EFFECT OF FRAUD SCHEMES ON THE OPERATIONAL COST OF MANUFACTURING
FIRMS

Kechi Kankpang (Ph.D)
Department of Accounting, University of Calabar
drkechi@gmail.com, Tel: 07036960151
&
Lawal Suleiman .G
Department of Banking and Finance, University of Calabar
suleimanlawal24@gmail.com Tel: 08034353777

ABSTRACT
This study explored the effect of corruption schemes on the operational cost of manufacturing companies. The study was conducted using the survey design. The key research elements involved in the study were the top management as well as employee of manufacturing companies operating in southern Nigeria quoted in the Nigerian Stock Exchange. The total number of employees spread across the entire manufacturing companies operating in the regions under the study are fifty thousand, three hundred and eighty -five (50,385) employees as reported in NSE Fact Book, 2016. The study sample was selected from the population using the Taro Yemani (1967) formula drawn across the entire seventy (70) manufacturing firms quoted in the Nigerian Stock Exchange. Data were obtained from both primary and secondary sources using the questionnaire and desk research. The ordinary least squares (OLS) simple regression analysis, percentages and coefficient of correlation statistical tools were used in testing the degree of relationship existing between the various variables in the research hypotheses and relevant questions raised in the study. Data gathered were presented and analysed using descriptive statistic for the purpose of establishing the variability of the responses to the survey instrument. This study has explored the effect of corruption schemes on the operational costs. The study has identified corruption as a universal phenomenon rampaging businesses as well as economies globally in both developed and developing countries. The study found that against the apriori expectations, corruption schemes have been found to have a very insignificant effect on the overall costs of doing business in the Nigeria economy. The researcher wishes to make the following recommendations based on the findings and conclusions drawn from this study: Preventive
controls such as segregation of duties, access rights and restrictions, effective supervision, strict and
responsive authorization and approvals, frequent job rotation, compulsory holidays and annual vacations at all levels of the organization should be put in place to ensure that fraud and financial misconduct is prevented from occurring in the first instance. While significant check and balances should be put in place to ensure that the payroll reflects only those duly employed and are working in the organisation to minimize to the barest minimum the occurrence of payroll related schemes in companies. Lastly, recruitment and selection procedures should be designed to ensure that only qualified individuals with the right personal traits are employed into the organisations’ work force.
Key word: Fraud, kickback, overbilling, purchase scheme, operational cost

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https://afra.org.ng/wp-content/uploads/2022/03/pro2019015.pdf

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