Fraudulent Practice And Its Effects On Profitability Performance Of Nigeria Banks (A Case Study Of Access Bank And Fidelity Bank PLC Of Nigeia Plc)

Project and Seminar material for Accountancy

Project and Seminar material for Accountancy


This study was carried out in order to find out fraudulent practice and its effects on performance of Nigeria Banks. Access Bank PLC of Nigeria, Nekede Owerri was use as the case study. The study aimed at exposing the way which fraudsters uses in defrauding these banks. However, fraud is the crime or an act of deceiving somebody in order to get money or goods illegally. Fraud may continue as long as it is not possible to read human minds and as long as social and economic injustices remains.

What organizations should aim at is to desire means of preventing fraud rather than detection and rigorous investigation. Also the sample size of thirty respondents were involved in the study and the data collected was analyzed using chi-square (X2), because it is a non-parametric statistics used only to test the independence of frequencies of option analyze on it goodness of fit. Furthermore, from the data collected and analyzed, the re searcher discovered that types of major frauds are included as cases of arm-robbery, and out of right theft.
Finally, the researcher recommended that banks should endeavor to organize seminars and workshop on fraud detection and control for their employee regularly and during induction class.

Table Of Contents

Preliminary Page(s)

  • Title Page
  • Approval 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 Objectives of the Study
  • 1.4 Research Questions
  • 1.5 Statement of Hypothesis
  • 1.6 Significance of the Study
  • 1.7 Scope of Study
  • 1.8 Limitations of the Study
  • 1.9 Definition of Terms

Chapter Two

2.0 Literature Review

  • 2.1 Introduction
  • 2.2 Meaning and Definition of Fraud
  • 2.3 Categories of fraud
  • 2.4 Methods through which perpetrator uses to defraud bank
  • 2.5 The role of the branch manager on frauds.
  • 2.6 Forms of fraud
  • 2.7 Effects of fraudulent practice in Bank (Access Bank PLC)
  • 2.8 Reason of Committing Frauds
  • 2.9 Techniques of fraud Control in Bank

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 Sampling Techniques
  • 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 Questionnaire
  • 5.5 Reference

Chapter One

1.0 Introduction

This is the introductory chapter of the chapters. is briefly explains the background of the study, statement of the problem, objectives of the study, research questions, statement of hypothesis, significance of the study, scope of the study, limitations of the study and definition of terms.

1.1 Background Of The Study

Fraud and other irregularities is used to refer to;

Fraud, which involves the use of deception to obtain an unjust or illegal financial advantage; or intentional misstatement in, or omission of amounts or disclosure from an entity’s accounting records in financial statements; or it is generally refer to an act of course of deception deliberately practiced to gain advantage, such deception as directed at the detriment of another. It suggest unfair dealing which could be perpetrated against the bank by its customers or by bank officer or by other interest groups.

Fraud may be a sole venture or a joint venture ( i. e one person or compromising more than a person). It may be short term fraud. Fraud may also be classified as actual or constructive frauds.

Actual fraud is defined as consisting of false statements made knowingly or without belief in their truth, or recklessly without caring whether they are true or false, with the intent that they be acted upon which are acted upon, to the detriment of persons or organizations that so acted.

Constructive fraud includes acts of undue influence, abuse of confidence, abuse of trust or misuse of office to gain undue advantages at the expense of other persons. It has been opened that there is no fraud without misrepresentation and a fraudulent misrepresentation makes a person or an organization liable for willful or reckless act of falsehood.

Fraud can be described as cancerous premeditated action of a person or group of persons with intentions of attending the truth of fact for selfish monetary gain. It involves the use of descent and trick and sometime highly intelligent carrying and knows how. The action usually takes the form of forgery, falsification of documents, forgery of signature and outright theft.

Employees as well as clients of firms in all industries engaged in fraudulent practices all over the world, although the existence of frauds in our banks is not an uncommon or unexpected phenomena’s, it is worrisome because of all the various problems confronting the banking industry, that of fraud is easily the most intractable. The banking industry worries more about fraud, consequences act on health and for the existence of the institutions. Fraud in banks nearly always leads to loss of money, mockers that ordinarily belong to someone other than the banks. The loss result in some cases reduced level of resources available for the use in the operations of the banks. According to the Nigerian Deposit Insurance Corporations (NDIC) annual report (2002) shows that 707 cases of fraud was reported in commercial banks and the amount involved was N12,919.55 million.

In every bad cases where fraud occur with crippling frequency and in wholesales sizes, the bank may found to close down as size a result of banks losing their money and it is wound up, the customers as well losses their money and documents. This lead to loss of confidence in the banks an reduces patronage, in our kind of financial environment where banking habits is being encouraged this cools results in a major set-banks for the efforts.

