PROJECT TOPIC, THE IMPACT OF FRAUD AND FORGERY OF THE PROFITABILITY OF FINANCIAL INSTITUTION
THE IMPACT OF FRAUD AND FORGERY OF THE
PROFITABILITY OF FINANCIAL INSTITUTION
A
CASE OF NATIONAL INSURANCE CORPORATION OF NIGERIA KWARA
STATE)
ABSTRACT
The
focus of this project is based on the impact of fraud and forgery of the
profitability of financial institution a case of National Insurance Corporation
of Nigeria Kwara State.
The
project has been designed to substantiate on the following area stated below:
the definition of frauds, the nature and types of insurance frauds, causes and
the extent of fraud and the roles of National Insurance Corporation of Nigeria in controlling frauds in the Nigeria public
sector.
From
these project, it was revealed among other than fraud, forgery, error and other
financial irregular are financial canker — worms which are eating deep into the
fabric of financial institution and as such accountability and transparency
should be an article of faith in the Insurance Corporation.
Every
chapter is broken down into numbered, paragraph each of which contain vital
segments of knowledge on the topic.
Chapter
one of this project talked about the background of the study.
Chapter
two was based on the relevant reviewing of the literature while chapter three
was the research methodology.
Chapter
four was devoted on analysis of data presentation of results while last chapter
five which is summary, conclusion and recommendation based on the findings.
VI
TABLE
OF CONTENT
Title
Page
Approval
Sheet
Dedication
Acknowledgement
Abstract
Table
of Content
CHAPTER
ONE
1.0
Introduction/Background of the study
1.1
Objectives of the study
1.2
Scope of the study
1.3
Justification of the study
1
.4 Statement of the Problem
1.5
Statement of the hypothesis
CHAPTER
TWO
2.0 literature Review
2.1 Meaning of Fraud
2.2 Causes and Extent of fraud
2.3
Nature and types of insurance fraud
2.4 Concepts of internal control
2.5
The evil of fraud to the fraudsters
2.6 Indication of fraud errors and regularizes
2.7 Fraud detection, prevention, and control
CHAPTER THREE
3.0 Historical background of National Insurance
Cooperation of Nigerian (NICON) 3
3.1 Organizational chat and structure of NICON 5
3.2 Research Methodology
3.4 Population under study
3.5
Sample size
3.6 Sampling method
3.7
Method of data collection
3.8
Method of data analysis
3.9
Method of testing the hypothesis
CHAPTER
FOUR
4.0
Data Presentation and analysis
4.1
Introduction
4.2
Administration of Questionnaire
4.3
Bio-data of respondents
4.4
Analysis of Questionnaire responses
4.5 Discussion of the Result
4.6
Effects of fraud on the Nigeria
Insurance Industry
4.7
The role of NICON in controlling fraud
in Nigeria
Public sector
CHAPTER
FIVE
5.1
Summary, Conclusion and Recommendations
5.2
Summary of findings 13
5.3
Conclusion 44
5.4
Recommendations
5.5
Limitation of the study
Bibliography
CHAPTER ONE
1.0 INTRODUCTION! BACKGROUND TO
THE STUDY
It
is no exaggeration to conclude that the worst enemies of our society in the
present time are fraudsters forgeries, errors and other financial
irregularities. In all their aspects frauds, forgeries, errors, corruption and
other fraudulent practices which are the products of dishonesty, greed,
deception, distortion and alteration are today pervasive feature of Nigeria
insurance company in particular.
Fraud
causes huge financial losses to the Nigerian Insurance Company and their
customers. The lapses to the internal control system in most organizations is
as a result of the existence of a poor control environment which could in
extreme causes lead to the closure of some parastatals and organizations in
some part of the world.
Frauds and errors
have been identified as one of the most destructive factors that easily lead to
failure in insurance corporation. It’s incidence has been primarily attributed
to weak or absence of viable internal control system. In recent times, the
dimensions and scope of fraud have become so complex and rampant especially
with the advancement in information technology.
Nevertheless, the
object of this research work is to suggest sufficient control that can be
employed by the insurance sector to regulate the evil of fraud and forgery on
the profitability of financial institution. In respect of National Insurance
Corporation of Nigeria.
