ABSTRACT

Bank 1iilures and widespread losses over the two decades, has however,

elevated the importance of internal control system within the formal financial

sector worldwide. Organizations set up internal control system most at times

because they are required by law to do so; but then, how many has actually

made a point of duty to train and educate the employees on how to use this

internal control system since its effectiveness depends on the competency and

dependability of the people using it. This research study defines internal control,

as a means to an end; it is aimed at verifying the conception that an efficient and

effectively implemented internal control system is the best strategy for

preventing and detecting fraud in the banking sector; thus the objective of this

research is to examine the effect of internal control system, when it comes to

prevention and detection of fraud. Data captured in this study was analysed

through statistical techniques using likerc scale. Chi square(x2) was also used to

analyse the response of the respondents. The statistical techniques involved the

use of modified likerc scale, i.e. agreed (A), strongly agreed (SA), disagree (D),

strongly disagreed (SD). The source of the data for the research was primary

source. Questionnaire and interviews were used as the data collection method

for the study. Based on the analysis, effective internal control system was seen

not to be the only significant effect in detection and prevention of fraud in

Nigerian banks, but external factors like the CBN policies, NDIC, also help in

fraud detection and prevention.