FRAUD DETECTION AND CONTROL IN THE PAYROLL DEPARTMENT (A CASE STUDY OF THE MINISTRY OF AGRICULTURE ENUGU STATE)

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FRAUD DETECTION AND CONTROL IN THE PAYROLL DEPARTMENT (A CASE STUDY OF THE MINISTRY OF AGRICULTURE ENUGU STATE)

ABSTRACT

The research paper fraud detection and control in payroll department. The aim of conduction this research is to investigate into the cause of alarming rate of fraud and its control in the payroll of our various ministries, identify the effect and suggest possible solution towards archiving fraud free in our organization payroll.In other words, the aim of the study is to ascertain, explained and highlight the reason for fraud in the payroll department and the organization in general, how can it be detected checked and control.In the investigation and analysis of the data collected. The following problem was identified. Using the incompetent staff to carry out the job required in the payroll. Absence of good internal control and internal check, employing of dishonest staff or crooks in the payroll section, non-motivation of the staff.Furthermore, because of the ghost workers exercise done by the Enugu state government in the ministry in 1995 is one of the things that inspired my to carry out this research on how fraud can be controlled or at least reduced to the lowest based minimum. The introduction of variation control is one of the checks. Finally to suggest solution to the problem and make recommendation for the future prospects of payroll department. The following recommendation should be based on the analysis for the questionnaire and oral interview.

TABLE OF CONTENT

CHAPTER ONE:

1.1 Introduction

1.2 Statement of the problem

1.3 Objective of study

1.4 Significance of study

1.5 Statement of the hypothesis

1.6 Scope of the study

1.7 Scope of the study

1.8 Definitions of terms

CHAPTER TWO:

2.1 Review of the related literature

2.2 Definition of fraud in the payroll department

2.3 Type of fraud in the payroll department

2.4 Causes fraud in the payroll department

2.5 Detection of fraud in the payroll department

2.6 Prevention of fraud in the payroll department

CHAPTER THREE

3.1 Research design and methodology

3.2 Source of data

3.3 Primary

3.4 Secondary data

3.5 Sample used

3.6 Method of investigation

CHAPTER FOUR

4.1 Data analysis and interpretation

4.2 Data presentation and analysis

4.3 Test of hypothesis

CHAPTER FIVE

SUMMARY, FINDINGS, CONCLUSION AND RECOMMENDATION

5.1 Summary of the findings

5.2 Conclusion

5.3 Recommendation

BIBLIOGRAPHY

APPENDIX / QUESTIONNAIRE

CHAPTER ONE

INTRODUCTION

In the recent time, fraud in the ministry dominates the front page of our newspapers, radio announcement and television announcement. The fact is indisputable in the ends of the readers, listeners and observers. This fraud stories should be on the greater concern to a patriot worthy of the name. The deeper study and the increase on the annalistically approach to ghost workers has led to the overgrowing realization of fraud and control in the ministry and autonomous department and the influence on the success or other wish of government of Nigeria

According to the research made, it is the impact the fraud have on government revenue, big organization, banks, ministries etc was what led to the writing on their topic.

Further more he ghost workers exercise done by Enugu state government in the ministry and autonomous department in 1995 and the introduction of the various control that inspired to carry out to carry out this survey and investigation on how fraud can be control or at least be reduce to the lowest bar minimum.

According to the Oxford advance learner’s dictionary of the current English, the word fraud simply means criminal deception.

Perhaps, the meaning and explanation that we consider more is the definition offered in Hamlyn, Encyclopedia world dictionary.

According to the great master dictionary, the word fraud means deceit, trickery, sharp practice and breaching of confidence, by which it stand to gain some unfair or dishonest advantage over other.

In other bead on the following definition put forward above, it means that the act contributed by some one which is pursed towards gaining under and non-meritorious credit at the detriment of the right of beneficiary construct an act of fraud is never committed, unless the intension of the perpetrator was present, the time the execution of the dubious plan. Therefore any allege fraud, which does not meet up with this test, must be construed and interpreted as aiding and abetting fraud.

Another definition of fraud by the college dictionary of the random house is simply a head trickery or breach of confidence use by one person to gain unfair and dishonest advantage over other.

