Description
TABLE OF CONTENT
Title page
Certification
Dedication
Acknowledgment
Proposal
Table of content
CHAPTER ONE
1.1 Introduction 1
1.2 Statement of the problem 3
1.3 Research question 4
1.4 Objectives of the study 4
1.5 Research Hypothesis 5
1.6 Significance of the study 5
1.7 Scope and limitation of the study 6
1.8 Definition of the term 6
1.9 Plan and organization of the study 7
CHAPTER TWO
2.1 Literature Review 8
2.2 Historical background of Skye bank plc 9
2.3 Conceptual issue of internal control system 13
2.4 Appraisal of internal control system in Nigeria
Banking Industry 15
2.5 Types of fraud 17
2.6 Remedies to fraud and forgeries in Nigeria banking system. 18
2.7 The effect of fraud in Nigeria banks 19
2.8 General cause of fraud in bank 21
CHAPTER THREE
3.1 Research methodology 23
3.2 Sources of data 23
3.3 Population of the study 24
3.4 Method of data collection and data analysis. 24
CHAPTER FOUR
4.1 Data presentation and analysis 30
4.2 Presentation of data 30
CHAPTER FIVE
5.1 Findings 38
5.2 Summary 39
5.3 Conclusion 40
5.4 Recommendation 41
REFERENCES 44
CHAPTER ONE
1.1 INTRODUCTION
In banking, Accounting and auditing internal control is defined as a process effected by an organization structure, work and authority flows, people and management information system designed to help the banking accomplish specific goals or objectives.
It is a mean by which organization resources are directed, monitored and measured. It plays an important role in preventing and detecting fraud and protecting the organization’s resources.
Internal control-integrated framework, a widely-used frame-work in not only the United State but around the world, internal control is broadly defined as a process, effected by an entity’s board of directors, management and other personnel, designed to provide reasonable assurance regarding the achievement of objectives in the following categories.
- Effectiveness and efficiency of operation
- Reliability of financial reporting
- Compliance with law and regulations
Internal control has five components
- Control Environment: set the tone for the organization, influencing the control consciousness of it people.
- Risk Assessment: the identification and analysis of relevant risk to the achievement of objective, forming a basis for how the risk should be managed.
- Information and Communication: System or process that supports the identification, capture and exchange of information in a firm and time frame that enables people to carry out responsibilities.
- Control Activities: the policies and procedure that help ensure management directive are carried out.
- Monitoring: process used to assess the quality of internal control performance over time.
The internal control relates to the aggregate control system of the organization, which is composed of many individual control procedures.
Discrete control procedures, control are defined by the SEC as a specific set of policies, procedures and activities designed to meet an objective. A control may exist with a designated function or activities in a process. A control’s impact may be entity wide or specific to an account balance class of transaction or application.
Internal control procedure reduce process variation, leading to more predictable outcomes. Internal control is a key element of the foreign corrupt practices Act (FCPA) of 1977 and the Sarbanes-Oxley Act of 2002, which requires improvement in internal control within business entities are also referred to as OPERATIONAL CONTROLS.
The internal control system (ICS) consists of a set of rules, procedures and organization structure which aims to.
- Achieve effective and efficient corporate process
- Safeguard the value of corporate asset ensure that corporate strategy is implemented
- Ensure the reliability and integrity of accounting and management data.
- Ensure that operation comply with all existing rules and regulations
1.2 STATEMENT OF THE PROBLEM
The problem of the study by the researcher is to find out the appraisal of internal control system as a means of efficiency and profitability in Nigeria banks. The major statement of the problem are:
- The various means employed by customer and staff or official in defrauding the money deposit bank in Nigeria. This is one of the problems confronting the money deposit bank and this affect the bank efficiency and profitability.
- The likely challenges to be encountered by money deposit banks in tackling fraud; it has become paramount for bank to employ control system internally to check fraud.
- The researcher work will aimed at finding lasting remedies or solution to solve problem of frauds in money deposit bank in Nigeria.
1.3 RESEARCH QUESTION
The focus of this study is to identify the appraisal of internal control system as efficiency and profitability in banks, hence, in the course of the study effect has been to find solution to the following research question.
- What is the bank concept of internal control system?
- What is the historical background of internal control system in commercial bank?
- What are the various mean employed in defrauding banks?
- What are the remedies to profitability in commercial bank (money deposit)?
- What are the main effects of fraud in banks?
1.4 OBJECTIVE OF THE STUDY
The primary objective of this study is to examine the appraisal of internal control system as a mean of efficiency and profitability in the Nigeria commercial bank (money deposit).
The objectives of the study are:
- To examine the basic concept of internal control system of banks.
- To discuss the theoretical framework of internal control system in the banking industry.
- To enumerate the remedies to efficiency in commercial bank (money deposit).
- To expatiate the form and nature of profitability in banking industry.
- To analyze the problem uncounted by the commercial banks (money deposit).
