FRAUD CONTROL MEASURES IN THE PUBLIC SECTOR IN NIGERIA
This study examined fraud control measures in the public sector. In order to actualize the objectives of the study, various literature and theoretical pissues were discussed. The instrument used for the purpose of this research was gathered through primary and secondary sources. The primary source is through questionnaires while the secondary source extracts from textbooks by different authors, journals and other publications. The mass of information generated from the questionnaires was summarized in form of table and analyzed using simple percentage. The researcher administered one hundred (100) questionnaires to respondents, out of which eighty (80) were retrieved for the purpose of presenting and analyzing responses to issues raise in the questionnaires. The data collected was analyzed using Z-test statistical tool. The findings from analysis revealed among other things proper and effective internal control system can minimize the incidence of fraud in the public sector. Recommendations were however made by the researcher.
TABLE OF CONTENTS
CHAPTER ONE: INTRODUCTION
Background to the Study
Statement of the Problem
Objectives of the Study
Scope of the Study
Significance of the Study
Limitation of the Study
Definition of Key Terms
CHAPTER TWO: LITERATURE REVIEW
2.1 Meaning of Fraud
2.2 Management Control Measures on Fraud
2.3 Types of Fraud
2.4 Cause of Fraud
2.5 Methods of Preventing Fraud
2.6 Current Fraud Practices in Nigeria
2.7 Cheques Frauds
2.8 Fraud Control Variables
2.9 Prudential Guidelines for Public Sector
Causes of Fraud
Types and Causes of Public Sector Fraud
Internal Control and Types of Control
Internal Control Measures for Controlling Fraud in Public
Sector in Nigeria
Expected Qualities of a Public Sector for Effective Internal
CHAPTER THREE: METHODOLOGY
The Population and Sample
Data Collection Method
Sources of Data
The Research Instrument
Data Analysis Method
CHAPTER FOUR: DATA ANALYSIS AND INTERPRETATION
4.2 Descriptive Statistics
4.3 Test of Hypothesis
CHAPTER FIVE: SUMMARY OF FINDINGS, CONCLUSION AND RECOMMENDATIONS
Summary of Findings
BACKGROUND TO THE STUDY
Fraud, according to Adeniji (2004:354) and ICAN (2006:206), is an intentional act by one or more individuals among management, employees or third parties, which results in a misrepresentation of financial statements. Fraud can also be seen as the intentional misrepresentation, concealment, or omission of the truth for the purpose of deception/manipulation to the financial detriment of an individual or an organization which also includes embezzlement, theft or any attempt to steal or unlawfully obtain, misuse or harm the asset of the organization, (Adeduro, 1998 and, Bostley and Drover 1972). Fraud has increased considerably over the recent years and professionals believe this trend is likely to continue.
According to Brink and Witt (1982), fraud is an ever present threat to the effective utilization of resources and it will always be an important concern of management. ISA 240 ‘The Auditor’s Responsibilities to Consider Fraud in an Audit of Financial Statement (Revised)’ refers to fraud as “an intentional act by one or more individuals among management, those charged with governance, employees or third parties, involving the use of deception to obtain an unjust or illegal advantage”.
Aderibigbe and Dada (2007) define fraud as a deliberate deceit planned and executed with the intent to deprive another person of his property or rights directly or indirectly, regardless of whether the perpetrator benefits from his/her actions.
Weirich and Reinstein (2000 cited in Allyne & Howard 2005), define fraud as “intentional deception, cheating and stealing”. Some common types of fraud include creating fictitious creditors, “ghosts” on the payroll, falsifying cash sales, undeclared stock, making unauthorized “write-offs”, and claiming excessive or never-incurred expenses. Pollick (2006) regards fraud as a “deliberate misrepresentation, which causes one to suffer damages, usually monetary losses”.
Albrecht et al (1995 cited in Allyne & Howard, 2005:287) classified fraud into employee embezzlement, management fraud, investment scams, vendor fraud, customer fraud, and miscellaneous fraud. Fraud also involves complicated financial transactions conducted by white collar criminals, business professionals with specialized knowledge and criminal intent (Pollick 2006).
The level of fraud in the present day Nigeria has assumed an epidemic dimension. It has eaten deep into every aspect of our life to the extent that a three old child talks about yahoo mail or 419, newly discovered sobriquet for advanced free fraud that is hunting our public industry. Nigeria, with all of its natural and human resources tethers on the brink of destruction because of fraud. Much of what we do is “cutting leaves” instead of dealing with the root problem.
