FRAUD DETECTION AND CONTROL IN PAYROLL DEPARTMENT IN TAI LOCAL GOVERNMENT

CHAPTER 1

INTRODUCTION

Fraud is an act of deception intended for personal gain or loss to another party. Fraud as a crime embraces all the multifarious means which a human ingenuity can device which are resorted to by an individual to get an advantage over another by false representation. This means that fraud can be perpetrated in the course of personal relationship in religious organizations, social clubs etc. Seetharaman, Senti Velmurugan & Periyanayagam (2004). Fraud causes tremendous loss to the business world and creates morale problems in the workplace. When we are stripped of our money by fraudulent means the consequences can be devastating. Fraud losses are serious problems to organizations that need to be managed, controlled and monitored

1.1 Background of the Study

The Association of Certified Fraud Examination (ACFE) identifies three main categories of fraud that affects organizations; the first of these is asset misappropriations, which involves the theft or misuse of an organization’s asset. Examples include theft of inventory or cash, false invoicing, accounts receivable fraud and payroll fraud. The second category of fraud is fraudulent financial statements which are the most costly with median loss of $2million among the 99 financial misstatements included in the 2008 ACFE study. The final of the three fraud categories and most common is corruption occurring in 27 percent of all fraud cases (AICPA, 2009). Corruption includes activities such as the use of bribes or acceptance of ‘’Kickbacks” improper use of confidential information, conflicts of interest and collusive tendering.

Fraud has been cited as Nigeria’s biggest single problem both in public and private sectors. It has not only snapped public trust in government but it has cost the government and people of Nigeria billions, due to corrupt management of public companies unrealized public projects and deteriorated infrastructure caused by looted maintenance budget. It is against this background that the researcher intends to analyze the issue of fraud and strategies to manage it. The research therefore seek to investigate the Fraud detection and control in payroll department in TAI LGA

1.2 Statement of the Problem

Fraud has been cited as Nigeria’s biggest single problem both in public and private sectors. It has not only snapped public trust in government but it has cost the government and people of Nigeria billions, due to corrupt management of public companies unrealized public projects and deteriorated infrastructure caused by looted maintenance budget. It is against this background that Kamaludeen (1991) observes “billions of naira is lost in the public sector every year through fraudulent means” this he argues represents only the amount that is ferreted out and made public.

Indeed much more substantial or huge sums are lost in undetected frauds or those that are for one reason or the other hushed up. Fraud constitutes any deliberate false act aimed at deceiving or harming any party, individual or corporate body, in any manner. Therefore the problem confronting this research is to investigate fraud detection and control in Payroll department in TAI LGA

1.3 Objective of the Study

To determine the nature of fraud.

To determine the methods of fraud detection and control.

To determine the nature of fraud detection and control in the payroll department in Tai LGA.

1.4 Research Questions

1. What is the nature of fraud.

2. What is the methods of fraud detection and control.

3. What is the nature of fraud detection and control in the payroll department in TAI LGA.

1.4 Significance of the Study

The study shall appraise the nature of fraud detection and control which will serve as a framework for the eradication of fraud in the public and private sector organization.

The study shall also provide essential information on issues fraud detection and control.

1.5 Statement of Hypothesis

1. Ho Fraud in the payroll department in TAI LGA is Low.

Hi Fraud in the payroll department in TAI LGA is high.

2. Ho Fraud detection in the payroll department in TAI LGA is low.

Hi Fraud detection in the payroll department in TAI LGA is high.

3. Ho Fraud control in the payroll department in TAI LGA is low.

Hi Fraud control in the payroll department in TAI LGA is high.

1.7 Scope of the Study

The study focuses on the appraisal of fraud detection and control in the payroll department of TAI LGA.

1.8 Definition of Terms

Corporate image: This refers to the goodwill and public image created by an entirely. It could be as a result of making good quality products, offering efficient services and maintain a satisfied workforce.

Internal control: the plan of an organization and all the coordinate method and means adopted within a business to safeguard its assets, check the accuracy data, promote operational efficiency and encourage adherence to prescribed managerial policies.

Liquidation: The winding up of a business, is usually as a result of insufficient funds.

Forgery: Forgery is the act of falsely making or receiving any writing for the purpose of doing to another person. Any alteration of a writing made with intent to defraud is a forgery. For instance, the forgery of a staff signature.

Dummy names: This type of fraud is in a way of including non – existence name in the wages sheets.

Falsification of account: These types of fraud are usually committed by the pay rollers who are either acting ignorantly, innocently or with proved criminal intent.

Forged cheque: Forged cheque with forged signature remain one of the commonest source of fraud, in this case, cheque books are stolen, customers signature are perfectly forged and many successfully withdraw from the bank.

References

Journal of Good Governance and Sustainable Development in Africa (JGGSDA), Vol. 2, No 4, May, 2015., Gbegi, D. O. & Adebisi, J.F., 2015, 2(4):109 128 110 Research Centre for Management and Social Studies