1.1
OBJECTIVE OF THE STUDY
The
general objectives of the study is to suggest the measures to create and
maintain a fraud free atmosphere that the insurance sectors request so as to
inculcate in local and foreign investor’s interest injecting financial
resources into the ailing economy.
In view of this, the
specific objectives are:
i. To develop a framework for the management
in their
responsibility for
the prevention and detection of fraud through implementation and continuous
operations of adequate system of internal control system.
ii. To examine
various types of frauds and forgery and the effects of these two vices on the
profitability of National Insurance Corporation of Nigeria.
iii. To examine and
highlight various consequences and dangers associated with fraud, error and
other irregularities in National Insurance Corporation of Nigeria.
Finally, the study
made recommendations and conclusion based on the analysis of data obtained in
the course of the research study.
1.2
SCOPE OF THE STUDY
This
inquiry strictly focus on the following :- the causes and extent of frauds in
National Insurance Corporation of Nigeria.
The
nature and types of frauds in the National Insurance Company.
The
study attempt to look at the implication of frauds on the National Insurance
Corporation of Nigeria
and their customers and try to provide solution to curb this nefarious
activities.
1
3 JUSTIFICATION FOR THE STUDY
This
research work provide adequate prevention and controls to checkmate the impact
of fraud and forgery on the profitability of National Insurance Corporation of Nigeria.
In the same vein, this research exercise is based not specifically on the
diligent researches of other researchers who have worked in the same field on
frauds in National Insurance Corporation of Nigeria but to venture into some
areas that are yet to be completely explored by the former, such as benefits to
be derived from National Insurance Corporation of Nigeria
However,
a substantial reduction in these obnoxious activities will aid and promotes
economic growth, development, guarantee stability and conductive investment
climate. It is important to note that investment is built on mutual trust and
understanding. And that is why, it is important to put adequate measures in
place to control frauds, forgeries, errors in the economy which will encourage
the desire investment capital inflow into the economy through the creation of
goodwill, mutual trust and confidence necessary for a stable and sustainable
investment climate.
Therefore, the study
examine the current techniques adopted by the management on the profitability
of National Insurance Corporation of Nigeria.
1.4
STATEMENT OF THE PROBLEM
Fraud,
forgery, error and other financial irregularities are financial cankerworms,
which are eating deep into the fabrics of financial institutions.
Can
one exclude the evil of frauds, forgeries and errors from the factor
responsible for the decadence and distress in Nigeria Insurance Company?
Are
fraud and forgery not the factors responsible for the lost of confidence in
Nigerian Insurance Company?
The
issue of frauds and forgeries affect many interests in the insurance company.
Depositors anticipate maximum liquidity and highest compensation in the capital
invested as premium.
1.5 STATEMENT OF HYPOTHESIS
For
the purpose of this research work, the following hypothesis were test. These
are stated below:
Ho: There is no significant relationship between
frauds and
forgeries
on the profitability of National Insurance corporation of Nigeria.
Hi:
There is significant relationship
between frauds and forgeries on the profitability of National Insurance
corporation of Nigeria.
CHAPTER
TWO
2.0
LITERATURE REVIEW
2.1
MEANING OF FRAUD
Fraud
has been defined by many scholars among which some few are found in different
books.
Hormby
and Benment (1993) defined fraud as criminal deception and as well as all acts
that involve dishonesty or deceitful the object that involve dishonesty
appropriation of assets belonging to another person.
Yekini
(1999) classified fraud together with white colour crime and this define the
term fraud as illegal acts characterized by guilt deceit, concealment and
cannot depend upon the application of physical force or violence or threat
there of.
2.2 CAUSES AND EXTENT OF FRAUD
In
order to propose remedies for eliminating fraud in Nigeria Insurance
Corporations, it is important to identify the most common causes of fraud in N
ICON. This is necessary in order to put insurance company in alert as they too
are prone to fraud.
The
major causes of frauds are usually grouped into the foflowing groups:
a.
Institutional factors
b.