1.5 RESEARCH HYPOTHESIS
The basic fundamental for testing hypothesis involved the formulation is:
Ho: Null hypothesis
Hi: Alternative hypothesis
Ho: Internal control system has no correlation with profitability and efficiency of money deposit bank in Nigeria
Hi: Internal control system has a effective correlation with profitability and efficiency of money deposit bank in Nigeria.
1.6 SIGNIFICANCE OF THE STUDY
The research work is predicted in nature of the study is enable the banking industry on the way to meet the profit on banks that meet the directives has been stronger.
The study in also be beneficial to the shareholders, the policy is bring about improved and increased in the shareholders value and with through appreciate of their share and it’s market ability through the mega bank customers is also benefit through reduction in cost of paying for services, prompt receiving of services, reductions in time spent in the banking hall.
1.7 SCOPE AND LIMITATION OF THE STUDY
This research work focused on the bank and other organization with special emphasis on Skye bank plc being that case study. Never the less the research work has been constrained to the below statement.
- Time Constraint: the time has not always a friend due to the fact that time available is too short to combine this project work with my other academic programms.
- Material constraint: banks staff own their customers duty of secrecy. This will make it impossible to get through data and information as regard primary source of information.
- Financial constraint; with current economic situation where there is financial wash up through the sale of government debt instrument.
1.8 DEFINITION OF KEY TERMS
Banker: A company carrying on the business of receiving money, collecting draft for customer subject to the obligation of honoring cheque drawn upon them from time t by customers to the extent of the amount available on the account.
Cheque kite flying: This is a method whereby depositors utilize the time a cheque to clean to obtain an authorized loan without any interest charge.
Control: This mean to check put a stop in the activity uses a limit in the activities of individual or a group of individual in the banking industry.
Deflation: This is making or alteration of writing to the prejudge of another man’s right or litter to which he is ordinary entitled to.
Fraud: Is an act of cause of deception deliberately practiced to gain unlawful or unfair advantages, such as deception in directly to the detriment of another.
1.9 PLAN AND ORGANIZATION OF THE STUDY
This spells out the organization structure of the topic with a brief or summary of what expected in each chapter, it is divided into five chapters, each chapter contain the following.
Chapter one we be the introduction of the study, statement of the problems, research question, objective of the study, research hypothesis, significance of the study scope and limitation of the study, definition of the term, plan and organization of the study.
Chapter two contain the literature review, chapter three contain the research methodology. Chapter four discuss the data presentation and analysis. Chapter five is devoted essentially to summary, conclusion and recommendations.
CHAPTER TWO
2.1 LITERATURE REVIEW
One of the major causes of distress in banks is the ineffectiveness in the system of internal control which has resulted into accumulation of bad debt which were incurred through dubious means.
Therefore, an understandably of the subject matter of this project topic hold to thoroughly understood that is the appraisal of internal control system as a means of efficiency and profitability in banks.
Awe (2005) internal control is defines as policies, procedures, practice and organizational structures implemented to provide reasonable assurances that an organization is business objective will be achieved and undesired risk event will be prevented or detected and corrected based on either compliance or management initiate concerns.
According to Leslie (2007), defines internal control as not only the internal check and internal audit but whole of system control financial and otherwise established by the management in order to carry on the business of the company in an orderly manner to safeguard the asset and secure as fast as possible.
The institute of Chartered Accountant of England and Wales (ICAEW) 2001, defines internal control as the whole system of control financial or otherwise established by Management in order to carry on the business of an enterprise in an orderly and efficient manner, ensure adherence to management policies, safeguard the asset and secure as far as possible the completeness and accuracy of the records.
Mayo (2003) defines internal control as the measure takenly, an organization for the purpose of protecting it’s resources against waste, fraud, inefficiency, ensuring accuracy and reliability in accounting and operating data, securing compliance with organization policies and evaluating the level of performances in all division of the organization.
According to ICAN study pack (2006) fraud consists of both the use of deception to obtain an unjust of illegal financial advantage and intentional misrepresentation affecting the financial statement by the one or more individuals among management employees or third parties.
Hornby (2001) defines fraud as an action or instance of checking somebody in order to make money or obtain good illegally.
- HISTORICAL BACKGROUND OF SKYE BANK PLC
The Skye bank Nigeria Plc received banking license on Oct 20, 1959 and opened it first branch at Kano City on January 4, 1960. she was the know as banquet international pour Afrique accidentale (B/AO) the origin of B/AO dates back to around 1853 when the bank first established in Senegal later it was changed to Banque Pour la Afrique accidentale (B/AO). The word internationale was added later when the bank owner included the first nationally bank B/AO was one of the first bank to set up shop in West Africa at a point the banks activities in the area were so prevailing that he was given the authority to issue currency notes (A Central Bank function). In the French speaking West Africa Countries. Skye bank was established as a subsidiary of BAO. The compliance with federal government orders, the headquarter was set up in 1960 at 94 board street Lagos.
