ABSTRACT

This study has as its primary objective to evaluate Internal Audit as a tool for Fraud prevention and detection in commercial Banks in Nigeria (A Study of selected Banks).The intention being to determine whether Internal Audit is used as a tool for fraud detection and prevention in commercial Banks in Nigeria.   The study explained the various activities undertaken by an Internal Auditor in Fraud prevention and detection in commercial Banks in Nigeria, and the activities of the central Bank of Nigeria with respect to Bank Inspections. The study, also reviewed in detail from the on- set Banking activities as written with its attendant Bank failures and advancements especially in the old and modern day with emphases on the role of an Internal Auditor in commercial Banks in Nigeria.  The approach adopted in the study is the use of questionnaires for the collection of Data relating to the Hypothesis designed to test the extent which Internal Audit as a tool for fraud detection and prevention in commercial Banks is accepted and used. As well 94.4%

respondents said that it serves the Purpose for fraud prevention and detection in commercial Banks in Nigeria.

The Null and Alternative Hypothesis designed for this purpose are Ho: There is no significant relationship between Internal Audit role failure and

Fraud prevention and detection in commercial Banks in Nigeria.

H,: There is significant relationship between Internal Audit role failure and fraud prevention and detection in commercial Banks in Nigeria.

The Hypotheses were statistically tested at the 5 % level of significance using the Non parametric chi- square. The first Hypothesis was rejected as 83 % of Respondents said that Internal Audit is performing its duties efficiently, effectively and economically in fraud prevention and detection in commercial Banks. The Hypothesis was also tested on the basis of professional qualification for Internal Auditors in commercial Banks. Also the knowledge of the respondents about Banking with respect to Internal Audit was tested. The conclusion from the study is that Internal Audit plays vital role in fraud Prevention and detection in commercial Banks in Nigeria.  Its failure can easily lead to fraud and finally Bank failures. Presently, according to the respondents75%  said that Internal Audit in the commercial Banks meets its obligation in fraud  Prevention and detection. Therefore, it is performing in Fraud prevention and detection in commercial Banks in Nigeria. Under the recommendations made by the researcher which includes: suggestion on improved reporting system; systems put in place to ensure payback of loans granted to customers by Banks; constant transfer and postings of Audit staff based on duration spent in a particular Branch; modern Internal Audit practice, where the Auditor is free and obliged to audit virtually everything; payment of adequate remunerations to audit staff and finally as attested by majority of the respondents on irregular scheduling of Inspection. Where 68% said Inspection should be based on irregular visits to achieve results.

TABLE    OF   CONTENTS

Title  Page                                                                                                                 i 

Evaluation  Assessment..                                                                               ii 

Declaration                                                                                                    iv 

Certification                                                                                                     v 

Dedication                                                                                                       vi

Acknowledgements                                                                                         vii

Table of Contents                                                          ,                                                                                     viii

 List  of Tables                                                                                                  xi

 Abstract.                                                                                                         xii

CI-IAPTER   ONE

Introduction                                                                                               1

1.1 Background of the study                                                                            1

1.2 Statement  of the study                                                                         4

1.3  Purpose of the study                                                                                   4

1.4  Research questions

 1.5  Research hypotheses                                                                                 5

1.6 Significance of the study                                                                             6

1 . 7 Scope of the study                                                                                       6

1.8 Limitations of study                                                                                      7

1.9  Definition  of basic terms                                                                                7

CHAPTER    TWO

Review of related literature                                                                          10

2.1 Banking  in Nigeria                                                                                                 10

2.2 Evolution  of Banking  in Nigeria 15

2.3 Indigenous Banking in Nigeria

2.4 Banking Legislation in Nigeria 17

2.5 Era of Deregulation       .,                                                                                20

2.6 Banking Inspection in Nigeria                                                                        21

2. 7 Reasons why  Banks are supervised      "                                                22

2.8 Scope of CBN's supervisory roles                                                                  23

2.9 Auditing                                                                                                           2 

2.1  O Types of Internal.Audit.                                                                                27

2. 11 Key Assumptions about the Internal Audit.                                          :              29

2.12  Objectives of Internal Audit.                                                                         34 

2.13  Scheduling an Audit..                                                                                   37

2.14 Inspection Reports                                         :                                                                                                       38                          

  2.15  Limitation  of prospects of Inspection in Banks                                           .40

CI-IAPr.rER THREE

Research Methodology                                                                                .43

3.1   Research Design                                                                                           43

3.2  Area of study                                                                                                   43

3.3 Population of study                                                                                .43

3.4 Statistical Determination of sample size                                                       .44

   3. 5 Data collection Method                                                                                  .44 

3.6 Operational Measures of variables                  :                                                                                                                         .46

3.7 Method  of Data Analysis                                                                                         46

3,8 Sample  Techniques          

CI-IAPTER    FOUR

Presentation and Analysis  of Data                                                              .47

4.1 Presentation of Data                                                                                     .47

4.2  Test of Hypotheses                                                                                        54

4.3  Discussion of findings                                                                                    58

CHAPTER     FIVE

Summary,  Conclusion,  Recommendation                                                   60

5.1   Summary of findings                                                                                      60

5.2  Conclusion                                                                                                     6.0

5.3  Recommendations                                                                                         60

References                                                                                                           63

APPEND IX                                                                    r •..•..••.•.••..•...  65

Questionnaire                                                                                                      66