Abstract
Fraud is one of the major challenges confronting Nigerian banking industry today. The study investigated the effects of internal control system on fraud prevention in Nigerian banking sector. A survey of the senior staff in the Twenty two (22) commercial banks in operations in Nigeria was carried out using a structured questionnaire. The results showed a positive and significant relationship between internal control system and fraud prevention. Positive and significant relationships exist between risk management, control environment, information management and technology on fraud prevention. However, the study found a positive but non-significant relationship between control supervision and fraud prevention. The study recommended a proactive risk management among banks. There should be special training for senior staff on red flags to fraud occurrence and best approach to handle them. Banks must invest heavily in anti-fraud software and latest hardware gadgets that can create awareness of impeding fraud for both staff and customers and build a strong resistance to protect bank database. Nigerian banks must fortify their internal control system to meet the realities of today. This will help to eliminate all loopholes which may arise due to changes in procedures, practices, and technology and government policies that have impacts onbanking industry.