The Effect of Fraudulent Practice in the Banking Industry

BACKGROUND OF THE STUDY

       The late 1980’s and early 1990’s have been characterized with the increasing complexes and abrasiveness of the business environment as well as declining market. As a result of this, the urgency for information management has been accelerated with the increasing dependence of the business environment and of course the banking industry or sector on computer most management staff and computer operators are rather more concerned to move along with recent computer technology that they have not had time to think of some other sensitive issues effecting the computer for fraudulent practice that may arise through computer usage.

       Fraudulent practices can be viewed from different people, depending on the perspective from which it is rampand in both developed countries.

       Fraudulent practice could be defined in different ways. Fraudulent practice could be defined as a “criminal deception act of a person” it could also be defined as his theft of asset without the notice of lawful owners or international misrepresentation of truth in order to deceive. It can also be viewed as a criminal deception to obtain an unjust or illegal advantage of something. Fraudulent practice could be seen as the embezzlement of property by a person to whom property has been entrusted. It is an international distortion of financial statement among management employee or third parties. International auditing guideline (IAG) defined fraudulent practice as “a particular type of irregularity that involves the use of deceit to obtain an illegal or unjust advantage of money items”

       Which ever way fraud is looked at, it connotes an intentional distortion of financial statement for which ever purpose the misappropriation of assets whether or not accompanied by distortion of financial statement.

       This study attempts to sort out what the computer in banking sector is like whether is prone to fraudulent or fraudulent practice, the various control measures, detection and level of safety and security of data.

       Banking: Banking has become totally dependent on the computer. In the past, a large but manageable amount of book keeping was handed manually but has been the expansion in banking that a huge labour force would be needed to tackle today massive volume of look keeping.

       The computer is necessary because there is no other way of dealing with this problem, in most cases, the computer is sited centrally branches are equipped with terminal, giving them on line banking facilities and which enable them to interrogate the central system for information on such thing as a current balance record and so on.

       Under the computer control customers statement are prepared and printed out especially designated stationary. Cheques are handled by computer at the clearing house central bank, a mouth operation carried out during the night when the system can concentrate on (dedicated) this purpose.

       The cheques are sorted into batches through the computer order and then returned to the branches the next day. The computer also provides each branches and its customers also provides each branches and its customers access to information from a much wide financial would them that would be possible under a manual system.