The nature and extent of fraud and other irregularities are influenced by societal values, norms and practices. That is why Opara (1990) concludes that the traditional Africa society was almost fraud free. This was because there were entrenched societal norms and values which no respectable member of the society would treat with disdain without incurring the wrath of the society or “gods”. At our time, the society is not helping matters in the wave of fraud and crimes, since criminals and fraudulent well-to-do persons are conferred with chieftaincy titles or made traditional rulers. In families, parents compare their sons and daughters with their mates whom they described as “well to do without any attempt at knowing what these persons do or where they started. They are not concerned with the so called progress of other person asking theirs words; “are these persons building houses, buying cars, marrying wives not your mates?

It will be right to infer that our society at present, fraudulent and a society cannot produce a better individuals and leaders than it is.

Fraudulent practice and its effects on performance of Nigerians banks is therefore of special concern to the monetary control and supervising authorities who are charge with 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 of bank to deliver services as at when demanded. The Nigeria society is bedeviled with the desire to get rich so as to feel important as Nigeria believed that wealth is the measure of power and importance. It is the realization of this fact that these “get rich quick” syndrome of people that made them to direct their attention on defrauding the banks.

Frequency occurrence of frauds untimely distracts the attention of the management and leads to increase running cost, time and energy that would have been spent in improving customers service, should be expanded on preventing fraud. Monies that would have also gone into service improvement activities should be expanded in setting fraud controls procedures and systems. The reason why the banking industry like any others, worries about fraud is that it varies widely in nature, character, and methodology.

There are two main sources of frauds in banks the internal and external sources though distinguishable in theory these sources are very often not separately in practice. That is to say a successful often takes place and succeeds as a result of the collaboration, international or error of judgment of an insider banks employees. Indeed it was recently affirmed that “the public believed that most fraud in banks are with the active communication of bank staff. Otherwise, how does one explains for example, how a cheque drawn in favor of Nigeria is paid in some private accounts?

Fraud has caused the loss of whopping amount of money contributed to the liquidation of several banks and consequently unemployment beset the acute problem of the discovering of the fraudulent practice in the Nigeria banks.

1.3 Objectives Of The Study

  1. To find out how bank staffs can help in preventing fraud.
  2. To find out why people commit banks fraud
  3. To discover ways of checking bank fraud.
  4. What banks should aim at towards frauds
  5. To find out whether bank fraud can be reduced.
  6. To devise means of preventing fraud rather than detection and rigorous investigations

1.4 Research Questions

  1. To what extent does fraud affects the profit level of banks?
  2. How does fraud affects capital base of banks?
  3. To what extent has fraud affected the liquidity position of banks?
  4. What is the rate of fraudulent practice in your bank.
  5. Why do people commit banks fraud?
  6. What are the means of preventing fraud?

1.5 Statement Of Hypothesis

In other to carryout a research to a logical conclusion, I have put forward some hypothesis which I wish to test.

  1. Ho: Bank fraud has not in any way affected the profit level of bank.
    Hi: Bank fraud has affected the profit level of banks.
  2. Ho: Bank fraud does not affect the capital base of banks.
    Hi: The capitals base of the banks has been affected by bank fraud.
  3. Ho: Fraud has not affected the liquidity position of banks.
    Hi: Liquidity position of banks is affected by bank fraud.

1.6 Significance Of The Study

The importance of this study cannot be overemphasized, it will be relevant to the management of the banking industry, as findings from it will help the bank on how to adopts some control measure to check the high incidence of fraud facing them in operation.

More so, it will be of immense importance to the researcher to update the work in terms of current changes in the banking sector.
This research will also be of a great help to shareholders, investors, depositors, customers, and the government at large.

Also, it will be of special concern to the monitory, regulatory and supervisory authority who are charged with the safety of individual banks and the soundness of the banking system.

In addition, it will be of immense value to the managements whose primary responsibilities is prevention and detection of properties, also charged with judiciary role of safeguarding assets since the directors of a companies or anybody in their place are regarded in law as activities stewardship capacity concerning the property which is under their control. It is the responsibility of management to ensure that the operations of the organization are conducted in accordance with all relevant legal obligations.

Lastly, it is of urgent need that auditors whose responsibility is primarily not to seek frauds, error and defalcation but to express an opinion on the financial statements of an enterprise, since irregularities and error by their nature affect the accounting records or financial statement, the auditor’s responsibility towards irregularities and errors is to design his works so that he may have a reasonable expectation of detecting those which may impair the truth and fairness of the statements.

1.7 Scope Of The Study

In this case, the study focuses on fraudulent practices and its effect on the performance of Nigeria banks. (Access Bank Plc Owerri). The incidence of fraud and forgeries could lead to the closure of some affected banks as it 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 fraudulent banks as a whole. It will also cover fraudulent practices in Access bank and the amount involved.

1.8 Limitations Of The Study

This research study is faced with difficulties and a constraint which has militated against the successful conduct of this research work, and in one way or the other adversely affected the quality of this research.

Firstly, most bank officers approached were reluctant to give out relevant and helpful statistical data on financial frauds occurring in their organization, none of them have accepted ever being refused to let out vital information so that their competitors will not use it as parameters to determine or measure their internal control efficiency.