Environmental social factors
The
institutional are those traceable to the internal environment of the
corporation while the environmental factors are those which result from the
influence of the society on the insurance industry.
2.3 NATURE AND TYPES OF INSURANCE
FRAUDS
Frauds
in insurance corporation are vary in nature, character and method of
perpetration. There are three broad categories of insurance frauds
perpetrators: internal, external and mixed. Internal perpetrators of frauds are
members of staff of the insurance corporation while external perpetrators are
person that have one thing of the other to do with the corporation. It can be
their client. Mixed involvement involves outsider colliding with the insurance
staff. It is useful for the management of an insurance company to identify the
categories under which the various frauds in their corporation fall, a clear
knowledge of this helps in the determination of the best solution.
The
most common forrri of classification employed by insurance corporation with
special emphasis on National Insurance Corporation of Nigeria is on the basis of method
used. Under this approach, the list of fraudulent methods are almost in
exhaustible as new methods are devised with time.
2.4
CONCEPT OF INTERNAL CONTROL
This
is a type of control exercise by management within an organization. The concept
has been defined by the statement of auditing standard No 1 section 320 sub —
section as the plan of organization and all coordinate methods and measures
adopted within a business of safeguard, it assets, check the accounting
reliability of its accounting policies, promote operational efficiency and
encourage adherence to described managerial policies. This definition is
broader than the meaning sometimes attributed to internal control.
The
institute of chartered accountant defined internal control as this system of
controls, financial and otherwise established by the management in order to
carry out the business of the enterprises in orderly and efficient manner,
ensure adherence to management policies safeguard of assets secure as far as
possible the completeness, accurately and validity of the records. The
objective of internal control is the prevention of early identification of
fraud and forgery.
2.5
THE EVIL OF FRAUD TO THE FRAU DSTERS
A
good name is better cherished than gold and silver, is the common saying. Those
that involved themselves in fraudulent practiced have allowed their conscience
to be bought over by the devil. Apart from the heart unrest, the fraudsters are
experiencing, other evils that be fall them include:
a.
It brings unfold hardship psychologically and mentally to them and their
families more importantly, nowadays when decree 3 of 1995 on failed banks
described as “ director” as a wife, husband, father, mother, son or daughters
meaning that, the indebtedness of a parent shall be visited on the children and
close relation. This destroys their
reputation
and image in the society on environment in which they operate.
Lastly,
the final punishment is awaiting those that allow their conscience to be bought
over by the almighty God in the day of Judgment.
2.6
INDICATION OF FRAUD, ERRORS AND IRREGULARITIES
The
failure of figure to agree expectations produced by analytical reviews
investigation by government department of policies or a regulatory authority,
for example, the director of banking supervision, CBN, substantial fees,
commissions or other payments which are larger or smaller than is usual or a
madder payment to consultants or financial adviser for unspecified services or”
ghost workers”
Existence
of evidence of falsified documents, presence of unexplained teems in
reconciliation or suspense account existence of evidence that internal control
is not operating as it intended to.
2.7
FRAUD DETECTION, PREVENTION AND CONTROL
The
function of fraud detection, prevention and control are intertwined and inter-
woven as three functions work together to emirate and arrest the incidence of
frauds and fraudulent tendencies.
In
combating fraud therefore, the policy should be that of prevention is better
than cure hence, the emphasis of both the account and inspector should be to
address the preventive inspection and auditing. As professed by Burns (1959)
“the best control over fraud is to place the possibility of the act beyond the
reach of every person who may be tempted.
It
is however, becoming increasingly parent that as the inspectors or audit
professionals are introducing series of control measures to forestall fraud,
fraudsters are also busy perfecting their way to circumvent such measures in
order to ensure that they too are not throw out of business.
Similarly,
it is possible to recommend the following detective prevention and curative
measures to control clearing fraud and other types of frauds now that we have
known their causes.
a.
Formulation
of good personnel and recruitment policies :-
Recruitment not based on sentiments but on personal knowledge of applicants,
guarantee and reverence from people to high integrity will prevent the
recruitment of kleptomaniac, greedy and ungodly individual in insurance company
(N ICON)
b.
