ABSTRACT

 The study focused on internal auditing as an effective tool for fraud detection and prevention of commercial banks in Nigeria. Problem such as misappropriation of public funds, theft, and embezzlement fraud could arise in banks where there is no auditing. The problem of fraud in the banking industry is caused by lack of cognizance between the aspiration of staff and corporative objective, little or inadequate experience ofemployees in relation to the function assigned to them, lack of training and lack of internal control system. To curb or eliminate these faults, internal control measures would be employed. The study made used of a survey research design and data collected were analyzed using regression analysis. The study revealed that that there is a sign flcant relationshzp between internal auditing and fraud detection and prevention. Additionally, the study revealed that there is a signfIcant relationshzp between internal control system and fraud detection and prevention. Based on the findings ofthe study, it is concluded that, to ensure effective prevention and control offraud in micro-finance ban Jci, management of the banks should ensure that internal auditing is well recognized and established in all department to match that of the commercial banks. It is recommended that to ensure internal auditing stand the test of time, only qualified and experience accountants should be appointed to head internal audit department in banks. Internal auditors should be well remunerated in order to maintain their integrity in carrying out their work. Finally, Internal checks, such as operational control should be built into banking system to simplify the processing of entries in order to secure prompt services, to help in minimizing errors and to act as insurance against possible collusion.