The establishment of Skye bank coincide with the emergency of the countries oil industry. The bank later developed links with some oil companies and in order to serve there need more promptly the bank set up two more branches in Portharcourt and Aba just before the out break of Civil wars in 1967 with the promulgation of the Nigeria companies decree of 1968, it because imperative for all firms in Nigeria to be corporate as Nigeria to be incorporated as Nigeria companies on limited liability companies under the name international bank for west Africa (IBWA). The English equivalent to B/AO. In 1971 the bank got their first Nigeria Chairman in person of Alhaji T. Galadima, that same year BAO itself experience charges in her own equity structure. The union bank of Switzerland bought over 20 percent of the 49 percent of BAO equity capital held at the city which the position was taken up by Boncodo Brazil, while the remaining 9 percent was brought by the company i.e. International Afribank debanque holding Luxeboury on account of indigenization, the federa military government in 1976 required 60 percent of the equity structure of Afri-bank and some other banks. The left B/AO with 40 percent of the Skye bank equity capital by 2005, Afribank had developed a branch network of 21 (twenty one) with 6 (six) rural branches staff strength has also growth to 210. The banks organization chart was restructured and new department like general control, legal commercial and marketing were added in 2006, the paid capital of Skye bank increased to 25 billion also for the first appointment of a Nigeria as the bank managing director in 2005, the federal government gave up 10 percent of their equity in the bank staff, two year later, the bank adapted Afribanbk as their subname. The name Afribank is common to all banks balance sheet.
Now, Mainstreet has become Skye Bank, effective 10 June 2015 , Mainstreet Nigeria Plc become Skye Bank limited. This step which will help enhance the smooth operation of the company will also ensure that the recapitalization process will be concluded ahead of the company will also ensure deadline given by the Central Bank of Nigeria.
Skye Bank has taken over the deposites liabilities and asset of Mainstreet since 10 June 2015.
Skye explained that in the change of Mainstreet to Skye bank limited. The bank remains going concern the bridge bank (MBL) will continue to operate normally and discharge it’s obligation to all the stakeholders without description. All the business location and service point of the bank is remn to the banking public normal business hours as the bank is in good position to meet all its obligations. Customers and the general public are assured that their deposit are safe and accessible as the bank is mainly undergoing a process on the road to successful recapitalization management and CIBN have assured customers that the position will loose from transacting business with the bank.
The Nigeria Deposit Insurance cooperation (NDIC) intervention and creation of Skyebank provides for the stabilization of the bank and will allow for continuing operation with no description as Skye bank will continue to enjoy the CBN guarantee for depositor and creditors.
The CBN guarantee for Mainstreet Bank has been extended to December 2011.
THE NAMES OF THE CHAIRMAN., MD & BOARD OF DIRECTORS
Mr. Timothy Oguntayo- Managing Director/CEO
Mrs. Amaka Onwughala- Deputy managing director.
Mr. Dotun Adeniyi- Executive Director.
Mrs. Ibiye Asime ekong- Executive Director.
Mr. Idris Yakubi- Executive Director
Mrs. Abimbola IZU- Executive Director
Mr. Victor Odozi- Independent Director
Dr. Janson Fadeyi- Non executive Director.
Mr. Victor Adenigbagbe- Non executive Director
Mr. Babajide Gbabiak- Non executive Director.
Mrs. Ammunnal Lawan Ali- Non executive Director.
2.3 CONCEPTUAL ISSUE OF INTERNAL CONTROL SYSTEM
One of the major causes of distress in bank is the ineffectiveness in the system of internal control, which has resulted into accumulation of bad debt, which were incurred through dubious means.
Therefore, an understanding of the subject matter of this project topic hold to the thoroughly understood, that is, the appraisal of internal control system as a means of preventing fraud in the banks (Elsie 2007) defined internal control in the bank the internal check and internal audit but whole of system of control financial and otherwise established by the management in order to carry on the safeguard the assets and secure as far as possible, the accuracy and reliability of its records. It can be deduced from the definition above that internal control comprises of:
- Internal check
- Internal audit
Internal check: an internal check is the aggregate of check and balance imposed on organization whereby the work of one person is verify independently and in complementary to the work of another, the objectives being the prevention or election of error and fraud. Internal check therefore is of necessity to start from allocation of authorities and division of work in such manner that one person (staff) does not see a transaction through from beginning to end. That is, staff duties are arranged in such a way that no one is allowed to carry through and to record every aspect of a transaction, so that there will not be elusion between two or more persons. Fraud is prevented and at the same time the possibility of errors are reduced to barest minimum. It will at this juncture vital to know what actually fraud is, fraud means to deprive other people the benefits which are accrued to them.
However, according to Razirowirs and Woltingin “coined of Justice” (1997) as an illegal and characterized by guilt, deceit and concealment and not dependent upon the application of physical force or violence or threat, it can be realized from the definition above that fraud comprises two fundamental element. The first one is “pre-medicated deceit while the other is peculation.
That is collective term for any combination of embezzlement defalcation or misappropriation of fund to control or prevent fraud duties among the starters of department are carry out by the whole of particular operation in which fraud is possible.
The reason being that when controls are inadequate, loopholes become glaring to the fraudulent person in the system and it is taken as an opportunity to oral such as fraudulent staff or person. Finally, it will be worthwhile to know its effective management control is part in place. It will considerably reduce that activities of a professional fraudsters from the fraudulent acts.
