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The Implementation of Robust Internal Control Systems for Fraud Prevention and Detection in Nigerian Banks

The Implementation of Robust Internal Control Systems for Fraud Prevention and Detection in Nigerian Banks

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The Implementation of Robust Internal Control Systems for Fraud Prevention and Detection in Nigerian Banks



Even since the establishment of the first three successful indigenous banks in Nigeria, the National Bank of Nigeria on February 11, 1933, the Agbommagbe Bank (now Wema Bank Nig Plc) in 1945,

the African Continental Bank Plc in 1947, and others subsequently established in the country between 1952, when the first banking ordinance was enacted to regulate and control the activities of commercial banks in the country, and the present day, prand have rem

There was no banking act or law to control the stability, shipment, and operation of commercial banks during the free banking era (between 1892 and 1952). There are currently as it is supervised.

A large number of banks were registered. Some did not even open their doors for business for a single day, while others just collected consumer deposits and varnished.

This resulted in the deprivation of our economy as a whole of much-needed finances for development, as well as the deprivation of individuals’ hard-earned funds. It also resulted in Nigeria’s loss of faith in commercial banks, and the country’s subsequent underdeveloped banking habits.

However, since the introduction of the first banking ordinance in 1952 and the central bank of Nigeria (CBN) ordinance in 1958 to regulate and control commercial banking activities in the country, fraud in commercial banks has grown in size, and the methods used by fraudsters have become more sophisticated day by day.

Currently, with the introduction of modern banking procedures into our financial system, such as better communication systems, automatic electronic devices, and computer networks, as well as different preventive steps implemented by banks. To avoid fraud in banks, the dimensions of the six and forms involved have increased in a geometric trend.

Other Amptiam in his articles obstructing the growth of the baking industry saw that it was discovered during an investigation that banks now take extra precaution before clearing a cheque because of the rampant incidence of fraud and forgeries. This type of fraud has caused banks to lose on average $ 1 million per working day of the year in Nigeria.

Asimi kola highlighted in his article “The Cash Economy Phenomenon” that fraud has gotten so sophisticated that the owner of a check book is required to validate it as his own signature. Recently, in order to combat the massive fraud, the CBN directed banks to enhance their capital base to # 25 billion.

Section an of the decree of 1990 formerly stated that the minimum paid up capital for a bank is #50 million for a commercial bank. This directive was issued after many banks were determined to have deceived their customers, the majority of whom were foreign investors. This was essential.

Bankers now take necessary precautionary measures before clearing cheques drawn on their clients’ accounts in order to prevent the size and fast occurrence of fraud in their bank. These precautionary steps highlight another issue confronting commercial banks.

In the banking hall, there is a problem with time waste. In his post, Ashimi Kola also stated that customers must wait at least two hours in the banking halls of Nigerian banks to cash their money.

This is one of the most valid criticisms levelled against the quality of bank services. The checking process is lengthy, and by the time a cheque is released to the cashier for payment, the customer is irritated, and Rast may have fallen asleep among the feeble crowd. This necessitates a complete reworking of the checking and control system.

Given the general state of affairs in commercial banking, fraud is the number one enemy to all concerned with the growth and development of banks. As a result, the purpose of this research work was to identify the fraud on the Nigerian economy in general,

and on Afribank Nigeria plc Enugu in particular, and to recommend more functional measures that will aid in the prevention and reduction of fraud in commercial banks in Nigeria.


The goal of this study is to give evidence on the nature and causes that contribute to ineffective management in banks, as well as to analyse the uneremental effect of FRUAD and lastly to demonstrate INTERNAL CONTROL as a foundation for fraud prevention and detection.


Because of the peculiar nature of banks in trading on financial assets and liabilities, there is a high proclivity for fraudulent manipulation by both employees and those outside the bank to implement internal control systems that will help to eliminate, stop, and arrest fraudulent tendencies and ensure effectiveness in performing its functions. It is an internal control function.

