1.0 INTRODUCTION
BACKGROUND OF THE STUDY
It is feared that the inability of management to ensure effective enforcement to rules and regulation have rendered that operation of internal control system s the Banking industry open to abuse. The net effect could be that every one carries out his schedule o duties in any manner he likes which consequently gives those wishing to commit fraud their long expected golden opportunity. Prior to 1952, there was no form of Banking art or ordinance to regulate the establishment and operations of Commercial Banks or a Central Banks to supervise the control of Banking Nigerian. During that time many Banks was registered some of which never operated and even since that period, fraud has remained a permanent feature in out Banking industry. This resulted in the loss of faith and trust in the financial institutions by Nigeria and consequently, under-development of the banking habit in the country. However with the introduction of the first banking ordinance in 1952, and the central Bank of Nigeria (CBN) Act in 1959 and other subsequent Acts and ordinances with their amendments over the years, used to regulate and control the activities and operations of financial institutions in the country, fraud in financial institution have rather increased in magnitude and the methods used to perpetrate them acquire 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, fraud have rather taken nuclear dimensions and the size of sums involved increased at a geometric rate and also with the held of Anipkitan (1976) a banker of repute, I Ashimi (1976, p6) a banker of prudent, Ughamadu N. (1991) observed to be liable in its banking sector and be very porous to fraud and many others who have contributed to maintain a prudently measured to the ascertainment of financial banking assets and liabilities.
Consequently, the confirmed existence of financial institutions rests delicately on the maintains of public confidence. This calls for the establishment of an effective system of internal control which among other things will help to ensure that the laid down procedures standard and statuary requirement. To establish a sound internal control system various organization adopt scope of their operations. Internal control system requires a continues check and rechecking of day-to-day activities of the business in order to ensure the correctness and firmness of the accounting records, and to detect and expose any deviation when it has accord. Most financial institutions loose confidence of the people not only through fraudulent use of funds but also through some detect in-fraudulent practices and or syndication of some dishonest staff facilitated by defects in the Bank internal control system. There is therefore a great need to climate or minimize the defects loopholes and make money effective and operational to quad against the occurrence and re-occurrence of fraud in our financial institutions.