Fraud And Financial Malpractices As A Leading Factor In Business Failure

INTRODUCTION
1.1 BACKGROUND TO THE STUDY
In all human endeavours and activities there are usually stories
of successes (achievements) and failures.
Businesses are therefore no exception. Initially, a motive for setting up a company is for economic reasons which are usually taken to be profit maximization. In periods of booms as was experienced in the mid – seventies during the oil boom, many businesses including the public sector organisations thieved in an era of abundance and squanderminio
In such an era, employment, production and income were at their peak levels and governmental expenditures at all levels rise considerably without any corresponding rise in productivity.
During this period also, no one complained, and managers of our various businesses did not think of means of survival and substance
Efficiency and effectiveness in the use of sources resources were never thought of and there were total absence of resource control mechanisms
Economic planners in such periods makes unrealistic projections and assumptions as they plan to build high – ways , sky – scrappers, organisation now think of lost reduction and minimisation of fraud and financial malpractices which hither to plunged such organisation into distressed conditions.
The adverse macro – economic conditions in Nigeria today has attained a dimension that can best be described as “crisis” level. This has led to some drastic measures or programmes being initiated by the government to keep the nation afloat.
Such measures have come in different names at different times, ranging from the belting tightening of the Shangri administration through Economic Emergency order of Buhari regime to the structural Adjustment programme (SAP).
As a result of these measures, firms, and individuals have found themselves in extremely hard condition to the extent that some have failed completely, others are stagnated and distressed.
What factors are specifically responsible for such state of affairs of the business firms? This project is set out to investigate how fraud and financial malpractices can bring is highly profitable organisations into distressed and untimely liquidation.

1.2 STATEMENT OF PROBLEM
In spite of the Federal Government privatising the
telecommunication industry, NITEL Ltd is saddled with the problem of bad image orising mostly from fraudulent management and staff of the company.
There is inherent weakness in the internal control system of NITEL Ltd.
NITEL Ltd management does not consider policy on fraudulent cases as strategic in its decision taking.
NITEL Ltd has not net-up with the expectation of investors as a privatised entity since its privatisation.

1.3 OBJECTIVE OF THE STUDY
To discuss and ascertain why Nigeria telecommunication
limited is still saddled with the problem of fraudulent and financial malpractices despite its privatisation.
To determine whether there is significant weakness in the internal control system of NITEL Ltd.
To determine and assertion whether NITEL Ltd regards fraudulent lexes very serious in its decision taking.
To determine and find out whether NITEL Ltd has met the expectations of its investors as a privatised entity since its privatisation.

1.4 SCOPE OF THE STUDY
To come out with accurate and reliable information, the researcher decides to confine herself with NITEL Ltd, Enugu – South east zone.

1.5 RESEARCH QUESTION
To guide this work, the following research questions were formulated to ensure clarity:
1. To what extent does high level of fraud and other forms of financial malpractices responsible for the failure of NITEL Ltd to achieve its corporate objectives?
2. Does poor internal control system in NITEL Ltd contributed to high level of fraudulent practice in NITEL Ltd.
3. To what extent would you agree that inadequate qualified staff in internal audit unit contributed to poor and ineffective internal control system of NITEL LTD.?
4. Does replacing the present and lukewarm internal control system with more effective ones for check and balance minimise/eliminate fraud and financial malpractice in Nitel Ltd

1.6 RESEARCH HYPOTHESIS
1. There is no significant effect of fraud in NITEL Ltd in achieving its corporate goals
2. There is no significant difference between senior staff and junior staff perceptions on high level of fraudulent due to poor internal control system of NITEL Ltd.
3. There is no significant effect of inadequate qualified staff in internal audit unit that may lead to its business failure.
4. There is no significant effect of fraud and financial malpractice elimination/minimisation by replacing the present and lukewarm internal audit unit through application of checks and balances.

1.7 SIGNIFICANCE OF THE STUDY
Significance of the study refers to the importance or usefulness of the research
potential investors suppliers, management, government and all those having one
interest or the other on the operation of the business firms.
The ultimate aim of every research is to provide knowledge and information that will bring about a better understanding of the topic under review.
Specifically, this project will offer enough information and explanation to the management of NITEL Ltd, the government, and the general public.
Furthermore, the research findings and recommendations will form a basis to be relied upon by subsequent researcher who may wish to make further inquiries on the issue of fraudulent practices and its effect on business failure.

1.8 DEFINITION OF TERMS
The research considers it very vital to define some highlighted terms as they
relate to this research work.
1. FRAUD- Fraud here mains embezzle property or fraud of an organization entrusted to one to manage. According to chambers twentieth century dictionary fraud is defined as “a deceit, imposture a snare or deceptive trick.
2. FINANCIAL – financial pertaining to finance is money affairs or revenue especially of states or public money. It is the out of managing or administering public money or resources of an organization.
3. MALPRACTICE – malpractice is an evil or improper practice: treatment filling short of reasonable skill or care. It is an illegal attempt of a person in position of trust especially of fund and/or resources of an entity, to benefit himself at other’s organizations’ cost.
4. CRISIS – This means the a decisive moment or turning point to decide on what measures to take handicap some unusual situations which affects an organization and the macro – economy at large like NITEL Ltd.
5. PROFIT – Profit means gains resulting from the employment of capital. This is usually the objective of most profit oriented companies.
6. FAILURE- Failure here means inability to achieve corporate objectives of an organization. That is to miss achievement or target of an organization.