AUDITING AS A TOOL FOR FRAUD RISK ASSESSMENT IN COMMERCIAL BANKS (CASE STUDY OF SELECTED COMMERCIAL BANKS IN ILORIN KWARA STATE)


AUDITING AS A TOOL FOR FRAUD RISK ASSESSMENT IN COMMERCIAL BANKS (CASE STUDY OF SELECTED COMMERCIAL BANKS IN ILORIN KWARA STATE)   

Abstract

With an upsurge in financial accounting fraud in the current economic scenario experienced, financial accounting fraud detection has become an emerging topic of great importance for academic, research and industries. In this age of high technology, fraud investigators can no longer be satisfied with just auditing or accounting skills, these investigators should be trained as forensic accountants and this training should include an extensive knowledge of accounting information. Despite the independence of auditors, fraud is still in the increase and most organizations has internal control system that checkmates the operations of  the organization but fraud still exist within the organization. In order to protect our banking sector, it is crucial to examine the level of assessment of fraud risk with respect to financial statement audits.

The study is on auditing as a tool for fraud risk assessment in commercial banks within Kwara State. The researcher employed both primary and secondary data in collection of information, and correlation analysis for testing of hypothesis, SPSS package was also used for analysis of questionnaire.

it is therefore required to note some areas of improvement that, The organization should put in place policies and procedures that will help in reducing fraud and also provide Conducive working atmosphere must be ensured for staff members.

Keywords: Auditor, Fraud, audit report, risk assessment, objectivity, integrity.