2.4 APPRAISAL OF INTERNAL CONTROL SYSTEM IN NIGERIA BANKING INDUSTRY
Ever since the inception of banker trade, there has been means of maintaining control after the transaction which is being carried out, however, with the rapid increase in financial institutions, the rates at which dubious act are being perpetrated is on the increase, these has therefore called for the appraisal of internal control in the financial institution most especially the banking industry has therefore embark on measure to reduce the dubious act drastically due to the increased in the rate of fraud through the following measures:
- Indepth identification of person opening account
- Pre-numbered financial instrument
- Internal audit or inspection
- Provision of sensitive equipment to track down the identity dubious persons.
Gone are the days when banks transact business with unidentified person, however in the present day, before any account can be opened in most financial institution such person will be provided better facilities by the bank, more so, the financial worth of such person will be ascertained, unscrupulous people do this to prevent fraud which is being perpetrated by capital flight.
PRE-NUMBERED FINANCIAL INSTRUMENT
Chapter one contain the introduction, statement of research problem, aims and objectives of the study, scope and limitation of the study, significance of the study, statement of hypothesis, definition of terms/concepts and plan , and organization of the study.
Chapter two treats past and current literature review which includes conceptual issue on internal control system the form and nature of bank fraud in Nigeria banking, remedies to fraud and forgery in Nigeria banking industry, different type of fraud in Nigeria bank in treating fraud in the bank industry.
Chapter three highlights research method and case study effect on the topic which includes design of study and data collection, restatement of hypothesis, historical background control system population and sample size techniques and limitation of the study.
Chapter four discuss the presentation and interpretation of data ascending to research question, tested hypothesis and case study, finally, generalization base on the outcome of the analysis.
Chapter five throw light on the findings, summary, conclusion, recommendations and suggestion for further study.
2.5 TYPES OF FRAUD
There are different categories of fraud which can be categorized as follows:
- Suppression: Suppression or cash lodgment cheque (especially cleaning cheques) and the documentation of vale such as, direct debts standing orders. This types of fraud is usually common with fraudulent staff to suppress third party(ies) to draw on their account when they hence no sufficient funds to accommodate such drawing.)
- Account Opening fraud: This involves the deposit and subsequent casting of fraudulent cheques. This happen when a person not knows to the bank account with the bank with false identification but unknown to the bank.
- Telex fraud: The transfer of fund from one location to another which is usually through telex. The message through codes can be altered to enable diversion of the fund to an account not originally intended.
- Double pledging: This type of fraud involves using of non-existing collateral to obtain bank facilities.
- Clearing fraud: Most clearing fraud bring on suppression of an instrument so that as the explanation of the clearing period applicable to the instrument, the collecting banks will give values as through the paying bank had confirmed the instrument.
- REMEDIES TO FRAUD AND FORGERIES IN NIGERIA BANKING SYSTEM
The consequence of fraud and forgeries in bank are very game to encounter through the following remedies:
- Effective control internal control: Management control systems have been operationally defined as the whole system of control, financial and otherwise established by the management in order to carry on the business of a company in an orderly manner, safeguard it asset as far as possible. The accuracy and reliability of the record which can be classified into.
- Internal checks: there are the operational controls which should be built into the banking system to simplify the processing of entities in order to secure prompt services to help in minimizing errors and act as an assurance against possible collusion among number of staff and customer of the bank.
- Internal audit or inspection: this involves the review of operation and records undertaken within the financial institution by specially assigned staff. The inspectorate play a dominant part in the wise to serve as watchdog on the bank funds and properties to ensure that expenditures and revenue are duly authenticated and authorized, which must be accounted for.
Finally, to ensure that accounting book to record are regularly balance in order to investigate real practices like fraud, forgeries and thief of money and properties.
- Proper security for financial instrument: sensitive financial investment should be properly kept and entrusted in a senior management staff should be indemnify scrutinized.
- Proper verification of signature: in order to prevent fraud and forgery, the internal control system should be so designed that proper verification of signature should be made before payment it done. More so, after the verification the number arrangement should be checked to not sequential arrangement of sensitive financial instrument.
- Central of dormant account: adequate measure should be taken so as not to allow for advantages use by unscrupulous member of staff, furthermore, the computer system for central our major processing and operation should be placed under heavy surveillance not to allow for intruders to perpetuate dubious act of forgeries and fraud.
Finally, close watch on the lifestyle to staff inevitable so as to know if there is drastic of sudden in the normal way of life fictitious are.
2.7 THE EFFECT OF FRAUD IN NIGERIA BANKS
The effect of fraud in Nigeria is overwhelming degrading and loss of confidence in the part entire population some of the major effect of fraud is
Huge financial loss to both bank as well as the customer the movement of fraud attempt succeed it tends to create a vacuum for loss in the liquidity expectation of bank and there by putting the hope of bank in shamble of loss interest as well as the principal investment of entire economics development.
