FCMB reports 1,368% rise in fraud cases in Q1

FCMB Group Plc posted a 1,368.47 per cent rise in fraud and forgery related matters in the first quarter (Q1) of this year, the bank’s financial statement for the period ended March 31 has shown.

According to the report, fraud and forgery expenses amounted to N329.16 million in Q1, compared to N22.42 million posted in Q1 of 2022.

Findings by The ICIR showed that fraud and forgery expense in the review period was much higher than the N123.08 million the bank reported for the full year ended December 31, 2022, which rose from N89.86 million in December 31, 2021.

“Existing controls have been strengthened to address the identified lapses and the Group continues to collaborate with other stakeholders, including regulators to curb the spate of fraud, including cyber risk exposures, which has escalated in recent times across the industry because of remote operations, increased automation and migration of customers to alternate channels,” FCMB Group stated.

A public affairs commentator and finance expert, Bala Zakka, told The ICIR that fraud and forgery expense is a term used by banks in their financial statement to report cases already confirmed and yet to be ascertained.

“Once it is a fraud case, it has already been confirmed and the loss must have happened. But forgery is a case of probability until forensic investigation is conducted to ascertain its truth. But once it is true, it is then transferred completely to fraud cases,” Zakka said.

He explained that in a forgery situation where investigation is conducted and it was discovered that it was not real that the expense income can be returned.

He said, “Generally, when you put fraud and forgery in a financial statement, you make provisions for their recording, and at that the items are already regarded as losses.

“Companies make provision for all their expenses before arriving at profit before tax (PBT), whether real fraud or not because whatever is reported as PBT is what they must pay compulsory tax on.

“Every other thing the company needs to take care of is put under expenses,” Zakka further explained.

He, however, noted that fraud and forgery are issues inherent within a company’s system, which are most likely perpetrated by outsiders with the connivance of insiders.

A lecturer at the University of Lagos, Abi Noruwa, said fraud and forgery cases can be like corruption or concealment of information.






     

     

    Noruwa said, “Forgery is a term that accountants used to express misplacement of funds, not well utilised or anything that is outside of bad debt.”

    He added that fraud and forgery are misappropriation by staff of the banks with the involvement of outsiders.

    In its latest report on fraud and forgeries in the Nigerian banking industry, Fitc Nigeria Limited, a technology-driven firm, revealed that a total of 19,314 cases of fraud were reported in the third quarter of 2022, which amounted to N9.62 billion.

    Banks ought to improve their internal control measures to proactively prevent fraud, Fitc recommended.

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