 TABLE OF CONTENTS

Title Page - - - - - - - - - i

Approval Page - - - - - - - - ii

Declaration - - - - - - - - iii

Dedication - - - - - - - - - iv

Acknowledgement - - - - - - - v

Abstract - - - - - - - - - vi

Table of Contents - - - - - - - vii

CHAPTER ONE – INTRODUCTION

1.1Background of the Study-----

1.2Statement of General Problem----

1.3Objective of the Study------

1.4Research Questions------

1.5    Hypothesis   -      -      -      -      -      -      -        -        -        

1.6Significance of the Study-----

1.7Scope of the Study------

1.8Definition of Terms------

CHAPTER TWO – REVIEW OF RELATED LITERATURE

2.1 Conceptual Framework --------

2.2 Theoretical Framework- - - - - - - -

2.3 History of Auditing- - - - - - - - -

2.4 Who is an Auditor? - - - - - - - - -

2.5 Reason for Audit in Nigeria - - - - - - -

2.6 The Audit Expectation Gap - - - - - - -

2.6.1 Responsibility of Auditors- - - - - - -

2.6.2 The Emerging Role of the 21stCentury Auditor to Detect and Prevent Fraud - - - - - - - - -- -

2.6.3 The Role of an Auditor in Ascertaining the Going Concern Status of a Company- - - - - - - - -

2.6.4 The Case of Cadbury Plc, Enron and Perceived Auditor’s Responsibility - - - - - - - - -- -

2.6.5 Reliability Factor - - - - - - - - -

2.6.6 Nature and Meaning of Audit Report Messages- - -

2.6.7 Independence Factor - - - - - - - -

2.7 Approaches to Reduce the Audit Expectation Gap- - -

2.7.1 Understanding the Role of Other Players in the Capital Market 

- - - - - - - - -- - - -

2.7.2 The Role of Education - - - - - - - -

2.7.3 Improving the Independence of Auditors- - - - -

2.8 Gap in Literature - - - - - - - - -

CHAPTER THREE – RESEARCH METHODOLOGY

3.1 Introduction - - - - - - - - -

3.2 Research Design - - - - - - - -

3.3 Area of the Study - - - - - - - -

3.4 Population of Study - - - - - - - -

3.5 Sample size and Sampling Techniques - - - - -

3.6 Instrument for Data Collection - - - - - -

3.7 Validity of the Instrument - - - - - - -

3.8 Reliability of the Instrument - - - - - -

3.9 Method of Data Collection - - - - - - -

3.10 Method of Data Analysis - - - - - - -

CHAPTER FOUR – DATA PRESENTATION AND ANALYSIS

4.0 Introduction - - - - - - - - -

4.1 Data Presentation and Analysis - - - - - -

4.2 Characteristics of the Respondents - - - - -

4.3 Data Analysis - - - - - - - - -

4.4 Testing Hypothesis - - - - - - - -

CHAPTER FIVE – SUMMARY, CONCLUSION AND RECOMMENDATION

5.0 Introduction - - - - - - - - -

5.1 Summary - - - - - - - - - -

5.2 Conclusion - - - - - - - - - -

5.3 Recommendations - - - - - - - -

References ----------

Appendix - - - - - - - - -

CHAPTER ONE

INTRODUCTION

1.1          BACKGROUND OF THE STUDY

The recent global financial crisis, which had its roots in the banking sector, highlighted, except from the existing regulatory gaps, the lack of proper and efficient internal audit functions within the banking institutions in order to mitigate the resulting negative effects. The burst of the credit crunch and the following financial recession resulted in the dramatic increase of bank frauds all over the world, a fact that strengthened the need for the implementation of internal audit techniques.

Moreover, the internal audit function plays a crucial role in the ongoing maintenance and assessment of a bank’s internal control, risk management and governance policies thus, adding value and assisting in the achievement of the management’s goals.

In the intermediation, banks mobilize savings from the surplus units of the economy and channel these to the deficit units, particularly private business enterprises for the purpose of expanding their productive capacity (Adeyemo, 2012). Levi (2001), asserts that corporate financial scandals in the USA such as Enron and Tyco debacles send shockwaves in the corporate world, regulatory authorities, audit fraternity and the economic world society at large. These have led to the erosion of investor confidence in the financial markets.

The incidence of fraud and misappropriation of funds in recent time poses a threat accounting profession because of its perennial nature.  This has resulted to questions as to whether accountants actually play any significant role towards the attainment of accountability and prevention of fraud especially that which is currently happening in our major or key financial institutions.

With an upsurge in financial accounting fraud in the current economic scenario experienced, financial accounting fraud detection has become an emerging topic of great importance for academic, research and industries. In this age of high technology, fraud investigators can no longer be satisfied with just auditing or accounting skills, these investigators should be trained as forensic accountants and this training should include an extensive knowledge of accounting information.

 Fraud imposes numerous costs to organizations that experience it. The banks might suffer loss in terms of monetary, reputation, human capital as well as the exposure to the risk of bankruptcy. In a wider scope, fraud does not only threaten our country’s economic condition with the loss of investors and resources, but it is in fact endangers the serenity and political stability of the nation. Nevertheless, while banks are active in the quest to reduce costs of fraud, it is important to make sure that they do not immensely deteriorate the effectiveness of current functioning key fraud controls.

Having committed a large sum of funds and resources as a shareholder to financial institutions, the expectation is to generate a high level of profitability but this has been thwarted by the high index of fraud perpetrations in the industry. Financial statements produced can no longer be relied upon except audited.

1.2          STATEMENT OF THE PROBLEM

Fraud is a challenge in organizations regardless of which type. Research has shown that inability of assessing fraud risk with accuracy can cause fraud not being detected, also improper recording of financial statement have accounted for the rise of irregularities and some acts usually perpetrated by some staff and members of management in a financial institution (Olowookere, 2001).

Furthermore, despite the independence of auditors, fraud is still in the increase and most organizations has internal control system that checkmates the operations of  the organization but fraud still exist within the organization. In order to protect our banking sector, it is crucial to examine the level of assessment of fraud risk with respect to financial statement audits.

1.3        OBJECTIVES OF THE STUDY

The main objective of this research work is to evaluate audit as a tool for fraud risk assessment in a financial institution.