- Loss of job, this leads to unemployment: it large sum of fraud is successful carried out, it may lead to the depression of such a bank thereby creating unemployment to the staff of such bank which could also create a nuisance into the economy.
- Waste of economics research investigation into a perpetrated fraud usually cause a lost of waste of financial enviable economic resources because time used to make profitable economy condition the continuance occurrence of fraud could make the entire population or confidence in such a financial institution because nobody want to invest in an unprofitable venture.
- Downed or loss to the genuine owner of the assets properties to some one other than the banks. This loss reduce the level of resources available for use in the operation to unwarranted losses for the bank and put the management for cash institution on its fees.
- Future loss income instance where fraud bank. In very bad circumstance where fraud occur with couping frequency and in which safe sizes, the bank may be free to close down and as a result wind up.
- Where large amount are involves, the reputation of the bank could jeopardize the customer confidence in the bank shaken, in our kind of financial environment where banking habit is being gradually encourage and develop, this could result in major set back.
2.8 GENERAL CAUSE OF FRAUD IN BANK
In order to be able to propose remedies for eliminate fraud in bank and the financial institution, it is useful to identify the commonest cause of fraud which explicitly discussed below.
- Poor Management: poor management gives rise to effective and poor internal control system indiscipline among member of staff creates an environment for fraud to flowing also inefficient management in terms of incompetence inadequate, supervision, inadequate control, poor coordination and ineptitude generate fraud.
- Staff Negligence: over independent of staff could give rise to fraud, there should not be two much operation with out security. This could allow fraud. Negligence could give birth to several anomalies such as lack of technical knowledge pressure and apathy.
- Large number of staff under a subordinate: when an official supervision gint along number of staff, there is a high likehood that fraud could go undetected.
- Lack of qualified staff: due to the fact that most organization aims at maximizing profit with no regard to the type of service to be delivered. This also contribute mainly to the depressed financial institution, the more the experience and knowledge of staff the less the like wood that fraud would pass a staff, the less the like hood that fraud would pass undetected unless with the support of that staff or any supervisor staff.
- Accumulation of annual leave: accumulation of annual leave special by staff holding sensitive such as branch manager, computer operator programme could enable them to cover up their mischief for a very long period which take awesome time before being detected.
- Poor inspectorate system: bank inspector should be made to inspect activities of bank from time to time but if the absence of the inspection is for relatively long period and time could encourage forgery and fraud perpetration.
CHAPTER THREE
3.1 RESEARCH METHODOLOGY
The importance of this chapter is due to the fact that research. Is systematic an intensive process of carrying on scientific method of analysis.
And this is in effect mean that some certain steps be involved to carryout a successful work in any research project. This state the type of data to be collected and the sources, what instrument to be used for data collection and data analysis.
Research methodology therefore, refer to design of necessary instrument by the researcher in order to gather the relevant information required to accomplish the research work for data collection, instrument include interview questionnaire textbook consultation e.t.c. while for data analysis, we have descriptive or inferential statistics both.
The research work on the appraisal of internal control system as a means of efficiency and profitability in Nigeria money deposit. The researcher has made use of both primary and secondary source of data.
3.2 SOURCES OF DATA
The primary data employed includes questionnaire and interview while secondary data includes, textbook, interred journals, current annual reports.
The population research is basically on the staff and plc customer of the Skye Bank Plc in Nigeria while both describe and inferential statistic has to be employed to present and analysis of the data collection.
3.3 POPULATION OF THE STUDY
The population of the study is a cause of all items of subject that possess the characteristics or that has knowledge of the phenomenon, being studied. The nature of the population must be known to determine the choice of sampling techniques.
3.4 METHOD OF DATA COLLECTION AND DATA ANALYSIS
The method of data collection used in accomplishment of this research work involves both primary and secondary data collection.
Primary Data: these are data collected for immediate and specific purpose they are usually original to the researcher and it’s reliability can be depended on the data collection through his means.
The primary data is usually in the time of face to face interview and use of questionnaire for the purpose of the research work mean of interview as well as questionnaire distribution within the member of staff of Skye Bank Ilorin is mainly used as one of the method of primary data is a form of interview compensation, which is carried a population is finite if all it’s population usually includes age, sex, occupation, ethnic group or nationality income level education income level education residence, e.t.c. each research project would require some unique description for a student in the campus, the relevant characteristic to be included.
A sample is a part of a population before a sample is drawn; the research must define what is his unit of analysis of unit of study, i.e. whatever is being studied and what constitution the population from which is known as a case and statistic it is known as N for example, all unit of study. All student admitted into University had both English and Mathematics at Credit level may be another unit of study. These two characteristics may be described as all units of study i.e. all student with first class had both English and Mathematics at credit level on admission.
The size of the sample itself the rationale for choosing that size of sample, the manner of selecting the sample is an important as the sample itself. Out with the aim of obtaining vital information.
The two main method of interview are also employed that is, the instructed interview, the structured of interview situation while the interview did not have a planned series of question, while the unstructured of interview involves the freedom of giving out question to the staff of the bank and the response to the question asked spending.
