An Evaluation of Forensic Accounting Techniques in Detecting Loan Fraud in Nigerian Commercial Banks: A Study of Union Bank Plc
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Background of the Study
Loan fraud remains a pervasive issue in Nigerian commercial banks, with Union Bank Plc being no exception. Commercial banks in Nigeria are responsible for managing significant financial assets and serving a large number of customers. However, the rise of sophisticated fraudulent activities, particularly in loan disbursement processes, poses a serious threat to the stability of the banking system. Loan fraud in commercial banks typically involves falsification of loan applications, misrepresentation of borrower information, or collusion between bank staff and borrowers. These fraudulent activities not only lead to financial losses but also undermine the trust and confidence of customers in the banking system (Ayodele, 2024).
Forensic accounting plays a critical role in addressing loan fraud in Nigerian commercial banks by applying specialized techniques such as forensic auditing, transaction tracing, and data analysis. These techniques enable forensic accountants to detect fraudulent patterns, identify anomalies in loan disbursement processes, and offer solutions to mitigate such risks. Union Bank Plc, being one of Nigeria's prominent commercial banks, faces the challenge of combating loan fraud while maintaining its financial integrity. This research aims to evaluate the forensic accounting techniques employed by Union Bank Plc in detecting loan fraud and assess their effectiveness in reducing fraud-related losses.
The findings of this study will provide valuable insights into the effectiveness of forensic accounting in fraud detection and offer recommendations for improving the bank’s fraud detection mechanisms.
Statement of the Problem
Loan fraud remains a significant problem in Nigerian commercial banks, including Union Bank Plc. The bank’s ability to detect and prevent fraudulent loan disbursements is crucial to maintaining its financial health and customer trust. While forensic accounting techniques offer potential solutions, there is a need for a comprehensive evaluation of these techniques to determine their effectiveness in detecting loan fraud in Union Bank Plc. This study seeks to explore the role of forensic accounting techniques in identifying and mitigating loan fraud within the bank.
Objectives of the Study
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To evaluate the forensic accounting techniques used by Union Bank Plc in detecting loan fraud.
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To assess the effectiveness of these forensic accounting techniques in reducing loan fraud in Union Bank Plc.
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To propose recommendations for improving forensic accounting practices in detecting loan fraud in Nigerian commercial banks.
Research Questions
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What forensic accounting techniques are used by Union Bank Plc to detect loan fraud?
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How effective are these forensic accounting techniques in reducing loan fraud in Union Bank Plc?
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What recommendations can be made to improve forensic accounting practices for fraud detection in Nigerian commercial banks?
Research Hypotheses
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Forensic accounting techniques significantly improve the detection of loan fraud in Union Bank Plc.
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The application of forensic accounting techniques has led to a reduction in loan fraud-related losses in Union Bank Plc.
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Enhanced forensic accounting practices improve the overall financial integrity of Nigerian commercial banks.
Scope and Limitations of the Study
This study will focus on Union Bank Plc and assess its use of forensic accounting techniques in detecting loan fraud. It will explore specific cases of loan fraud and evaluate the effectiveness of forensic accounting practices employed by the bank. Limitations may include access to detailed fraud cases, proprietary banking data, and potential confidentiality issues.
Definitions of Terms
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Forensic Accounting: The application of accounting techniques to investigate financial fraud, irregularities, and disputes (Ayodele, 2024).
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Loan Fraud: The act of providing false or misleading information to obtain a loan or misappropriating loan funds, resulting in financial loss for the bank.
Commercial Bank: A financial institution that provides a wide range of services such as loans, savings, and checking accounts to individuals and businesses
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