Attractive
pay package :- Maintained of competitive and
rewarding, workmen compensation scheme will enable an average staff live above
power line and shun temptations to defraud his or her employer.
c.
Good
management : management by example should be the
watch work of every staff, be it a director, manager, officer or messenger.
Every one should comply with the laid down policies and procedures in the
perlormance of any insurance company functions. He who says, people should not
steal, he too should not steal also.
CHAPTER
THREE
3.0
HISTORICAL BACKGROUND OF NATIONAL INSURANCE CORPORATION OF NIGERIA (NICON)
National
Insurance Corporation of Nigeria
is owned by the federal government of Nigeria. The corporation was
established by no 22 of 1969 (decree) now cap 263 LFN 1990 as amended with the
aim objectives of assisting in the development of insurance industry in Nigeria
and specifically to ensure that federal government assets and property are
fully protected by way of insurance.
The
corporation which is now leading insurance companies in Nigeria account for the
Nigeria Insurance market, with a gross premium income of Nigeria Insurance
sector in respect of N ICON was N1,729.77 billion and underwriting result of
N82 million in 1992 in 1993, the corporation generated a premium income of
N2.912.3 billion with a profit of N12.66 million while in1994, the total
premium income was N34biIlion and profit was N157 million, in 1995, a gross
premium income of N 9.96 billion was granted with a profit after tax of N87
million. The corporation also hit the billion Naira market as its share capital
was raised to Ni billion. All these in respect of National Insurance
corporation of Nigeria.
3.2 RESEARCH METHODOLOGY
3.3 TYPES OF DATA
For
the purpose of the study, the researcher used both primary and secondary data.
3.4
POPULATION UNDER STUDY
The
population of study of 40 staffs of Nigeria Insurance Corporation (NICON),
Kwara state. The study considered 15 selected top management staffs and 25
lower level management who are involved in supervisory activities in the
corporation as sample frame.
3.5
SAMPLE SIZE
To
allow for a thorough coverage of the study, about thirty staffs is selected for
consideration. To this effects 29 questionnaires were actually distributed on a
random basis to the management staff selected.
3.6
SAMPLING METHOD
In
selecting the sample for the distributing of questionnaires, simple random
sampling techniques was employed. This give equal chance of being selected to
all the length or member forming the sample size hence, providing a basis for
the generalization of result.
square
at the level of significance of 5% and a degree of freedom of (r— 1) ( c — 1) of chi square distribution (x2)
The
formula for collection of data was based on the calculation of x2 is
X2 = Z(Oi -ED
Ei
Where
Di = observed frequency of any value
Ei
= Expected frequency of the same value
∑=
Summation
3.7
METHOD OF DATA COLLECTION
The
primary data collected use the appropriate instrument of data collection of
questionnaire and personal interview.
The secondary data
collected from the company or corporation records, books of accounting and
other publications that bear on the areas of operations relevant to the study.
Thereafter, the information there is adapted to return on capital employed.
3.8
METHOD OF DATA ANALYSIS
In
analyzing data to be collected, statistical tools of descriptive analysis was
employed. This analysis is both qualitative and quantitative. The qualitative
method allows for the use of tables, sample percentages, chart and frequency
while the quantitative method involves analyzing the data expressly.
3.9
METHOD OF TESTING THE HYPOTHESIS
Hypothesis
formulated was tested using both descriptive and inferential methods of
analysis
The descriptive
method is through the use of table and simple percentage while the inferential
method is through the use of chi-
CHAPTER FOUR
ANALYSIS
OF RESULT ( DATA PRESENTATION)
INTRODUCTION
In this chapter, an
attempt was made in collating and analyzed the data collected through the
administration of questionnaire the first part of the questionnaires deals with
the demographic information consisting of Sex, Age, Marital Status, Educational
Qualification, Department and years of experience in the insurance industry (N
ICON)
Moreover,
all relevant research question and hope these earlier and formulated were
tested to generate a logical and reasonable conclusion. This was made possible
through the testing of the relevant responses in part (B) and (C) of the questionnaire.