The specific objectives are stated as follows:

        i.            Determine whether independence of auditors reduces fraud risk.

      ii.            Evaluate the effect of managerial integrity in reduction of fraud risk.

    iii.            Examine internal control framework in reducing fraud risk.

    iv.            Identify the constraint faced in minimizing fraud risk in commercial banks.

      v.            Suggest possible recommendation for auditors in combating fraud risk in commercial banks.

1.4         RESEARCH QUESTIONS

The following research questions were answered based on the stated objectives of the study.

           i.         Does the independence of auditors reduce fraud risk?

         ii.         What is the effect of managerial integrity in reduction of fraud risk?

       iii.         What are the internal control frameworks in reducing fraud risk?

1.5       HYPOTHESES OF THE STUDY

Based on the research questions and for the purpose of this study, the following hypotheses were formulated.

Ho1: Independence of auditors has no significant relationship with fraud risk reduction.

Ho2: There is no significant relationship between managerial integrity and fraud risk reduction.

Ho3: Internal control framework does not significantly correlate with fraud risk reduction.

1.6          JUSTIFICATION OF THE STUDY

        The impact of auditing in the assessment of fraud risk cannot be over emphasized. As such a lot of research works have been carried out on it both internationally and nationally which include assessment of the adequacy of external auditing in disclosing fraud in Nigerian commercial banks (Zachariah, Musa & Ibrahim, 2012), however the researcher is not aware of any research work carried out on this topic in Kwara State. This research will be of significance to the banking sector in Ilorin, Auditors and students who are willing to carry out further research in this area.

1.7              SCOPE OF STUDY

The study is on auditing as a tool for fraud risk assessment in commercial banks within Kwara State. However, due to time and financial constraint, the study focused on some selected banks within Ilorin metropolis, Kwara State, Nigeria.

1.8. DEFINITION OF TERMS

1. Auditor:  Auditor is a qualified accountant who also passed a professional examination. Such a person must be of good conduct and have a vast knowledge and able to understand a practical business, endeavor always to grasp the technicalities and business, methods of any concern whose account he undertakes to audit.    

2. External Audit: This is an audit carried out by an independent person who is not an employee of the enterprise.

3. Audit:  Audit can be define as the independent examination of a financial statement and expression of opinion on the financial statement of enterprise by an appointed auditor in pursuance of that appointed and in compliance with any relevant statutory obligation.

4. Objectivity: refers to the need to maintain impartial judgment (e.g. not developing analysis to support a decision that the accountant knows is not correct.

5. Qualified Opinion report is issued when the auditor encountered one of the two types of situations which do not comply with generally accepted accounting principles, however the rest of the financial statements are fairly presented.

6. FRAUD is an act or course of deception, deliberately practiced to gain unlawful or unfair advantage; at the detriment of another, it is also defined as a conscious premeditated action of a person or group of persons with the intention of altering the truth and or fact for selfish personal monetary gain project topics   final year project topics and research materials 

7. FORENSIC AUDITING: as the utilization of specialized investigative skills in carrying out an enquiry conducted in such a manner that the outcome will have application to the court of law.

8. TRADITIONAL AUDITOR or statutory auditor is appointed to carry out statutory audit.

.

AUDITING AS A TOOL FOR FRAUD RISK ASSESSMENT IN COMMERCIAL BANKS (CASE STUDY OF SELECTED COMMERCIAL BANKS IN ILORIN KWARA STATE)



TYPE IN YOUR TOPIC AND CLICK SEARCH.






RESEARCHWAP.ORG

Researchwap.org is an online repository for free project topics and research materials, articles and custom writing of research works. We’re an online resource centre that provides a vast database for students to access numerous research project topics and materials. Researchwap.org guides and assist Postgraduate, Undergraduate and Final Year Students with well researched and quality project topics, topic ideas, research guides and project materials. We’re reliable and trustworthy, and we really understand what is called “time factor”, that is why we’ve simplified the process so that students can get their research projects ready on time. Our platform provides more educational services, such as hiring a writer, research analysis, and software for computer science research and we also seriously adhere to a timely delivery.

