INTERNAL CONTROL SYSTEM EFFECTIVENESS AND FRAUD PREVENTION INNIGERIAN DEPOSIT MONEY BANKS

Abstract

Over the years, there has been an emphasis not only on the presence of internal control system in the banking sector but also the efficiency of internal control. There is possibility for internal control unit to be present but they are ineffective. This study was carried out to examine internal control system effectiveness and fraud prevention in deposit money banks in Nigeria. The study adopts a descriptive analysis which helps in summarizing the data. Inferential statistics was used such as the multiple regression analysis to explain internal control system effectiveness and fraud prevention. Questionnaires were administered to Nineteen deposit money banks in Nigeria and a total of 40 questions were asked and answered accurately. Cronbach Alpha Coefficient was used to test the reliability of the measurement and as such are reliable because the entire alpha coefficients are greater than 0.6. The findings of the study show that there is a positive and significant relationship between control environment and fraud prevention mechanism The overall result showed that control environment (CE), risk assessment (RA), information and communication (IC) and monitoring (MO) have a positive and significant impact on fraud prevention, whereas control activities have a positive but insignificant effect on fraud prevention. Based on the findings, the study recommends that organizations’ management and those saddled with the responsibility of governance of companies should always be alert to all possible circumstances (business risks) that may threaten the banks’ ability in achieving its set objectives. Management can achieve this through regular assessment of the operating environment of the organization to identify threats arising from competition, legislation, technological changes, etc. The banking sectors should carryout regular reviews of their control system. This can be done at least semi-annually. The management should ensure it receives timely, relevant, and reliable reports for decision-making.