AN EXPLORATORY APPROACH ON CALL-OVER SYSTEM: A CONTINUOUS AUDIT TECHNIQUE FOR FRAUD DETECTION AND PREVENTION IN BANKING SECTOR

Abstract

Recent development in financial technology has expedited the work and veracity
of internal audit in banking sector. Call-over emerged as a continuous auditing
mechanism and leverage this technology to incessantly monitor and examine
large amount of banking transactions in real-time in part to prevent/detect fraud
at the same time providing assurance on the effectiveness of the internal control
of the bank. The objective of this paper was to examine the impact of call-over
on detection and prevention of fraud in banking sector and to illustrate the
practical application of Call-over in banking sector. The paper uses filtering
technique to select 12 banks which form the sample size of the study. Genuine
banking transactions were collected at random as a case study to detect fraud
risk. Call-over was then applied to these transactions using Extensive Business
Reporting language (XBRL) to identify irregular transactions. Findings reveal
four suspicious transactions with irregular processing. We conclude that call-
over has a significant impact on fraud detection and prevention in banking
sector and that fraud potential is more ubiquitous in cash and tellering than
customer service, fund-transfer or any other department in deposit money
banks. We recommend that internal audit of banks be strengthen in order to
support the bank’s anti-fraud management efforts necessary to protect the bank.
We further recommend that staff be mandated to call-over the transactions of
their fellow colleagues on a daily basis and the result thereof be reported the
branch internal auditor.