TESTIMONIES FROM OUR CLIENTS


Please feel free to carefully review some written and captured responses from our satisfied clients.

  • "Exceptionally outstanding. Highly recommend for all who wish to have effective and excellent project defence. Easily Accessable, Affordable, Effective and effective."

    Debby Henry George, Massachusetts Institute of Technology (MIT), Cambridge, USA.
  • "I saw this website on facebook page and I did not even bother since I was in a hurry to complete my project. But I am totally amazed that when I visited the website and saw the topic I was looking for and I decided to give a try and now I have received it within an hour after ordering the material. Am grateful guys!"

    Hilary Yusuf, United States International University Africa, Nairobi, Kenya.
  • "Researchwap.org is a website I recommend to all student and researchers within and outside the country. The web owners are doing great job and I appreciate them for that. Once again, thank you very much "researchwap.org" and God bless you and your business! ."

    Debby Henry George, Massachusetts Institute of Technology (MIT), Cambridge, USA.
  • "Great User Experience, Nice flows and Superb functionalities.The app is indeed a great tech innovation for greasing the wheels of final year, research and other pedagogical related project works. A trial would definitely convince you."

    Lamilare Valentine, Kwame Nkrumah University, Kumasi, Ghana.
  • "I love what you guys are doing, your material guided me well through my research. Thank you for helping me achieve academic success."

    Sampson, University of Nigeria, Nsukka.
  • "researchwap.com is God-sent! I got good grades in my seminar and project with the help of your service, thank you soooooo much."

    Cynthia, Akwa Ibom State University .
  • "Sorry, it was in my spam folder all along, I should have looked it up properly first. Please keep up the good work, your team is quite commited. Am grateful...I will certainly refer my friends too."

    Elizabeth, Obafemi Awolowo University
  • "Am happy the defense went well, thanks to your articles. I may not be able to express how grateful I am for all your assistance, but on my honour, I owe you guys a good number of referrals. Thank you once again."

    Ali Olanrewaju, Lagos State University.
  • "My Dear Researchwap, initially I never believed one can actually do honest business transactions with Nigerians online until i stumbled into your website. You have broken a new legacy of record as far as am concerned. Keep up the good work!"

    Willie Ekereobong, University of Port Harcourt.
  • "WOW, SO IT'S TRUE??!! I can't believe I got this quality work for just 3k...I thought it was scam ooo. I wouldn't mind if it goes for over 5k, its worth it. Thank you!"

    Theressa, Igbinedion University.
  • "I did not see my project topic on your website so I decided to call your customer care number, the attention I got was epic! I got help from the beginning to the end of my project in just 3 days, they even taught me how to defend my project and I got a 'B' at the end. Thank you so much researchwap.com, infact, I owe my graduating well today to you guys...."

    Joseph, Abia state Polytechnic.
  • "My friend told me about ResearchWap website, I doubted her until I saw her receive her full project in less than 15 miniutes, I tried mine too and got it same, right now, am telling everyone in my school about researchwap.com, no one has to suffer any more writing their project. Thank you for making life easy for me and my fellow students... Keep up the good work"

    Christiana, Landmark University .
  • "I wish I knew you guys when I wrote my first degree project, it took so much time and effort then. Now, with just a click of a button, I got my complete project in less than 15 minutes. You guys are too amazing!."

    Musa, Federal University of Technology Minna
  • "I was scared at first when I saw your website but I decided to risk my last 3k and surprisingly I got my complete project in my email box instantly. This is so nice!!!."

    Ali Obafemi, Ibrahim Badamasi Babangida University, Niger State.
  • To contribute to our success story, send us a feedback or please kindly call 2348037664978.
    Then your comment and contact will be published here also with your consent.

    Thank you for choosing researchwap.com.