Secondary data: these are data which originate from author from existing prepared method such as the journal, Magazine billions documented work of reputable bankers, reference are also make from term/ seminar paper. The bulk of these method of data collection are found in libraries. However, the use of secondary data have been so useful in the preparation and compilation of this research work, which are
- Easy accessibility to relevant data and information needed research work.
- It source cost and economical to obtain.
LIMITATION OF THE METHODOLOGY
The study is limited by a number of factors.
First, some respondents refuse to return their questionnaire also response to the question might not necessary represent the opinion of the respondents despite the technique partial a fair representative sample and there by reduce blast the minimum.
Further, some of these interview are reluctant to answer questions because of the fear that their answer might have a negative effect on the bank.
Three, and finance constraint were other difficulties encounter during the course of data collection.
Thus, did not allow this for visiting all the Skye Bank Plc in Nigeria, and thus, data collected were limited.
However, in spite of all these shortcomings, effort were made to analyze the available data to establish the relationship among different variable observed.
Kwara State Polytechnic
Department of Banking and
Finance, Ilorin
1/06/2016
The Manager
Skye Bank PLC,
Post Office,
Ilorin, Kwara State.
Dear Sir,
QUESTIONNAIRE
I am a final year student of Department of Banking and Finance, Kwara state Polytechnic, Ilorin.
As part of the condition for the award of Higher National Diploma (HND) in Banking and Finance. I am conducting a research topic appraisal of internal control system as a mean of efficiency and profitability in the Nigeria Deposit money banks using Skye Bank Plc as a case study.
I shall therefore be grateful if the attached Questionnaire could be completed as objectively as possible. Please be assured that any information that given in this regard will be treated confidentially and used for the purpose of this academic exercise.
Thanks for your unreserved assistance.
Yours Faithfully
Babatunde Omolade Omolayo
HND/14/BF/FT/146
QUESTIONNAIRE
SECTION A
Tick the appropriate option
- Sex: A. MALE( ) FEMALE ( )
- Age: A. 20-40 ( ) 41 and above
- Qualification A. 1st Degree and below ( ) B. Post graduate and above.
- Year of experience A. Below 44 years B. 4 years and above ( )
- What is your area of discipline? A. Banking and Finance ( ) B. Accounting ( ) Business ( ) D. Other ( ). Please specify
- Which department do you belong ____________________
- Post held ____________________________________________
- Type of Account: A. saving ( ) B. Current ( ) C. Fixed deposit ( ).
- Marital status A. married ( ) B. single ( ) C. divorced/ widow ( )
SECTION B
- Did you agree that Appraisal of Internal control system as a mean of efficiency and profitability in the Nigeria deposit money bank. Agree ( ) B. Disagree ( ). C. Indifferent.
- Did you agree that Internal control plays role in preventing and detecting fraud in Nigeria banking industry: A. Agree ( ) B. Disagree ( ) C. Indifferent
- Did you agree that Internal Control System contribute toward the development of the Nigeria bank: A. Agree ( ) B. Disagree C. Indifferent
- Did Internal control regulate the reliability of Financial reporting A. Agree ( ) B. Disagree ( )
- Did you agree that Internal control system make the workers to compliance with the law and regulation of the Nigeria banking industry A. Agree ( ) B. Disagree ( )
- Did you agree that internal control system will promote effective in Nigeria banking industry A. Agree ( ) B. Disagree ( ).
SECTION C
- Do you think that profitability will serve as the only means to set up new generation of viable and production of quality service? A. Agree ( ) B. Disagree ( ).
- What are the challenges of internal control system in Nigeria banking industry? ________________________
- What are the benefits of internal control? _________
- Is internal control help in recovering stolen money ____________________________
- What are the constituents of internal control system _____________________________________________
- Did your bank make funds available to maintain standard quality delivery to your customer? Yes ( ) B. No ( ) C. Indifferent
- Do you think quality service will help in facilitate your banking operation . Yes ( ) B. No ( ) C. Indifferent
- Did your bank derived any benefit from quality service delivery on profitability. Yes ( ) B. No ( ) C. Indifferent.
CHAPTER FOUR
4.1 DATA PRESENTATION AND ANALYSIS
This chapter is designed to present and analyze data on the appraisal of internal control system as a means of efficiency and profitability in the Nigeria Banking Industry.
Eighty five respondents participated in the study by responding to the questionnaire designed by the researcher and approved by the supervisor.
All the data collected are analyzed descriptively with use of illustrated tables, samples percentage and simple bar chart.
4.2 PRESENTATION OF DATA
In the application of primary and secondary mode of data collection several questionnaire were distributed among members of staff at the Skye Bank, Ilorin. The distribution is based on several department of the loan through the bank is not entirely established due to the fact that the branch has just been in experience and their responses from the basic for the comprehensive accomplishment of the project.