Secondly, the researcher would have loved to make an in-depth study of many issues but for time constraints, lack of finance and material etc.

1.9 Definition Of Term


This is defined as a wrongful or criminal deception intended to result in financial or personal goods. In legal storms, it is a false representation of a matter of fact whether by words or by false or misleading allegation. It can also be defined as a deception deliberately practiced in order to secure unfair or unlawful gain.


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

Fraudulent Practices:

It is the method by which people engage in an act.


It is a trick intended to make somebody believe something that is not true.


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


It means believing in a clever way and using indirect method in order to achieve something.


It means dishonest behaviours that is intended to make somebody believe something that is not true


To steal money which belong to another persons or your employer.

Actual Fraud:

False statements made knowingly or without belief in their truth.

Constructive Fraud:

Acts of undue influences abuse of confidence, abuse of trust or misuse of office to gain undue advantage at the expense of other persons.


It is the act of the forgeing a customer’s signature to draw money fraudulently.


Is the act of alteration of depositors agents with the intentions to steal another person’s money.

False Document:

A document that contain or seems to be real to deceive people

Fraud Men:

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


Something done on purpose rather by an accident

Chapter Five

5.0 Summary, Conclusion And Recommendation

5.1 Summary Of Findings

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

In chapter one of this work, the study involved the statement of purpose/objectives 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, 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 bird eyes view of what is fraud and some methods through which perpetrators used in defrauding the banks.

Secondly, the study of trend in Nigeria bank was done on general perspective form or type of bank fraud was also studied such as teaming and leading, deflection account manipulate and so on, were studied 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 these data was done by the use of tables). This presentation and analysis were based largely on information supplied by respondents of questionnaires describes and interviews, the findings from this research were also intensively discussed.

In chapter five, the whole project was summarized, some recommendations suggested base on the findings and conclusion.

5.2 Conclusion

Generally, banks fraud could be defined as an act of misappropriating a bank assets in cash or kind by a bank staff, bank customers or third party in which the bank loss arising from such acts. Fraud is a wicked act that confers illegal possessions of other people’s wealth on the fraudulent person thereby preventing the original owners from enjoying their wealth. It is a very comprehensive field of crime under of crime under which exist a range of different activities, the attention of the fraudulent person is dishonestly benefits himself to the detriment of the banks, banks staff banks customers or any member of the publics through banking operation. Fraud can be committed by bank customers, bank saf6f, customers and third party, that is non-bank customers and third party.

Frauds are caused in the acronym work that is there must be will on the part of the intending fraudulent person to commit the fraud. There must be opportunity to execute the fraud and the exist which is the escapes from sanction against successful or attempted fraud or deviant behaviour. Thieves are not born but made out of opportunities. The fact is that banks deals in money and instruments that can easily be converted to cash. Fraudulent persons is to get rich quick through the bank. The bank have become persistent target for fraudulent persons, even fraud which originate in other industries usually pass through banks or conversion of the forged document into cash, lodgment of forged cheques for clearing and transfer of cash that is obtained for fraudulent persons. Majority of the fraud incidents being reported is under deposit loans and inter branch accounting transaction including remittance.

5.3 Recommendations

In the light of the above review and analysis carried out in the preceding chapter of the study and with what had been seen and expressed by the researcher in the course of the study, then following recommendations has been ascertained.

  1. Since one of the cases of fraud is discovered in the research work is “lack of staffs training” banking sector should endeavour to organize seminars, workshop, symposia and lecture on fraud control for their employees regularly. This will have effect of assisting the bank employees in detecting on time the fraudulent practices in the banks.
  2. Bank staffs should be properly screened before being satisfactory, reference must be obtained to present whereby names of terminated/dismisses bank staff are circulated among banks will go too long to reduce incidence of bank fraud.
  3. Adequate banking education could be organized for bank customers. This enlightenment forum should be used to educate the customers on bank fraud. They should also report promptly any suspicious entries in their accounts to the bank loss of instruments of banking transportation by customers should be reported to the banks without delay.
  4. The central bank of Nigeria should also properly monitor and suspend the activities and forgeries against three issue of fraud and forgeries in banks
  5. The existing management control system should be supplement by buying modern bank security control equipment which includes:
    • Fraud detection and preventing equipment
    • Micro character reading machines
    • Use of per scope camera to photography reasons of making large cash withdraw.

5.4 Area Of Further Study

Further research work on the performance of management through financial reports need to be undertaken by future researcher. Due to time and financial constraints, the study was limited only to the managements of other sectors of the economy.

The researcher therefore recommend the followings areas for further research.

  1. The impact of internal control system in banking sector of Nigeria.
  2. Electronic banking and banks performances in Nigeria.
  3. The nature, extent and economic impacts of fraud on banks.
  4. The impact of employees appraisal on the performance of bank and prevention of fraud.

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