Investigation Into the Causes, Effects and Remedies of Fraud in the Public Sector

• Title page
• Approval page
• Dedication
• Acknowledgement
• Table of Contents
• Abstract

CHAPTER ONE

• 1.0 Introduction
• 1.1 Background of the study
• 1.2 Statement of the problem
• 1.3 Objectives of the study
• 1.4 Significance of the study
• 1.5 Scope of the study
• 1.6 Research hypothesis
• 1.7 Research question
• 1.8 Limitation of the study
• 1.9 Definition of the terms

CHAPTER TWO

• 2.1 Introduction
• 2.2 Appointment of Auditor General According to Constitution of Federal Republic of Nigeria
• 2.3 Method of Appointment of Auditor General
• 2.4 Definition of fraud
• 2.5 Types of fraud
• 2.6 Causes / circumstances which encourage fraud in the public sector
• 2.7 Effect of fraud in the public sector
• 2.8 Remedies/methods of preventing fraud in the public sector
• 2.9 Legal control of fraud in the public sector
• 2.10 Summary of the literature review

Chapter Three

• 3.0 Research methodology
• 3.1 Research design
• 3.2 population of the study
• 3.3 Sample/Sampling Techniques
• 3.4 Research instrument
• 3.5 Data collection procedure

Chapter Four

• 4.0 Data presentation, analysis and discussion of findings
• 4.1 Introduction
• 4.2 Analysis of sources of data
• 4.3 Representation of data

Chapter Five

• 5.0 Summary, conclusion and recommendations
• 5.1 Introductions
• 5.2 Summary of finding
• 5.3 Conclusion
• 5.3 Recommendations
• 5.4 Suggested area for further research

Bibliography

Questionnaire

Appendix

1.0 Introduction

1.1 Background Of The Study

The importance of investigating the causes, effects and remedies of fraud in the in the public sector particularly in the Imo state ministry of finance cannot be overemphasized. This is because such an investigation will enable us to provide solution on how best to minimize the level of fraudulent practices in the public sector. The public sector institution / ministries are described as the “main pillars” of a modern society (Draucker, 2002).

They provide services, which are essential in shaping the lives of the citizens. Every citizen, however both those highly and lowly placed in the social ladder, depend on the services / activities of public service institution for their survival. It is for this reason that government in recent timer has began to allocate huge revenues to the public sector ministries so as to enable them carry out their operations / activities effectively.

In Imo state for example, government increased her revenue allocation to the public sector. The national rolling plan 1990 — 1992, then president put plan size for the three years, period at about N142 billion consisting of N 92 billion or (35%) was for the private sector of the economy. The national rolling plan of 1998 — 2000 as contained in the budget of transition presented by the then president draws inspiration from the broad goals and objectives of the 2010 vision. In spite of the good intention for public sector to carry its developmental objectives, the major problem pronounced in this sector is the increase level of fraud.

The term “fraud” is defined as the misrepresentation by a person of material fact known by the person to be untrue or made with reckless indifference intention of deceiving the other party and with the result that the other party is injured (Brown, 1986).
Fraud in the contemplation of the civil court of justice is defined as that which include properly all acts, omission, and concealments which involve a breach of legal or equitable duty, trust or confidence, justly reposed and are injurious to another or by which an undue or unconscientiously advantage is taken on another. All surprise, trick, cunning dissembling and other unfair way that is used to cheat anyone is considered as fraud.

Fraud in all cases implies a willful act on the part of anyone, whereby another is sought to be deprived by illegal or inequitable means of what he is entitled to (Milliamp 1990). There are different types of fraud committed.

According to Emile (1981), these include:Larceny. Embezzlement forgery, manipulation of account and misappropriation of maren or material Larceny fraud is that wrongfully, willfully taking and carrying away of the personal goods of another with intent permanently to deprive him thereof that is thief — misappropriation has to do with the putting of wrongfully or dishonestly to the process of adopting and changing something in order to suit ones purpose or advantage.