ADMINISTRATION
OF QUESTIONNAIRES
A
total number of twenty — nine (29) questionnaire were actually administered to
the staff of (NICON) Ilorin, Kwara State in four separate department of random
basis out of this, one was returned unfilled the analysis of the remaining
twenty— eight ( 28)
questionnaires
was finally carried out through the use of relevant tools of analysis. The
tools of analysis employed in this chapter have teen discussed in chapter three
of this research work.
BlO
— DATA OF RESPONDENTS
TABLE
4.1
SOURCE
RESEARCHERS SURVEY, 2011
Below
is the graphical representation of the above data figure
The
response analyzed in their table 4.2.1 and figure iv above shows that the staff
strength is 75% for male and 25% for female implying that the staff strength
for male to female s greater.
TABLE 4.2
SOURCE
RESEARCHERS SURVEY, 2011
The
information is depleted in the bar — chart below
Figure
v
SOURCES:
RESEARCHER’S SURVEY 2011
The
two analyses above, showed that respondents are within the age of (20 — 29)
year representing 21%, 15 respondents are within the years of (30 — 39) years
representing 54% and 7 respondents fall within the age of 40 and above years]
representing 25% all percentage approximated. The anaysis representing the
present of more matured man in the filed
TABLE 4.3
MARITAL STATUS
SOURCE
RESEARCHERS SURVEY, 2011
The
above data s shows graphically below Figure vi
SOURCES: RESEARCHER’S
SURVEY 2011
From
the table 43, 23 respondents are married representing 82% while 5 respondents
are single representing 18%. The two analysis show that, there are more married
employee than single which called for absolute dedicated to work.
TABLE 4.4
EDUCATIONAL QUALIFICATION
RESPONDENTS
SOURCE
RESEARCHERS SURVEY, 2011
The
representing shown above imply that the majority of the respondents are first
degree holders and above indicating high degree of reliance on responses given
by them as a result of their academic background and skill, particularly with
the presence of professional
TABLE 4.5
DEPARTMENT I SECTION
SOURCE
RESEARCHERS SURVEY, 2011
From
the table 45, 3 respondents working in accounting department representing 11%
while 6 respondents working in internal audit department representing 21%, 10
respondents working in computer department representing 36% and respondent are
working in marketing and advertising department representing 32%. The analyses
represent the presence of management information system for processing data and
evaluation of data.
TABLE 4.6 WORKING EXPERIENCE
SOURCE:
RESEARCHERS SURVEY, 2011
The
above analysis shows that, there are relatively more experience staffs n the
sample selected.
ANALYSIS OF QUESTIONNAIRE
RESPONSES SECTION “B” ON FRAUD
TABLE 4.7 RESPONSES
SOURCE:
RESEARCHERS SURVEY, 2011
The
analysis in the table 4.7 shows that the management of this operation,
irrespective of the management level admitted that manipulation, falsification
or alteration of record is the most featureable element that constitute fraud
in the insurance corporation (NICON) since we have 57% of the respondents,
clamming to this fact compare to other percentage as shown above.
Question 2: what
factor(s) do you think is (Are) responsible for fraud and forgery in the
insurance industry?
SOURCE: RESEARCHERS
SURVEY, 2011
The
analysis in the table 4.8 above shows that 72% of the staffs irrespective of
management level a that the poor book — keeping is a noticeable factor that
responsible for fraud and forgery in the industry poor book — keeping provide a
fertile ground for fraudulent manipulations in insurances corporation.
Question
3: In your opinion, do you think fraud can lead to the loss of confidence in
industry?
SOURCE:
RESEARCHERS SURVEY, 2011
From
the table above, since 89% of staffs acclaiming to this fact, most of the reason
gave by the respondent are Loss of confidence by the insuring public, loss of
confidence in the insurance corporation couple with extreme embarrassment.
These are the responses to question 4
Question
5: In your opinion, can management fraud be prevented?
SOURCE:
RESEARCHERS SURVEY, 2011
From
the table above, the management admitted that management fraud can be
prevented, since 93% of staffs s acclaiming to this fact while 7% of
respondents said it cannot be prevented.
