Impact of Internal Control Systems on Banking Indstry

Only available on StudyMode
  • Download(s): 271
  • Published: May 12, 2011
Read full document
Text Preview
Search in Medwell

* Home
* Journals
* For Authors
* For Subscribers
* News/Media
* Contact Us

*
Related Links
*
Abstract
*
Fulltext PDF
*
Fulltext HTML
*
References
*
Citation

*
Journals by Subject
*
Agricultural Sciences
*
Animal Sciences
*
Applied Sciences
*
Business Sciences
*
Earth Sciences
*
Engineering
*
Information Technology
*
Medical Sciences
*
Molecular Sciences
*
Pharmacology
*
Social Sciences

* Home
* Journals
* Pakistan Journal of Social Sciences
* Volume 6 Issue 4, 2009
* Fulltext HTML

Pakistan Journal of Social Sciences
Year: 2009 | Volume: 6 | Issue: 4 | Page No.: 181-189
DOI: 10.3923/pjssci.2009.181.189
Impact of Internal Control System in Banking Sector in Nigeria Olaoye Clement Olatunji

Abstract: The Central Bank of Nigeria reported that the backward development in Nigeria was attributable to weaknesses in the internal control systems of the banks. This has clearly pointed out the picture of how fraud has been penetrated in the financial strength of Nigerian Banks. In a nut-shell, the damage which this menace, called fraud has done to the banks is innumerable and needs urgent attention. Therefore, the attempt to put an end to this economic degradation, gave rise to the topic of this research study the impact of internal control in the banking sector in Nigeria with Wema Bank of Nigeria PLC as a case study. However, this study is aimed at verifying the conception that an effective and efficient internal control system is the best control measure for preventing and detecting fraud, especially in the banking sector. Data captured for this study, were analyzed through descriptive and inferential statistical methods. The descriptive analysis involves the use of percentages, tabulation and graphical presentation. While the inferential statistical method involved the use of the chi-square. The functions of fraud prevention, detection and control are interwoven, as the three works together to eliminate fraud and fraudulent tendencies. Therefore, internal control is highly significant in fraud detection and preventions in banking sector in Nigeria.

INTRODUCTION

Internal control, the strength of every organization, has become of paramount importance today in Nigerian banks. The reason being that the control systems in any organization is a pillar for an efficient accounting system.

The need for the internal control systems in the organizations, especially banks, cannot be undermined, due to the fact that the banking sector, which has a crucial role to play in the economic development of a nation is now being characterized by macro economic instability, slow growth in real economic activities, corruption and the risk of fraud.

Fraud, which is the major reason for setting up on internal control system, has become a great pain in the neck of many Nigerian bank managers. It has also become an unfortunate staple in Nigeria’s international reputation. Fraud is really eating deep into the Nigerian banking system and that any bank with a weak internal control system, is dangerously exposed to bank fraud.

The CBN reported that cases of attempted fraud and forgery in banks, as at half-year 2007 have surpassed what was recorded for the whole year 2006. The CBN half-year report for 2007, revealed a total of 741 cases of attempted fraud and forgery, involving 5.4 billion, $35,406.1, 150 Euros were reported as at June, 2007. In 2006, 1,193 cases were reported involving 4.6 billion, $1.8 million and 14,389.7 pound sterling. The CBN also reported that the backward development was attributable to weaknesses in the internal control systems of the banks. This has clearly pointed the picture of how fraud has...
tracking img