Forgery entails the making of fraudulent alteration of a thing or of something spurious, which is put forth a genuine. Embezzlement is that act of appropriate fraudulent to one's own use sue of money or property entrusted to one's possession.

It is usually in the form of money entrusted to one's care and one uses it for his / her own private purpose.

The causes of fraud in the public sector are enormous, some of them include the absence of a well — designed control system, in some public sector ministries, internal audit department is not well organized, inadequate accounting records in terms of computerized, accounting system, uncontrolled use of input devices and lack of proper security network in the use of computer systems, division of labour, undue reliance placed on management upon the technically of staff concerning their duties. Lack of incentives to the employees, are advanced.

The possibility of fraud occurring is a slack reality especially in times of economics depression, when the in times of economics depression, when the organization turnover are not impressive, interest rate and inflation rates are high, poor salary structure, etc. fraud becomes even more likely when wags fail to keep pace with the rising prices and individual taste.

Fraud could be prevented if the management in public sector puts in place a good and internal control system established. Inter audit department where it is absent, and above all a good accounting system Management could minimize fraud by improving the welfare of the employees and their immediate families.

The use of computer packages in accounting goes a long way in reducing fraudulent practice and continuous comparing of figures application controls needs to be emphasized at this point and a constant review of packages in use to keep pace with technology. It is in view of the above that this study intends to investigate the causes, effect and remedies of fraud in the public sector using the Imo state ministry of finance as a study.

1.2 Statement Of The Problem

Fraud as the case may be is fast eaten deep into the Nigeria public sector with less than five percent of the employees who could comfortably beat their chest and make claims of not being a party to this game. Most government ministries are losing a lot of money on daily basis due to the fraud of various types and dimension.

There was a case reported by one of our national dailies where twenty — nine (29) workers of Osun state parastatal (government owned organization) were ordered and arrested for their refusal to refund N4.1 million which they allegedly mismanaged.

The order was given be Mr. Justice Lateef Aremu, the chairman of the public property and fund recovery panel, during the panel's sitting (Osogbo — Guardian, August 22, 1998 p.3).

Another was a case of two middle aged men in Aba who stole more than N 2.0 million belonging the state government parstatals (ministry of sports). It was foiled by men of the criminal investigation department (CID) Abia state command. They were alleged to have stolen two union Bank Plc cheques leaves involving the said amount for payment. When the bank officials detected some errors in the cheque and subsequently arrested them (Nigeria Tide, May 21, 1993 P.I).

The possible questions now are why this menace of increasing cases of fraud in the public sector, what are the root causes of these vices called fraud, who is responsible for hem, what effect does fraud have on such public sector and how could it be reduced in the barest minimum? It is in the view to answer these questions that prompted the researcher to embark on this study.

1.3 Objectives Of The Study

The objectives of this study include:

1. To identify the causes of fraud in the public sector.
2. To find out the ways in which these fraudulent acts are committed.
3. To know the cadre of staff or management level usually involved in fraud.
4. To enterprises / ministers.
5. To find out the remedies through which fraud could be prevented or minimized in the public sector.

1.4 Significance of the Study

Among all said and done in this area, the fact remains that fraud is fast becoming a menace in our public sector, hence the causes and effects need to be uncovered, and the possible remedies of preventing or reducing such menace be advanced forward. By so doing, the study will be of great significance to the following:

1. Identification of the government ministries or the particular group that are most victims of fraudulent activities.
2. This will help them put inbuilt controls that will check the occurrence of fraud and proffer a near permanent solution.
3. This study is significant to management in the public sector, as it would expose to them the importance of establishing a good and effective internal control system so as to reduce fraudulent practices in their various ministries.
4. The study will recommend to management of the various government ministries the need to computerize their record keeping, accounting information system and other managerial information system, in order to improve operational efficiency and reduce possibilities of falsification of documents by employees.
5. The research will be useful to the government as it would provide reasons why they should constantly supervise and audit the work of her appointed ministers.
6. This will no doubt reduce the occurrence of fraud in the public sector.
7. Finally, this study will be great benefits to student, researchers, scholars and other academicians who may wish to embark on further research in this topic as its findings will add to the existing literature, which they can use as reference for their study.