Question
6: if your answer to the question above is no, how best can mana9ement fraud be
prevented
Table
4.11
SOURCE:
RESEARCHERS SURVEY, 2011
From
the above table, the management of NICON admitted that formulation of good
personnel and recruitment is the best ways of
preventing
management fraud. Since 57% of the staffs are off this view compare to other
percentages
Question
7: How intervals do your organization audit their account?
Table 4.12
SOURCE:
RESEARCHERS SURVEY, 2011
The
above table 4.12, reveal that 50% of the staffs acclaiming to the facts that
the management of NICON audit their account quarterly since its has the larger
percentage compare to other percentage.
Question 8: what is your opinion
in internal control Table 4.13
SOURCE:
RESEARCHERS SURVEY, 2011
The
analysis of the above table 4.13 clearly indicates the NICON staffs admitted
that internal control which ensure that the objectives of the organization are
achieved, while other respondents percentage are not up to 54%
Question 9: The aim of internal
control is to minimize risks, irregularities and incident of frauds.
SOURCE:
RESEARCHERS SURVEY, 2011
The
table 4.14 above shows that the NICON staffs acclaiming that internal control
can be use to minimized risk, irregularities and other fraudulent tendencies.
Question 10: What category of
manager is responsible for the internal control set up in your organization.
SOURCE:
RESEARCHERS SURVEY, 2011
From
the table 4.15 analysis the larger percentage of NICON staffs admitted that the
responsibility of Internal Control rest upon Top management level
Question 11: How effective is the
internal control system in your corporation
Table 4.16
SOURCE:
RESEARCHERS SURVEY, 2011
From
the table above, the larger the percentage of NICON staffs admitted that the
intern& control set up the management s very strong.
Question
12
An
effective way of preventing and detecting frauds is through an effective system
of internal control
SOURCE:
RESEARCHERS SURVEY, 2011
DISCUSSION OF RESULTS
After
critical presentation and analysis of the data obtained, the conclusion were
finally based on the outcomes obtained from both the question in questionnaire
and the tested hypothesis.
The
research questions asked shows that there s significant relationship between
fraud and forgeries on the prodigality of the insurance company.
The
performance of each division and that of the management as a whole depend on
internal control obtain frauds and forgeries in insurance industry.
EFFECTS OF FRAUDS ON THE NIGERIAN
INSURANCE INDUSTRY
Studies
in Insurance Fraud and Forgery are normally prompted by the perceived effects
of fraud, error and other financial mal — practices on insurance industry, and
desire to find the means of curbing such adverse effects.
Ojigbede
and Adewumi (1956) have identified the effects of fraud on insurance
corporation and these include
Loss
of confidence by the insuring customers and the insurance corporation. This
loss results into reduction in the level of resource viability, which could
hamper the operation of insurance industry and could force a close — down, if
the frequency and size of frauds are high.
In
addition, the distraction of management attention, increase in operating costs
and the wastage of time and resources of frauds prevention and other effects of
fraud and forgery.
Economic
deregulation, Ojigbede and Adewumi (1986) went further to say that fraud can
cause economic crisis for a nation. These issues at stake which centers on
distress of insurance corporation in recent times was as a result of fraudulent
practice and outsider credit abuse by insurance at the apex insurance industry.
THE ROLE OF NICON IN CONTROLLING
FRAUD IN NIGERIAN PUBLIC SECTOR
National
insurance corporation of Nigeria
is fully owned by the federal government of Nigeria. The corporations was
established by degree no 22 of 1969 (now cap 263 LFN of 1990 as amended) NICON
was created to combat the corruption that attended the insurance of government
assets, and to Nigeria Insurance Industry from foreign domination.
The
high rate of frauds in public institutions can be attributed to lack of sound
internal control system and the existences of a poor control environment.
National Insurance Corporation of Nigeria
has helped in controlling fraud in the Nigeria public sector through the
following points.
i. A management’s style that places values on
and demonstrates ethical standard and which requires that there shall be
written ethical code of behaviour application to all with in the corporation with
the consequences of non - observance made plan to all is good starting point in
the creation of a defense against fraud.
ii. A good working atmosphere in which people
are treated fairly and frankly and are motivated and are given a feeling that
the organization genuinely cares about their well — being and is willing to discuss
problems and propose solution also contributes to some measures towards
minimizing the risk of fraud in the absence of such an atmosphere individual
may, in certain circumstance feel rentful towards the organization and may
result to dishonest means.