ANALYSIS OF DATA
From the data collected, the branch has only 25 members of staff ranging from Junior staff to the Manager who holds administrative control of the business or establishment. Base on the expenses are analyzed, questionnaire will be employed and response are analyzed below:
Table 1: showing the total number of respondents
Table 1 reveals the number of respondents in the bank
Table 1, Sex or Gender
| Option | Number of respondents | Percentage (%) |
| Male | 15 | 60 |
| Female | 10 | 40 |
| Total | 25 | 100 |
Research survey, 2016
|
|
The table above shows that male is 60% while female is 40%
Table 2: Marital Status
| Option | Number of respondents | Percentage (%) |
| Single | 12 | 48 |
| Married | 10 | 40 |
| Divorced | 3 | 12 |
| Total | 25 | 100 |
Source: Research survey, 2016
From the above table 12% of the respondents were single, 10% were married and 3% divorced.
QUESTION 15: WITH PUBLISHING OF INTERNAL CONTROL SYSTEM HOW DOES PROFIT RATE LOOK LIKE?
| Option | Number of respondents | Percentage (%) |
| Certainty | 20 | 80 |
| Not certainty | 4 | 16 |
| Indifference | 1 | 4 |
| Total | 25 | 100 |
Source: Research survey, 2016
Table above shows that 90% agree on how profit rate look while 16% not agree and 4% is indifference.
TABLE III: RESPONDENT EDUCATIONAL QUALIFICATION
| Option | Number of respondents | Percentage (%) |
| HND/BSC | 7 | 28 |
| MSC | 2 | 8 |
| PGD | 3 | 12 |
| ND | 10 | 40 |
| O’LEVEL | 3 | 12 |
| TOTAL | 25 | 100 |
Source: Research survey, 2016
QUALIFICATION
The table above shows that age respondents with HND/BSC as 20% follow by 8% of MSC and PGD is 12% while ND is 40% and O/level is 12% of the respondents.
TABLE IV RESPONDENT PERIOD OF EMPLOYMENT
| Option | Number of respondents | Percentage (%) |
| 21-30 | 12 | 48 |
| 31-40 | 10 | 40 |
| 40-above | 3 | 12 |
| Total | 25 | 100 |
Source: Research survey, 2016
The table above shows that the age 21-30 is 48% age 31-40 is 40% and age 41 and above is 12%.
ANALYSIS OF ANNUAL REPORT
| Years | Number of attempted | Amount involves | Number of success | Percentage of amount success |
| 1995 | 11 | 5.2M | 6 | 76% |
| 1996 | 8 | 3.7M | 3 | 54% |
| 1997 | 14 | 10.2M | 10 | 80% |
| 1998 | 10 | 8.0M | 3 | 50% |
| 1998 | 7 | 6.0M | 2 | 37% |
| Total | 50 | 33.1M | 25 |
Source: Skye bank yearly chief inspector report, it can be deducted from the five year fraud case in the bank that fraud attempts and success have been on the doctrine with the exemption of 1994 figure which has a very high number of attempts this is because there were political and labour crisis in the Country in which dubious member of staff wanted to use the opportunity to enrich their pocket because most of the subordinate who serves as control staff were not available because of crisis in town during 1997.
After mat of the crisis it was discovered by the bank some staff has already stolen that huge amount with collusion with some bank customers some of the fraud were forges of customers signature while other were done by posting facilities figures into the credit column account, thereby inflating the balances of such account.
Other type of fraud discovered during this period that is cheques that are yet to be processed through clearing house were given value which is usually of unsettle long outstanding of loan and which is very difficult to trace their origin. With alarm rate of fraud in 1997, the bank then decided to launch war against fraud and deal decisively with any staff in fraudulent act.
Generalization
The research is all about the appraisal of internal control system as a means of efficiency and profitability in Nigeria banking industry.
The researches have been conducted in such a way that the research methodology used here very productive.
A large percentage of the questionnaire distributed was returned and well completed, thus making the outcome of the show a high degree of reliability.
According to the analysis, all respondents know percentage of the amount is (808) in section B, the table show the number that attempted fraud are low to those that are not attempt in internal control system lead to efficiency and profitability.
All data analysis are clearly stated with sample percentages.
Internal control systems have made a lot of efficiency profitability for the bank alone but to the general economy at large.
CHAPTER FIVE
FINDINGS, SUMMARY, CONCLUSION AND RECOMMENDATIONS
5.1 FINDINGS
To achieve this goal, structured interview techniques were used to aid the gathering of relevant and useful which were collected before arriving at the researcher findings.
The first hypothesis has been affirmed in table I and II where it is crystal clear that fraud lead to unwarranted losses to both the bank and customers.
As regards second hypothesis, the analysis in table III and IV proved that more than 75% of bank frauds success with active connivance or collaboration of bank staff.
The third hypothesis has also been affirmed by the analysis in table VI which gave credit to the popular belief that management control measure in Nigeria are not without 100 poles on the other hand, the staff punishment are meant to serve as determent to fraudulent have ironically turned to a source of motivation with its damaging consequences uncurbed.
The fourth hypothesis has also been affirmed as analysis in table VII. About 35% of the budget annual running cost of banks is spent on preventing and detecting fraud.
This rate is high enough to contribute to the improvement of banking services to the customer but which its attempt to save our society from an incurable diseases.