1.5 Scope Of The Study

The scope of this study has been limited to Imo state from which the Imo state ministry if finance has been chosen to be study. The respondents for this study constituted management staff and accounting personnel in the Imo state ministry of finance.

It is hoped that the findings from this area covered would be used for generalization to all other public sector organizations in the country.

1.6 Research Hypothesis

In order to have a foresight of what the out come of this study would be, the following hypotheses are put forward.

Ho: There is no significance relationship between the absence of a well designed internal control system in the public sector and the increase in fraud in the organization.

H1: There is significance relationship between the absence of a well designed internal control system in the organization.

Ho: There is no significant relationship between an installation of an effective internal control system in the public sector and reduction in fraudulent practices in the organizations.

Hi: There is significant relationship between an installation of an effective of internal control system in the public sector and reduction in fraudulent practices in the organizations.

1.7 Research Questions

The following questions were raised in the course of conductive this study;

• What are the causes of fraud in the public sector?
• In what ways can fraudulent acts be committed?
• What cadre of staff or management level is usually involved in the public sector?
• What are the effect of fraud in public sector enterprises ministries?
• What are the remedies through which fraud could be prevented or minimized in the public sector?

1.8 Limitation Of The Study

The following were the limitations of this study:

1. The source of material information to be used in this study was limited to reported cases of fraud in journals, seminar papers, newspaper, managers etc.
2. The inadequacy of finance is a serious limitation to this study.
3. The researcher was highly constrained by finance in terms of expanding the scope of the study.
4. Time inadequacy also constituted a limitation to this study.
5. There were difficulties in combining the time for academic activities at school, personal engagements, with the time set aside for the research work.
6. Lastly, inadequacy of records kept by the Imo State ministry of finance on fraud as well as the reluctance of some of the respondents to give sufficient information on fraud cases posed a great limitation to this study.

1.9 Definition Of The Terms

The following terms are defined for the purpose of clarification:

Fraud: This is a misrepresentation by a person of material fact known by the person to be untrue or made with reckless indifference as to whether the fact is true with the result that the other party is injured.

Fund Embezzlement: This is unlawfully taken away as money entrusted to one's are.

Manipulation: This simply means using one's position or power to influence a favour on advantage dishonesty.

Prevention: This means avoid, stop or checkmate on occurrence of an incidence.

Larcenist: This is an unlawful taken away of property of the organization without the knowledge and proper clearance from the appropriate authorities.

Internal Control System: This refers to the whole system of control financial and otherwise, established by the management in order to carry on the business of the enterprises in an orderly manner, safeguard its assets and secure as possible the accuracy and reliability of its records.

Accounting Information System (AIS): This is a set of activities of an organization responsible for the preparation of financial information's and the information obtained from transaction data for the purpose of internal reporting to management for the use of planning and for external reporting to government and the public.

Account Details - For USSD / POS Transfer

Account Name: Sparklyn Services Account No: 1222599051 Account Type: Current Bank Name: Zenith Bank PLC

Proposal Writing Format under Accounting

Investigation Into the Causes, Effects and Remedies of Fraud in the Public Sector is a proposal topic for final year research work, which comprises the major and elective project proposal writing sections for Investigation Into the Causes, Effects and Remedies of Fraud in the Public Sector (A Case Study of Imo State Ministry of Finance) research work.

Major Sections

• Motivation for Embarking on the Project

• Brief Background of Study

• Statement of Problems

• Aim of the Study

• Specific Objectives of the Study

• Significance of the Study (Who benefits from the project and how?)

Elective Sections

• Relevant Research Questions

• Relevant Research Hypotheses