CHAPTER
FIVE
5.0 SUMMARY, CONCLUSION AND
RECOMMENDATIONS
5.1 SUMMARY OF FINDINGS
In
view of the magnitude and scale of fraud perpetrated in the society and the
numerous real life events and cases of frauds in the society, this work had
this tried to identify the various causes of fraud in insurance company and the
extent of fraud in Nigeria financial institution with special emphasis on
National Insurance Corporation of Nigeria. Efforts have been made to explain
the nature and types of fraud in the Nigeria public sector. Attempts
have been made to proffer solution and preventive measures through the use of
internal control.
The
International Auditing Guideline (lAG) places the responsibilities for
detention and prevention of frauds and forgery on the management, it requires
management to therefore, fashion out ways and responsibilities for controlling
this canker worm.
The
subject has accordingly been receiving the attention of monitoring and
supervisory authorizes’ in view of the fact that frauds and forgeries result in
huge financial losses to Insurance Corporation and their customers, the
depletion of premium paid by the customer, Insurance Corporation capital base
and loss of confidence in Insurance Corporation which ultimately causes the
failure in insurance industry.
5.2
CONCLUSION
The
war waged against frauds, forgeries error and other financial crime by the
present administration of President of Federal Republic of Nigeria UMAR MUSA
YARDUA rests on the unalloyed support and commitment of all Nigerians and we
should all strive as individuals and collectively to shun selfishness, greed
and other financial fraudulent practices in the Insurance Industry and in
Nigeria economy at large.
We
should rather in our dealings and social interactions demonstrate the quality
of honesty, integrity, truthfulness, probility and patriotisms and should not
use public office as an opportunity for inordinate ambition for the nation’s
treasury and insurance corporation’s assists to the detriment of the economy.
5.3
RECOMMENDATION
The
following recommendations are proffered to reduce frauds and fraudulent
tendencies in the insurance industry in particular and other economic sector
generally.
Accountability
and transparently should be an article of faith in the insurance corporation
and the nation at large. It must be religiously implemented. Sanctions should
be imposed promptly and with firmness for any breach of the policy.
Since
some members of professional bodies have been implicated in frauds and
corruption, professional bodies in the country should strictly enforce their
code of ethics, ensure religious compliance and purge immediately their
organization of members found waiting.
Extravagant
life styles of public officers especially staff in insurance corporation should
be watched closely and checked.
It
is not the responsibilities of government alone to eradicate frauds, errors and
corruption, it is the management and equally the duty of every Nigerians to
shun all form of corrupt practices.
Declaration
of assets by public functionaries should be made public, compulsory and not a
secret.
5.4
LIMITATIONS OF THE STUDY
Time
and space as indispensable factor have however, circumscribed the anticipated
extensive analysis of this research study in addition, insufficient funds and
inadequate supply of information and other necessary data perhaps, due to the
confidential nature of the industry, have also constrained the scope of this
research study in respect of National Insurance Corporation of Nigeria.
Similarly,
since (NICON) transacts business outside Nigeria with other insurance
company. The entries in some of the returns were expressed in foreign
currencies, which should have been converted to either Naira equivalents, It
was difficult to get day — today conversion rate. Also, it was notice that most
of the fund perpetrated are usually expressed in foreign currencies. The
fluctuation in exchange rate made it difficult to detect the earth amount of
loss through fraud.
5.5
AREAS OF FURTHER RESEARCH
The
suggested area of further research is an insight into various punishment be
mated — out to the fraudsters.
APPENDIX
I
Working
(calculation of expected frequency)
El = 28x20
= 16.04
384
E2 = 25x41
= 2.99
384
E3 = 28x41
= 2.99
384
E4 = 28x82
= 2.33
384
The calculation
proceeded in three format
QUESTIONNAIRE
Kwara
State
Polytechnic,
Department
of Accountancy,
Ilorin,
Kwara state.
