The Role of Internal Audit in Prevention of Fraud in...

TABLE OF CONTENTS Title page Certification Dedication Acknowledgement Table of content Abstract CHAPTER ONE 1. Background of the Study 2. Statement of Problem 3. Research Objectives 4. Significance of Study 5. Scope and Limitation of the Study CHAPTER TWO: LITERATURE REVIEW 1. Introduction 2. Types of Bank Frauds 3. Causes of Fraud 4. Effects of Fraud on Banks 5. Internal Audit function 6. Fraud and Internal Audit 7. Fraud Prevention 1. General Measures 2. Specific Preventive Measures 8. Elements of Fraud Auditing 9. Measures of Controlling Fraud in Banks 10. Statement of Internal Audit Standard No. 3 2.10.1 Deterrence of Fraud CHAPTER THREE: Research Methodology 1. Area of Study 2.†¦show more content†¦A fraud may occur when an innocent error or mistake, that has not been identified, is taken advantage of by a fraudster. The increase in criminal activities has led to money laundering fears in banks and other financial institutions. By its very nature fraud is a clandestine operation. Perpetrators of frauds do not advertise their activities or their methods. There is also the perception -that fraud is a victimless crime; that banks can well afford the losses. The extent of fraudulent activity worldwide is unknown but is perceived to be on the increase. This nefarious activity could lead and has actually led to crisis in and the collapse of many financial institutions worldwide. The demise of the Bank of Credit and Commerce International (BCCI) London is a very good example. The increasing wave of fraudulent activities in financial institutions poses a threat to their stability and survival if it is not arrested. Fraud is a business risk which may result in financial loss to banks and their customers, loss of confidence in financial institutions, depletion of shareholders funds and capital base. Failures of internal control have almost always been identified as a main contributing factor to many catastrophic bank failures. Therefore, it is the responsibility of management to put in place systems and processes that will prevent and detect fraud within the banks. Internal auditors can assist them in this