Unlit to help management achieve effective results. The direct and financial repercussions of a lack of an adequate internal control system cannot be overstated. Thus, the banking sector has seen a tremendous growth in recorded bank fraud, costing hundreds of millions of naira each year.

These take the form of computer frauds, deflationary misrepresentation of documents, and outright disappearance of physical cash by employees and outsiders, as well as the recurring issue of bank branch managers granting credie over their discretionary as approval by top management without adequate security, resulting in losses and increased bad debt.


Most banks conduct business in such an inefficient manner that their targets and budgets are constantly unrealistic, resulting in negative results and poor performance.

As a result, while well-managed banks seek approval to create new branches, poorly managed banks are clamouring for permission to close unlivable branches or even close their doors totally.

As it is mammals of procedures, the problem of loss of economy and efficiency in operators is more important than fraud. Employees’ recording of some bank transactions does not comply to set standards, resulting in an unbalanced book of records.


Increasing bad debt portfolio of banks inherent from high credit default by loan users has been giving bankers sleepless nights as a significant part of their income is row used as a provision against these debt in view of the requirement of prudential guidelines for licenced banks issued by the central bank of Nigeria in off Nigeria in 1990, in 1991, financial year, most of the existing banks will hinge portfolio after report losses or very minimal profile position,

Because of the government’s and other regulatory organisations’ ongoing concerns about the banking problem and the critical requirement for management effectiveness, several registrations and directives have been issued recently.

Recently, the CBN issued a mandate to banks to recapitalize up to N25 billion, and in January 1991, the CBN distributed an information book to all bank directors (pocked Guide for Bank Directors). Similarly, the Bank and other financial institution decree was issued by the government in 1991.


The primary goal of the Lily study is to identify and explain how internal control Adit could be utilised to prevent and detect fraud. Using Afri Bank Plc as an example

However, in a more particular sense, there is a study scale to

1. Determine the extent to which Afribank Plc has adequate internal control.

2. Fund the extent of inefficient banking operations.

3. Calculate total loan losses and bad debt portfolio growth.


The usefulness of this study, named effective internal control as a foundation for prevention and detection of fraud, cannot be overstated. The researcher was motivated to conduct this study because of the benefits accruable from an appropriate internally controlled organisation.

Similarly, the findings of this study would be extremely beneficial to a wide range of individuals, including auditors, external examiners, managers, the accounting and banking professions, banking regulatory organisations, and other participants in the financial system.

When a society is corrupt, wealth is groritied regardless of its origins. Most bankers may be compelled to toss professional ethics to the wind in order to enter the political and ruling classes. As a result, studying is critical.

Recognising the probable causes of disease would help a medical doctor give4 a proper prescription for disease prevention and cure. Similarly, it will be necessary to analyse and prescribe directive, preventative,

and curative measures to combat fraud and distress in banks. Indeed, when internal control machinery is built, this may be accomplished. Additionally, recruiting based on personal integrity rather than sentiments will prevent the recruitment of weptomanaic, selfish, and sinful people in banks.

It is believed that for good management, every banker, whether a director, manager officer, supervisor clerk, or messenger, should lead by example. Everyone should be made to follow the established policies and procedures when performing any banking function. Whoever believes that people should not steal should not steal themselves.


This study evaluates internal control as a foundation for fraud prevention and detection. It intends to generate important theoretical concepts and apply them Adri bank plc in Enugu in such a way that they will be useful to individuals involved in management.

In a word, this thesis addresses the following question.

1. How effective are Afri Bank’s banking operations?

2. What is the appropriate attitude and perspective of banking transactions?

3. How common are FRAID AND IRRECULARIDES in Afribank?


1.6 The purpose of this study is to address the management function of internal control with specific reference to Afri Bank plc. This study project encountered numerous challenges.

First, the bank that was visited was hesitant to provide significant statistical data on financial frauds that occurred in their banks. This is non-compliance because none of these banks denied ever being a victim of fraud.

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