Dear Respondents,
QUESTIONNAIRE
ON THE IMPACT OF FRAUD ON THE
PROFITABILITY
OF FINANCIAL INSTITUTION, A CASE STUDY
OF NATIONAL
INSURANCE CORPORATION OF NIGERIA,
ILORIN
KWARA STATE (N ICON)
As
part of the requirements’ for the award of National Diploma in Accountancy, we
are conducting a research on the above topic.
The
questionnaire is meant for academic research purpose only and all the
responses’ to the questionnaire will be treated confidentially.
I
would be very grateful for your assistance in completing these questionnaire.
Yours
faithfully,
SALAKU
AFEEZ ADEWALE
SECTION
A: PERSONAL INFORMATION
Please
tick ( ) as appropriate
1. Sex: a. Male
( )
b. Female ( )
2. Age: a. 20—29yrrs ( ) b. 30-39 ( )
c.
40 and above ( )
3. Marital status: a. single ( ) b. Married ( )
4. Educational Qualification
a. WAEC/SSCE (
) b.
NCEIOND
c.
HND!BSC ( ) d.
ACA/FCA
5. What department I section do you belong?
a. Accounting ( ) b. Internal Audit ( )
c. Computer Dept ( )
d. Marketing & Advertising Dept ( )
6. Years of experience in the Insurance
industry
a.
1-5yrs( ) b. 6—l0yrs(
c.
10-- l5yrs( ) d. 16—2oyrs(
e.
21— 25yrs(
SECTION “B” ON FRAUD
1.
What is your opinion constitute fraud
in the insurance industry?
a.
Recording transactions without substances ( )
b.
Manipulation, falsification or alteration of record ( )
c.
Misapplication of accounting policies, if this is intentional and deceitful ( )
d.
Misappropriation of assets ( )
2.
What factor(s) do you think is ( are)
responsible for fraud and forgery in the insurance industry?
a.
Poor book — keeping ( )
b.
Inadequate staffing ( )
c.
Economic factor (poverty) ( )
d.
Absence of viable internal control (
)
3. In your opinion,
do you think fraud can lead to loss of confidence in insurance industry?
a.
Yes ( ) b. No ( )
4. If your answer to
3 is (a) please give reasons
a…………………………………………………………………………….
b…………………………………………………………………………..
C…………………………………………………………………………
d…………………………………………………………………….
5. In your opinion, can management fraud be
prevented?
a. Yes ( ) b. No (
)
6. If your answer to the question above is (b)
How best can
management
fraud be prevented?
a. Through an effective system of internal
control
b. Through periodic internal audit
c. Attractive pay package
d. Formulation of good personnel and
recruitment
7. How interval do your organization audit
their account?
a. Every month ( ) b. Every six month ( )
c. Quartly ( ) d. Yearly ( )
8. What is your opinion in internal control?
a. Control which ensure that the objective of
the
organization
are achieved ( )
b. Controlling the staff of an organization ( )
c. Controlling the assets of an organization (
)
d. All of the above
9.
The aim of internal control is to
minimize risk, irregularities and the incidence of fraud
a.
Yes ( ) b. No ( )
10.
What category of management is
responsible for the internal control set up in your organization
a.
Top level management ( )
b.
Middle level management ( )
c.
Lower level management ( )
d.
All of the above(
11. How effective is the internal control system
in your
organization?
a.
Very strong ( ) b. Strong ( )
c.
Very weak ( ) d. Weak ( )
e.
I don’t know ( )
12.
An effective ways of preventing and detecting frauds is through an effective
internal control system.
a.
Yes ( ) b. No ( )
BIBLIOGRAPHY
AHEZEE (2001)
Cultural and Job regulation
unpublished,
Birmingham PHD
thesis
of the university
of Aston
ALIANDA (1997) Fraud
detection and prevention
sixth
edition London Dp publication ltd (ELBS)
ARCHIBONE B. E (2004)
- Fraud prevention and control.
Seventh
edition London Op Publication ltd
BABATUNDE (2002) —
The Auditor roles and
responsibility
in relation fraud.First edition Lagos
land mark publication ltd
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