An Assessment of the Effect of Audit Practices on Fraud Control in Nigerian Banks

Abstract

public concern, particularly in the banking sector where it occurs at an alarming rate and undermines the ability of banks to achieve their goals. This study assessed the effect of audit practices on fraud control in the Nigerian banking industry, using First Bank of Nigeria Plc as a case study. The specific objectives were to identify the causes of fraud, measure its impact, and determine the means of controlling it through effective audit practices. A survey research design was adopted, and primary data were collected through a structured questionnaire administered to sixty (60) staff of the bank comprising bankers, managers, and accountants, of which forty-eight (48) were returned and analyzed. The chi-square (χ²) technique was used to test two hypotheses at the 0.05 level of significance. The findings revealed that communication gaps, poor leadership skills, inadequate training, and weak monitoring were the greatest causes of fraud in the Nigerian banking industry. The first hypothesis was rejected, confirming that effective audit practice significantly controls fraud, while the analysis further established that auditing alone cannot completely prevent fraud in banks and government establishments. The study concluded that the internal audit function is a critical component of corporate governance and that adequate internal control should be put in place. It is recommended that banks strengthen internal control systems, invest in continuous staff training, and adopt effective fraud-monitoring mechanisms to complement the audit function.