The Impact of Internal Control Mechanisms on Fraud Detection and Prevention in Nigeria Deposit Money Banks

Abstract

This study examined and assessed the impact of internal control mechanisms on fraud detection and prevention in Nigeria's deposit money banks. Specifically, the study evaluated the impact of control environment risk assessment, control activities, and monitoring activities on fraud detection and prevention in Nigerian deposit money banks. The descriptive research design was used in the study. Primary data was obtained from the management staff of FUGAZ Banks. Data gathered was estimated using descriptive statistics of respondents’ demographics, correlation analysis, Multiple OLS estimation and post-estimation tests. Discoveries from the study revealed that the control environment exerts a positive significant relationship with fraud detection and prevention in Nigeria DMBs with a coefficient estimate of 0. 03483 (p=0.0054>0.05); risk assessment exerts a positive significant relationship with agricultural investment in Nigeria with a coefficient estimate of 0.4082 (p=0.0199<0.05); control activities exert positive insignificant impact on fraud detection and prevention in Nigeria DMBs with a coefficient estimate of 0.3058 (p=0.0992>0.05) and monitoring activities exert a positive significant impact on fraud detection and prevention in Nigeria DMBs with coefficient estimate of 0.0307 (p=0.0215>0.05). Hence, the study suggested that the management of DMBs should adopt proactive actions towards its internal control; risk assessment of DMBs should be constantly carried out by the management and those charged with governance; management of DMBs should frequently modify the modalities of its operation per time and DMBs management staffs should on a constant basis monitor its internal control system to improve its soundness and control fraudulent activities.