Forensic Accounting as a Tool for Fraud Detection and Prevention in Nigeria
CHAPTER ONE
OBJECTIVES OF THE STUDY
The objective of the study is to find out the following:
- To examine the role of Forensic Accountant in an organization.
- To examine the possibility of reducing the occurrence of fraud cases using Forensic Accounting.
- To find out whether Forensic Accountant can help in detecting and preventing fraud in the Public Sector
- To examine if there is significance difference between Forensic Accountants and External Auditors.
CHAPTER TWO
REVIEW OF RELATED LITERATURE
INTRODUCTION
Fraud and corruption are fundamental problems of third world countries, particularly Nigeria were official corruption has become endemic.(Akram 2009). The spate of world-wide corporate scandals involving Enron, World com, Global Crossing, Tyco International, Xerox (USA); Parmalat (Italy) and corporate fraud perpetuate din Nigeria by management of Lever Brothers, Union Dicon Salt, Cadbury (Nigeria), and the 14 distressed banksas exposed by audit of the Central Bank of Nigeria has shown the failure of traditional audit techniques in unraveling corporate fraud and have rejuvenated interest in forensic accounting. So also are the increasing government concerns over official corruptions and the doggedness of the various anti corruption agencies at unraveling them through the deployment of forensic accounting methodology.
Companies are now beginning to be more determined than ever to ensure that their operations are above board and in no way connected with financial frauds. These have resulted in a steadily growing demand for sophisticated accounting and auditing techniques as provided by forensic accounting in detecting, correcting and preventing fraud as well as deceptive and creative accounting practices. Until recently, the detection of fraud or white collar crimes was generally thought to be part of the conventional accounting and auditing functions. Generally, Fraud was something that internal or external auditors were supposed to guard against through their periodic audits.
However, the failure of traditional audit in curtailing the menace of official corruption and white collar crimes is inflaming passion for forensic accounting techniques. The extent to which forensic accounting is gaining relevance in Nigeria in the fight against corruption in Nigeria, the investigative capacity of Nigerian accountants and the pace of development of forensic accounting in Nigeria are among the principal objectives of this paper.
CHAPTER THREE
RESEARCH METHODOLOGY AND PROCEDURE
INTRODUCTION
This chapter is concerned with the methods and procedures used in the collection of data for the study. The strategies adopted in the collection of data are discussed under the following sub-headings which includes; research design, area of the study, population of the study, sample size and sampling techniques, sources of data, method of data collection as well as method of data analysis.
CHAPTER FOUR
PRESENTATION, ANALYSIS AND INTERPRETATION OF DATA
INTRODUCTION
This chapter entails the presentation of data analysis and interpretation of data collected. The data was through the use of questionnaire while the analysis was based on the research questions stated earlier in chapter one of this study. Simple percentages and tables were used to analyze the research questions while Chi-square statistical tool was used for testing of hypotheses.
CHAPTER FIVE
SUMMARY, CONCLUSION AND RECOMMENDATIONS
INTRODUCTION
This chapter presents the summary, conclusion and recommendations for further studies.
SUMMARY
Summary of findings for this research is based on the analysis of data collected through questionnaires and testing of hypotheses. They are itemized as follows:
- That the services of Professional Forensic Accountants differ to a Traditional External Auditor.
- That the services of Professional Forensic Accountant are preferable to the services of Traditional External Auditor.
- That the uses of Forensic Accounting do significantly reduces the occurrence of fraud cases in the public sector.
- That there is significant difference between Professional Forensic Accountants and Traditional External Auditors in terms of a skills and techniques applied and fraud investigation.
- Majority of the respondents are aware of Forensic Accounting which where majorly drawn from the top management and senior staff and very few from the middle and lower cadre.
- Majority of the respondents had good knowledge of the concept of Forensic Accounting.
- Based on oral interview Eti-Osa Local Government Council does not use the services of Professional Forensic Accountants and therefore required such services.
- That the services of Professional Forensic Accountants are needed more in the public sector.
- That Forensic Accounting can help in detecting and preventing fraud in the public sector.
CONCLUSION
In conclusion, this study has analyzed why attention has to be given to the question of fraud detection and fraud prevention in public sector and Eti-Osa Local Government Council in particular with the aid of Forensic Accounting. It has discussed the Forensic Accounting approach or procedure necessary for detection, prevention of fraud and the type of control to be established in order to control the incidence of fraud in the state. It should be emphasized that whether within the business world or in the public sector, the ultimate responsibility for discouraging and preventing fraud and corrupt practices rests with management.
This study also appreciated some of the reasons why government staff and other public servant engage themselves in fraudulent practices. Also, the role of forensic accountants and the skills they need to possess to be able to contribute their quota meaningfully in achieving the objectives of this study was extensively discussed.
Above all, the study revealed that the use of Forensic Accounting do significantly reduces the occurrence of fraud cases in the public sector, as it equally showed that there is significant difference between Professional Forensic Accountants and Traditional External Auditors in terms of skills and techniques applied in Fraud detection and prevention.
RECOMMENDATIONS
From the findings of this study, the researcher made the following recommendations:
- Forensic Accounting will provide litigation support service with appropriate provision of professional services in the law courts.
- Forensic Accounting will institute good corporate governance in the public sector which will install public confidence in the government and the entire system.
- The traditional auditing has limitation in detecting fraudulent practices which the forensic accountants will effectively fill. They have the professional ability back up by law to break into the organization system and examine the books, make discoveries and present the documentary evidences in the law courts.
- The image of Nigeria in the international community has discouraged foreign direct investment because of economic and financial crime. This has effect on development, employment and the standard of living of the people. Eradication of economic and financial crime through the adoption of forensic accounting in the system will improve the image of firms under review.
- Detection and prevention of corruption have given rise to the profession of forensic accounting. Due to this fact, the most important thing companies have to do with regard to fraud is to prevent the crime from being committed.
Government and regulatory authorities should ensure the provision of standards and guidelines to regulate forensic activities and above all Nigerians should embrace integrity, objectivity, fairness and accountability in theirday-to-day activities.
REFERENCES
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- Ajie, H.A., & Ezi, C. T. (2000). Financial Institutions and Markets. Owerri: Corporate impression.
- Albrecht, W.S. (2005). Identifying Fraudulent Financial Transactions: A Framework for Detecting Financial StatementFraud, Brigham: Brigham Young University.
- Akram , M (2009): Role Of Audit In Fighting Corruption Paper Prepared For Ad Hoc Series in Corporate Organisations. Group Meeting On “Ethics, Integrity, and Accountability in the Public Sector: Re-building Public Trust in Government through the Implementation of the UN Convention against Corruption” 26-27 September.
- American Institute of Certified Public Accountants. (2010). FVS Practice Aid 10-1: Serving as an Expert Witness orConsultant. New York: Author