Generally, fraud takes its roots from the human heart. It is an axiom that the heart is deceitful above all things and is desperately wicked. Fraud is the number one enemy of the business world, no company is immune to it and it is in all works of life, Nwankwo (1991). The fear is now rife that the increasing wave of fraud in the public sector in recent years, if not arrested might pose certain threats to stability and the survival of individual public sector and the performance of the industry as a whole and no area of the economy is immune from fraudsters and even the public system. Fraud if not checked might cause run on in the public sector.
STATEMENT OF THE PROBLEM
The problem which militates against fraud control in the public sector which this study seeks to proffer solution to are: lack of efficient and effective internal control system in the public sector, inability of the public sector officials to consistently follow the established public sector procedures in the course of their operation, inadequate training opportunities to the employee on fraud detection, non availability of developed process of identifying fraud, related control designed to minimize the risk involved constantly, review and update, and lastly, ineffective physical control system of operation.
Against this backdrop, the following research questions are raised:
Does proper and effective internal control system minimize the incidence of fraud in the public sector?
Do fraud affects the public sector mostly and can erode the assets of any organization if it is not controlled or minimized?
Does the auditor assess internal controls used by the public sector to prevent or detect the theft of assets?
OBJECTIVES OF THE STUDY
The objective of this study to examine fraud control measures in the public sector.
The specific objectives are:
To determine if proper and effective internal control system can minimize the incidence of fraud in the public sector.
To verify whether fraud affects the public sector mostly and can erode the assets of any organization if it is not controlled or minimized.
To find out if the auditor assess internal controls used by the public sector to prevent or detect the theft of assets.
The following hypotheses have been formulated to serve as a base for this research;
Ho: Proper and effective internal control system cannot minimize the incidence of fraud in the public sector.
H1: Proper and effective internal control system cannot minimize the incidence of fraud in the public sector.
Ho: Fraud does not affect the public sector mostly and cannot erode the assets of any organization if it is not controlled or minimized.
H1: Fraud affects the public sector mostly and can erode the assets of any organization if it is not controlled or minimized.
Ho: The auditor does not assess internal controls used by the public sector to prevent or detect the theft of assets.
H1: The auditor assesses internal controls used by the public sector to prevent or detect the theft of assets.
SCOPE OF THE STUDY
This study is undertaken to examine the fraud control measures in the public sector. The population of the study is the entire public sector in Nigeria, while the sample size is some selected public sector in Edo State. In using time series, data from a period of five years is used (i.e. 2007 to 2011).
Geographically, the study will be conducted in Benin City, Edo State.
SIGNIFICANCE OF THE STUDY
It is expected that this study would consolidate existing literature on the issues surrounding the relationship between fraud and the public sector. The study would also facilitate the examination of the effects of fraud and the public sector and thus boosting the empirical evidence from Nigeria. Furthermore, given the empirical nature of the study, the outcome of this study would aid policy makers and regulatory bodies in economic modeling and policy simulation with respect to the selected variables examined in the study.
The result of the study would be of benefits to government, investors and corporations in examining the effectiveness of the fraud control measures in the public sector.
It will also be useful in stimulating public discourse given the dearth of empirical researches in this area from emerging economies like Nigeria. Finally, it would also add to the available literature on the area of study while also providing a platform for other researchers who may want to further this study.
This study will make do with both the primary and the secondary data. The primary source of data collection will base on the information obtained through questionnaires administered to elite respondents, while the secondary data will rely on the existing literatures on the subject matter, e.g. textbooks, journals, articles etc.
A total of 100 questionnaires will be administered to respondents. Thereafter, Z-test statistical tool will be used to test the hypothesis.
LIMITATION OF THE STUDY
There is always a challenge of ascertaining the level of data accuracy especially with regards to time-series data. The study considers this a limitation.
DEFINITION OF KEY TERMS
Fraud: Wrongful or criminal deception intended to result in financial or personal gain.
Internal Control: An accounting procedure or system designed to promote efficiency or assure the implementation of a policy or safeguard assets or avoid fraud and error etc.
Public Sector: The part of an economy that is controlled by the government.
Adeniji, A. (2004): Auditing and Investigation. Lagos, Value Analysis Publishers.
ICAN (2006): Financial Reporting and Audit Practice. Lagos, VI Publishing Ltd
Adeduro, A.A. (1998): “An investigation into frauds in banks”. An unpublished thesis of University of Lagos.
Bostley R.W.B. and Dover C.B. (1972): Sheldon’s practice and law of banking, 10th ed, London, Macdonald and Evans.
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