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The Prevention And Detection Of Fraud in Small Scale Industries in Nigeria (a case study of adegoke group of companies ibadan)


The issue of fraud has become a serious food for thought for many corporate bodies in recent time. Consequently more time is spent on board meeting in an attempt to find situation the persistent fraudulent practice among management and non management staffs.

And frauds is a wrongful or criminal deception intends to result in financial or personal gain, while fraud is a deliberate misrepresentation while cause another person be suffer damage. Fraud occurs when someone gains something’s of value usually money of property.

While small scale industries are defined by the Nigeria industrial policy as those with total investment between one hundred thousand naira (100,000.00) and two million naira (2m) exclusive of land but including working capital.

And in the layman definition, small scale is a business that is start with little capital. It is therefore evident from the above that most of the big company complements today started as small and many as one man business like A.G levels nig. Plc, John Holt plc lever brothers’ nig, plc pz industries plc and today they exist as multi national mega industries. The contribution of small scale industries to the economy are:

  •  Promotion of even development and fair distribution of industrial activities throughout the country.
  •  Rapid expansion and diversification of the Industries and before investment.
  • Transformation and modernization of traditional industries.

    In order to prevent and detect fraud in small scale industries good internal control. Provide a working environment in which good employees are not tempted to do something they would not ordinarily do.

And internal control includes the prevention of potential problems as well as the early detection. And correction of actual problem should they occur.

The most common type of fraud by employed is fictitious lean other common forms of fraud are the use of in transit or suspense account and kickbacks.


Title page





Table of content


1.0 Introduction

1.1 The background of the study

1.2 the problem of the study

1.3 Significance of the study

1.4 Scope of the study

1.5 Limitation of the study

1.6 research hypothesis


2.0 Literature review

2.1 Categories of fraud

2.2 Farm of fraud

2.3 Prevention of frauds

2.4 Detection of fraud

2.5 Frauds prevention in the banking industry


2.6  Research methodology

2.7  Population definition

2.8  Population size

2.9  Sampling method

2.10 Data collection method

2.11 Data presentation and analysis technique


3.0 Presentation and analysis of result

3.1 Brief history of case study

3.2 Data presentation and analysis

3.3 Testing of hypothesis

3.4 Discuss of test result

3.5 Discussion of test result


4.0 summary, conclusion and recommendation

4.1 summary of findings

4.2 conclusion

4.3 Recommendation





The term fraud, refer to an intentional misrepresentation of financial information by one of more individual among management employees or third parties. The issue of fraud has become a serious food for times. Consequently more time is spent on board meeting in an attempt to find section to the persistent fraudulent practice among management and non management staffs. The issue of standard transaction practice in any organization should not be left lying occurs in any establishment will determine the long term survival and growth of the company. If not handled with care it can lead to corporate failure.

The responsibility ability for the prevention and detection of fraud rests within management through effective implementation and continues operation of an adequate system of internal control. The internal control system is defied in the audit standard and guideline approved by the council that the association of certified accountant (ACA as the whole system of control, financial and otherwise established by the management in order to carry on the business of the enterprises in orderly and efficient management and also adherence to policies of the management.

The internal control of an organization can be in following

  1. organization control (source) (Ayeni A.P, 2007)
  2. physical control

iii.  segregation of duties

  1. personnel control
  2. supervision control
  3. Arithmetic and accounting control.

The advance learners dictionary defined fraud as criminal reception an act of a particular person or things that receives. According to the international auditing guidelines, fraud is defined as irregularities involving the use of people to obtain an illegal or unjust advantage which may involve the following.

1.Supposing or omitting  transactions from records of document.

2.Misapplication of accounting policies, if this is Intentional and deceitful.

The issue of fraud has become a serious food for through for many corporate bodies in the recent times. Consequently more time is spent on toward meeting in attempts to find solution to the persistent fraudulent practice among management and non management staffs.

The issue of standard transaction practice in any organization should be left lying low. The frequency with which it be rears is highly leads in any establishment will determine the long term survival and growth of the company and if not handed with care can lead to corporate failure. In the recent years, the general and of the essential product is increasing fairly in Nigeria and this will mentally continue. Both the federal, state and local government carrot fold their arms then resulted into various measures like the introduction of small scale industries in Nigeria.

Also, in order to meet such unprecedented demand of a reasonable cost and efficiently here is need to employ fraud prevention and reflection techniques in organization so as to prevent them from dying off.


In carry out the study the following problems were encountered.

  1. For effective coverage: The topic was restricted to small scale industries organization. These industries are both governmentally and privately owned because of this and the secretive nature of most of the private and government industries, certain factual information required were considered very sensitive and confidential issue that could not be obtained. The industries stated that there was no adequate structure on ground to be develop to improve performance in there industries.
  2. In choosing,the industries, effort were made to secure industries with new product on hand which will reflect their organization techniques few met up with this requirement where this is possible. However very little corporation was received from the officer notwithstanding with all these problems it was possible to highlight the performance of the industries. The study was conducted and a set of recommendation to help in minimizing fraud in small scale industries.


All organizations whether profit oriented or not operate within conditions of resources constraint. As a result, various steps are taken and procedures established to ensure that fraud in a small scale industries are prevented and detected in achieving and maximizing the organization goals. Primarily among the steps taken to the setting up a structure of internal control within which on orderly operation can take place.


The small scale industry covers a relation scope and in a project of this nature a large representations sample of bank, government or private institution and compare should have been studied. In order to get an under knowledge of the management procedure and techniques employed in the industries to prevent and detect fraud,

The study has however been confirmed to the small industries in Oyo state Ibadan and its environment. While a descriptive and theoretical approach has been adopted in the analysis of office field work approach has been adopted. It is the intention of the twitter to focus on internal control system in the small scale industries.


The limitations to the study are the factor impending the researchers work and such factors include time duration of the semester, financial constraint and inaccessibility of relevant and sufficient data. These factors militated against the researches in such a way that time given to conduct the work was very short and this resulted in the researchers inability to do the work efficiently. The lack of adequate financial support also delayed researchers to do with within a reasonable time.

Lastly, the long distances of the companies have caused the inability of the researchers to travel down to the companies in order to get data on how to detect and prevent fraud in small scale industries. The researchers will limit the study to Adegoke group companies in Ilorin.


Hypothesis simply means a conjectural or tentative statement or an assertion or an idea which is thought suitable to explain the fact about something or preposition of what can be seen in the world of reality and this production is made from the world of theory and natural phenomena.

The essence of hypothesis in this study is to conduct test into the validity of the following found where internal control system is faulty and proper internal checks is lacking.

Hi: That fraud is basically due to complex nature of accounting system.

Hi: Have been taken as the probability that the will hypothesis Ho is true or valid.

Ho: this is to test whether detection and prevention of fraud will not help the industry to safe it resources from pilferage as a result of weak internal control system.


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