The fifth and the last hypothesis has also been corrected proved as analysis in table V and Vi that banks are generally skeptical about reporting cases of the public.
The inference drawn from this analysis is that tools used to commit frauds are diversified and the experience of the fraudsters become more enriched with each repeated attempt to defraud. The further affirms the theory that there is a mature relationship between the existence, growth and sophistication of crime and the socio-economic and complexity of every society.
5.2 SUMMARY
The research work has been able to unravel some mysteries associated with forgeries and fraud in the banking sector of the financial institution in Nigeria. The effect therefore has nevertheless been the beneficial to the economy.
This has made this project to appraisal of internal control system in bank to the prevention and also note the cause of frauds in the financial institutions.
The main causes of frauds and forgeries in the banking sector are improper and poor internal control and not only the causes manner and mode of employment of staff has also cause a great depression to the financial sector.
Fraud has over the year taken different dimensions and increased in sophistication, today banks are concerned and worried about system in the banking industry. The rampant growth of economic crime and financial fraud threatened the financial security of bank and even nation as a whole.
The project have therefore try as much as possible to make comprehensive report on the appraisal of internal control system on the commercial banks.
5.3 CONCLUSION
The efficiency of any organization depends on the internal control system. Before forgeries and fraud can be achieved there must have been some sense of improper coordination from the management of such organization.
The inefficiency to perpetrate fraud both within and outside the organization, there are several method of perpetrating fraud ranging from the Junior staff to the senior staff.
Most of the fraud attempts are as a result of close monitoring from the dishonest staff within the financial institutions and collaboration from the extended body, which are mostly the customer of the bank. There are times which fraud are not international but due to unnoticed errors from the initial aspect of the transaction which are capitalize on by the dishonest member of the staff.
Therefore, the management of any financial institution mostly banks should note that any person who initiates the start of a transaction must not see the end but should be taken one by other trusted and efficient staff who will monitor and see proper recording of the subordinate staff.
The management in this effort to monitor fraud and forgeries which are being perpetrated and should be concern about the welfare of its staff because an efficiency in any internal control system and adequate training.
5.4 RECOMMENDATIONS
The importance of any effective internal control system cannot be over emphasized in financial institution for the internal control system to be efficiently effective, the following recommendations should be taken into consideration.
Rotation of employee to an extent, practicable rotation of member of staff in the sensitive section should be duly carried out at intervals, if this is done, the members of staff holding such initial position will break up not to allow any irregularities which are uncovered with correspondingly promote the effectiveness of the internal control system.
Competence of personnel, even the best designed of internal control will work satisfactorily unless the adequate and well trained member of staff involves in the operational activity must be professionally and training and re-training should be carried out or embark upon so as to move along way the dynamic environment in which the bank exists. They will go a long way in improving the effectiveness of any internal control measure taken by the management.
The environment in which internal control operates is constantly changing because of the influx of some factors in formulating needs in the policies need to be understood so that duties should be properly segregated and linked together in horizon so that all efforts will be geared toward achieving same goals by institution in a system of graduated limit.
Establishment of deal control system by means of allowing transaction to pass through mechanism by which range, members of staff will be the achievement of an operation from the beginning to the end which will allow for proper supervision and security and reducing errors and irregularities.
- A good working atmosphere where there will be free flow of bankers to customer relationship, this will motivate both staff and customer to work synergistically and proper solution which might contribute to measures towards minimized work on fraud.
- Statutory requirement of rendering returns for effectiveness of all policy measures which the government monetary and supervisory authority might have designed the measure to curb.
- The preparation of application manual which will not allow intruder to gain access so easily through the security outfit which will be provided within and out of the system network.
- Establishment of inspectorate unit, which will commensurate powers of authority to embrace some degree of independence within the corporate organization structure.
- Proper verification of signature on all sensitive transaction, this will go along way in reducing forgeries and frauds, which could be disaster to the internal control system.
- Control of account to make sure these account are not used by dishonest staff to channel fraudulent transactions.
- Finally, the use of Regis-scope commercial should be installed to monitor the personality of individual involved in large financial transactions.
More so, management should let members of the staff to be aware of their valuable potential and are capable to be treated qualitatively honored which could motivate to allow proper and effective management control towards eradication of fraud and forgeries.
REFERENCES
Archibony E.E. (2004)The Bank Inspector Liberia: New born Publisher.
Awe, O.I. (2005). The theory and practice of Auditing. 2nd edition. Lagos. Gilgal creation and publications.
Fakunle, B.(2006). Audit companion, Califonia;
University of Califonia.
Horn by, A.S. (2001). Oxford Advance Learner’s Dictionary of current English. 5th edition, Oxford: Oxford University press.
ICAN. (2006). Financial reporting and audit practice Nigeria, Institute of Chartered Accountants of Nigeria.
Mayo and B.P.P (2003). ICAN study Test on Auditing and Investigation. Oxford: Oxford University press.
Thomas R.G (1964): our modern banking and monetary system wood clift prentile hall.
Warine E, C (1979): recovery of doubtful debt jurkirnas of institute of banker volume 107
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