. Why do people commit bank fraud?
  4. Can bank fraud be reduced?

1.5 State Of Hypothesis

  1. Ho: Nigeria bank are not fraudulent owing to economic situation
    Hi: Nigerians are fraudulent owing to economic situation.
  2. Ho: Most fraud is not caused by poor recruitment policy
    Hi: Most bank fraud is caused by poor recruitment policy.
  3. Ho: Most bank fraud is not caused by management lapses.
    Hi: Most bank fraud is caused by management lapses.

1.6 Significance Of The Study

The importance of this study cannot be over emphasized, it will be relevant to the management of the banking industry, as finding from it will help the banks on how to adopt some control measures to check the high incidences of fraud facing them in their operation. Secondly it will be of immense importance to the researcher to update the work in terms of current changes in the banking industry.

This research work will also be of a great help to shareholders, investors, depositors, customers and the government at large. Lastly, it will be of special concern to the monetary regulatory and supervisory authority who are charged with the safety of individual banks and the soundness of the banking system.

1.7 Scope Of The Study

In this case, the study focus on fraudulent practices and its effects on the performance of Nigerian banks. The incidence of fraud and forgeries could lead to the closure of some affected banks as had happened in some parts of the world including Nigeria.

If not arrested might pose certain threats to the stability and survival of individual banks and the performance of the industry as a whole, it will also cover fraudulent practices in international bank and the amount involved in fraud annually.

1.8 Limitation Of The Study

This study is face with difficulties which this research work is confronted. Firstly, most bank officers approached were reluctant to give out relevant helpful statistical data on financial frauds occurring in their organization, none of them have accepted ever being refused to let out such vital information so that their competitors will not use it as parameters to determine or measure their internal control efficiency.

Secondly, time, because of the academic work load there is no time to consult texts books, make research in the library and internet in the course of this write up. Lastly financial constraints.

1.9 Definition Of Terms


This is an act of or course of deception directed as the detriment of another in legal terms, fraud is the act of depriving a person dishonestly of something which is or might be entitle to but for the perpetration of fraud.


It is something done often. It is something that people do often in a particular way.

Fraudulent Practices:

Can be said to be the methods by which people engage in an act of deception directed at the detriment of another.

False Document:

A document that contains fictious information but made to look real to deceive people.

Fraud Men:

It refers to those who are professionally habited to defrauding people of their legally acquired property or money.


It means a person who commits a crime or does something that is wrong or evil.


Something done on purpose rather by an accident.


The act of deliberately making somebody believes something that is not true.


Is the total number of people living in a geographical place or areas.


Is an organization that provides various financial services for the safe keeping of money and other valuable items.

Chapter Five

5.0 Summary, Conclusion And Recommendation

This chapter deals with the summary, conclusion and recommendation. The summary contains chapter one, chapter two, chapter three, chapter four and chapter five. The conclusion which of these research works talks about the name, topic which is fraudulent practices and its effects and performance in banks.

The recommendation also talks about what the bank or measures which the bank will adopted to control fraud banks.

5.1 Introduction

This is the final stage of the project work where we portray the summary of findings, conclusion and recommendation.

In summary of findings, we tried to summarized this work from chapter one through chapter four and then chapter five.

Bank fraud is said to be an act of misappropriating a bank asset in cash or kind by a bank staff, bank customers or third party in which the bank suffer loss arising from such acts.

However, in recommendation bank should endeavour to organize seminar, workshops, symposia and lectures on fraud control for their employees regularly since one of cause of fraud is discovered in the research is lack of staff training.

5.2 Summary Of Findings

In the course of this study, fraudulent practices were studied as a means which perpetrators use in defrauding the bank.

In the first chapter of this work, the study was involved the statement of purpose (objectives of the study) and the statement of problems, the scope and limitation of the study were embodied. Also the definition of some terms encountered in the work was given so as to enable easy understanding and assumptions by the past.

In chapter two of the work, a review of past literature was undertaken. This field is a very versatile area therefore, the related literature was massively reviewed. It started first with given birds eyes view of what is fraud and some methods through which perpetrators used in determining the banks.

Secondly, the study of trend in Nigeria banks was done on general perspective from or type of banks fraud was also studied such as fearing and lading, deflection, account manipulation and so on, mere study and finally some of the techniques for controlling fraud in banks were also discussed.

The third chapter focuses on the methodology used in data collection which includes oral interview, questionnaire and observation methods. The data generated through all these method were presented in the chapter four. An analysis (breakdown) of the data was done by the use of tables. This presentation and analysis were based largely on information supplied by respondents of questionnaire distributed and interviews the findings from this research were also extensively discussed. In chapter five, the whole project was summarized some recommendations suggested based on the findings and conclusion.

5.3 Conclusion

Generally bank fraud could be defined as an act of misappropriating of bank asserts in cash or kind by a bank staff, banks customers of third arty in which the bank suffer loss arising from such acts.

Fraud is a wicked act that confers illegal possession of other people wealth on the fraudulent person thereby preventing the original owner from enjoying their wealth. It is a very comprehensive field of crime under which exist a range of different activities the intention of the fraudulent person is to dishonestly benefits himself to the detriment of the bank, bank staff, bank customers or any other member of the public through banking operation. Fraud can be committed by bank customers, bank staff, third party.

Fraud is caused in the acronym work that is there must be will in the part of the intending fraudulent person to commit the fraud. There must be opportunity to execute the fraud and the successful or attempted fraud or deviant behavior. Thieves are not born but made out of opportunities. The fact that banks deals in money and instruments that can easily be converted to cash and since the ultimate ambition of the fraudulent person is to get rich quick the banks have become persistent target for fraudulent persons. Even frauds, which originate in other industries usually pass through banks for conversion of the forged documents into cash. Lodgments of forged cheques for clearing and transfer of cash that is obtained through deception. All the major operational areas in banking represents a good opportunity for fraudulent persons. Majority of the fraud incidents being reported is under deposit loan and inter-branch accounting transaction including rerrutances.

5.4 Recommendations

  1. Since one of the causes of fraud is discovered in the research work is “lack of staff training” banks should endeavour to organize seminar, workshops, symposia and lecture on fraud control for their employees, regularly. this will have effect of assisting the bank employees in defecting.
  2. Bank staff should be properly screened before being satisfactory references must be obtained the present where by names or terminated/ dismissed bank staff are circulated around banks will go a long way to reduce residence of the bank fraud.
  3. Adequate banking education be organized for bank customers. These enlightenment forums should be used to educate the customers on bank fraud. They should also be report promptly any suspicious entries in their account, to the bank loss instruments of banking transactions by customers should be reported to the banks without delay.
  4. The control banks of Nigeria should also properly monitor and suspense the activities of banks to guard against these issues of fraud and forgeries in banks.
  5. The existing management control system be supplement by buying modern banks security control equipment which includes
    • Fraud detection and prevention equipment
    • Micro character rendering machine
    • Use of periscope camera of photography reasons making large cash withdraw.

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