CHAPTER ONE
INTRODUCTION
1.1 BACKGROUND OF STUDY
It is feared that the inability of management to ensure effective enforcement of rules and regulation have rendered that operations of internal control system as the banking industry open to abuse. The net effect could be that every on carries out his schedules o duties in any manner he likes which consequently gives those wishing to commit fraud their long expend golden opportunity. Prior to 1952, there was no forms of Banking art or ordinance to regulate the establishment and operations commercial banks or a central bank to supervise the control of banking Nigerian. During that time many banks were registered some of which never operated and over since that period, fraud his remained a permanent feature in our banking industry. This resulted as a loss of faith and trust in the financial institutions by Nigerians and consequently, underdevelopment of the banking habit in country.
However, with the introduction of the first bank ordinance in 1952, and the central bank of Nigeria (CBN) Act in 1959 and other, subsequent Acts and Ordinance with their amendments over these years, used to regulate and control the activities and operations of financial institutions in the country. Frauds in financial institution have rather increased in magnitude and the methods used to perpetrate them acquired greater sophistication day after day. Now with the introduction of modern procedures and advancement in information technology such as those in communication system, automatic electric gadgets and computer into the banking system coupled with the various precautionary measures taken by bank agent rather than taken nuclear dimensions and the size of sums involved increased at a geometric rate. Anikpitan (1976), a banker of repute maintained that: – Discoveries during investments shows that banks now take extra precaution for clearing a cheque because of rampant incident of fraud and forgery which a bank boss placed on the average of N1m per working day of the year in Nigeria. I. Ashimi (1976 p.6) maintained that: – Fraud has become sophisticated as to make a forged signature on a cheque leaf look good enough for the rightful owner to think that it was his signature. But a situation, as is being experience now, where incessant cause of bank fraud are being reported, could if not immediately checked, erode depositors confidence in the in nation’s banking system. Such a situation could also scare foreign investors from the country.