This two definition rather appropriate and are adequate for this project because they contain the main element of fraud which include the following.

There must be deceit, trickery or breach of confidence

There must be unfair and dishonest advantage because our concept of one mans loss is another man’s gain

STATEMENT OF THE PROBLEM

The recently reported wave of fraud in the ministries is to say the least is very unfortunate,. Frauds without doubt are been perpetuated in various sub sectors for the economy and those committed in the government organization going by the previous and recent report are most disconcerting. The situation as we are expensing now where incessant cares for the fraud for the ministries payroll are being reported which can not be immediately check erode our future economy. Fraud has continued to cause untold hardship to our people collectively and individually. To copies all fraud has significantly contributed to what is happening in the ministry and department lapse in the government of Enugu state.

Frauds that may be discovered in the payroll department include.

(i) Salary defecation

(ii) Over casting of salary sheet

(iii) Inflation of figure

(iv) Dummy names and non-existing expenses

(v) Preparing of supplementary voucher

In the effect of this posed by fraud in almost every payroll system of Nigeria, the organization that gave the researcher he impetus to go into research to investigate and find out the rational behind this frauds in payroll, how they are detected checked and controlled.

In recognitions of the above fact, the fact that the research intends to investigate the type of fraud committed and other possible effect of fraud in the payroll system. The researcher also hope to make useful recommendation and suggestion that will help completely to a large extent eliminate fraud in the ministries payroll

PURPOSE OF THE STUDY

Frauds in payroll system in the most Nigerian organization are comparatively high and this has distorted the growth the development of certain organization. The main aim of the study is to accretion the reason for fraud in the payroll, how they are detected, checked and controlled.

To find out the different type of fraud committed in the payroll

To find out the step that can be taken to eliminate fraud in the payroll system

To find out causes of fraud in the payroll system

To find out the categories of worker committing fraud in the payroll system

To make recommendation base on the findings of the study

To determine the nature and scope of this fraud in payroll whether they are fundamental or material

Finally to suggest solution to the problem and make recommendation for future prospects

SIGNIFICANCES OF THE STUDY

The study is meant to aid the payroll system in Nigerian in detecting fraud since the interest of both the government and the workers is at risk if unprotected. The study will also aid all other organization hat may have the need for assistance in checking fraud since fraud and some other malpractice are not limited to the ministries alone.

It is hoe that the recommendation and the suggestion made in the study will help in the growth the development of the government ministries as well as business organization and if necessary replace most of their ineffective internal control check with more effective and perhaps less dangerous once. The elimination for the activity of fraud from the payroll will restore the cooperate image of the ministries patrol.

Finally the study could be immense help to all those who wish to carry out further study on fraud in the ministries payroll or in any other related field.Fraud Detection

STATEMENT OF HYPOTHESIS

The research hypothesis is made to test the realities and the correctness of the question contains in the fraud detection and control in the ministries payroll.Fraud Detection

The following hypothesis has been formulated base on the statement of problem and the objective of the study in order to guide the study.Fraud Detection

HYPOTHESIS II

Ho: fraud has any effect on the progress of any organization and that of the Nigerian economy

Hi: Fraud ha effect in the progress of an organization and that of the Nigerian economy

HYPOTHESIS 2

Ho: there is no incidence of fraud in the ministries payroll system

Hi: there is incidence of fraud in the payroll of the ministries.

SCOPE OF THE STUDY

The scope for the study is to

1. Assertion whether there are proper securities and Auditor who can detect fraud.

2. Investigate and find out if the payroll system in most Nigeria organization keeps appropriate internal control.

LIMITATION OF THE STUDY

The scope of the study has been limited to the payroll system in Enugu state due to time and proximity.Fraud Detection

Secondary due to the sensitive nature of he topic most patrollers are generally not disposed t help for the simple reason that the researcher may have been sent by the internal auditors of the ministry to investigate the operation of the payroll system.Fraud Detection It took time to convince the staff to cooperate and this was even possible because the researcher was able to prove to them that he was a student of the Institute of Management and Technology Enugu (I.M.T.)Fraud Detection

Thirdly, since moist of the payrolls system ahs the same method of operation, it is believed that the need so the researcher will still be met from the study of the sample from Enugu state.Fraud Detection

DEFINITION OF TERMS

Corporate Image: this refers to the goodwill and public image by an entity. It could be use as a result of making good quality product, offering efficient service and maintaining a sanctified workforce.

