Internal Control System and Fraud Prevention in Nigeria Financial Institutions

This research investigated the impact of internal control system on the prevention of fraud in some selected Nigerian financial institutions. In particular, this study examined the impact of risk assessment, control activities, monitoring activities, and information and communication systems on the prevention of fraud. Descriptive survey research method was employed for this study with the use of structured questionnaires as data collection instrument. Data was collected from 109 employees of Access Bank Plc and Guaranty Trust Bank Plc using Taro Yamane sampling technique. Data collected was analyzed using descriptive statistics and multiple regressions. The result shows that risk assessment had a significant positive relationship with fraud prevention. Also control activities has a significant influence on reducing fraud occurrence in that they aid strict adherence to internal policies and procedures. Monitoring activities such as internal audits, compliance reviews enhance significantly the detection and prevention of fraud. It was further discovered that the implementation of adequate and robust information and communication systems can positively impact on the prevention of fraud as these systems aid quick reports of fraud, efficient flow of information and timely responses. The conclusion from the study is that a robust internal control system is crucial to the prevention of fraud in Nigerian financial institutions. It was, therefore, recommended that these financial institutions enhance their risk assessment process, ensure proper execution of control activities, enhance their continuous monitoring process and utilize secure information and communication systems. Also there should be proper and continuous training for all employees, and a stronger management commitment to ensure proper implementation of internal control systems.