INTERNAL CONTROL SYSTEM AND FRAUD PREVENTION IN THE NIGERIAN BANKING SECTOR.

One of the major challenges Nigerian banking industry is facing today is how to curb fraud occurrence. Therefore, the study investigated the effects of internal control system on fraud prevention in Nigerian banking sector. The study emphasis was on the adequate of internal control system in the area of risk management, control supervision, control environment and information management and technology for fraud prevention. To evaluate the effectiveness of the control systems, survey research design was employed. The population of the study consist of the senior staff in the twenty two (22) commercial banks in operations in Nigeria. The instrument used for the study was structured questionnaire. The research questions were answered and the hypotheses generated were tested using statistical package for Social Sciences (SPSS). Findings showed a positive and significant relationship between internal control system and fraud prevention. A positive and significant relationship between risk management, control environment, information management and technology on fraud prevention. However, the study found a positive but non- significant relationship between control supervision and fraud prevention. The study recommended a proactive risk management among banks. Special trainings for senior staff on red flags to fraud occurrence and best approach to handle them. Banks must invest heavily in anti-fraud software and latest hardware gargets that can create awareness of impeding fraud for both staff and customers and build a strong resistance to protect bank database. Nigerian banks must fortify its internal control system to meet the realities of today; this will help to eliminate all loopholes and gaps which arise due to changes in procedures, practices, and technology and government policies that have impacts on banking industry.