Internal control: the plan of the organization and all he co-ordinate method and the means adopted by a business to safeguard its asset, check the accuracy and reliability of its accounting data, promote the operational efficiency and encourage adherence to prescribe managerial policies

Liquidation: the winding up of a business usually as a result of insufficient funds

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

Dummy names: this type of fraud is in a way of including non-existing names in the way to sheet.

Falsification of account: this type of fraud is usually committed by the plan rollers who are either acting ignorantly innocent or with proved criminal intent.

Forged cheque: forge cheque with forgery signature remain one of the commonest source of fraud, in this chequebook are stolen, customers signature are perfectly forged and many successful withdrawal from the bank.

The above terms were defined in order to lend clarity to the terms.

FRAUD AND REGULATION:

According to Onovo (ACA), the word fraud and irregularity can be termed as error and this word error can be referred to unintentional mistake in the financial statement whether it is in mathematical or clerical nature or whether due to oversight of misinterpretation of relevant facts.Fraud Detection

1. Irregularities: in a general view, from the research made, the word is used to refer to internal distortion of financial statement for whether purpose or misappropriation of assets.

2. Fraud: fraud in this aspect is one type of irregularity. This word fraud is used to refer to irregularities involving the use of the use of criminal deception to obtain adjusts o illegal advantage.

3. Management responsibility: the primary responsibility for the prevention and detection of errors and irregularities rest with the management.. The responsibility may be partly discard

Aid by the institution of an adequate system of internal control. The responsibility of management in this regard is even higher where asset are help in a fuditionary capacity on the behalf of the public in a third party as in the case with bank and the insurance companies. In addition, the direction of the company is regarded in law as acting in stewardship capacity concerning the property, which is under their control.

Consequently they have duty to take step to ensure the safety of the companies’ asset.

AUDITOR’S RESPONSIBILITY

The legal position is that it is not the auditor’s responsibility to detect or prevent fraud and irregularities (Le: Kingston Contton Mill (1896)Fraud Detection

The auditor duty is to state whether a set of account gives a true or fair view and comply with the relevant regulation. The auditor’s responsibility is to design and evaluate his work wit a view to detecting their errors and irregularities, which impairs the truth the fairness for the financial statement. Therefore in abstaining audit evidence, the auditor should certify himself that those errors and irregularities which may be material to the financial statement has not occurred and if they occur, they are either corrected or accounted for in the financial statement.

In carrying out this responsibility, the auditor should exercise reasonable care and skill and apply current auditing standard and principles. In the audit of some ministries and parastatals, the auditor may be instructed to look for errors and irregularities, in such a case, the auditor obviously have a responsibility.Fraud Detection

THE DRAFT GUIDELINES

Fraud and other irregularities provide some general assistance to identify circumstances, which are possibly indicative of irregularities. Some of those are:

Missing vouchers or documents

Evidence for falsified document

Unsatisfactory explanation

Figure trend and result which do not accord with explanation

Evidence of dispute

Unexplained item or reconciliation or suspense account

Evidence of unduly Lavish lifestyle by drop employee

Unusual investment of fund held in a inducing capacity

Evidence that the system of internal control is not operating as it was believed or intended to.

As regards action to taken as standard potential errors, the irregularity and the guideline state if during the course of his wok, the auditor obstinate information indicating the possible existence of error and irregularities, the following action should be taken.

(a) Unless it is possible to conclude that with additional testing, the circumstances encountered could not give rise to irregularities or error having a material effect on the financial statement. The auditor should perform and additional test.

(b) If after testing has been performed and if it appears them that an error or irregularity has occurred. The cost and likely effect on the financial statement analyzing and projecting the result of his test.Fraud Detection

(c) Where the auditor is satisfy that irregularity is not the material to the financial statement, he should consider discussing appropriate level of management in order to determining what further action should be taken.Fraud Detection

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