Accounting Project Topics

The Impact of Forensic Auditing on the Financial Performance of an Organisation (a Case Study of Nestle Food Nigeria)

The Impact of Forensic Auditing on the Financial Performance of an Organisation (a Case Study of Nestle Food Nigeria)

The Impact of Forensic Auditing on the Financial Performance of an Organisation (a Case Study of Nestle Food Nigeria)


Objectives of the Study

The study aimed to achieve the following specific objectives:

  1. To assess the role of forensic auditing in detecting and preventing financial fraud within Nestle Food Nigeria.
  2. To evaluate the impact of forensic auditing on the financial performance of Nestle Food Nigeria.
  3. To identify the challenges and limitations associated with the implementation of forensic auditing in Nestle Food Nigeria.



Conceptual Review

Forensic Auditing

Forensic auditing encompasses a multifaceted approach to investigating financial irregularities within organizations (Enofe et al., 2021). It involves the systematic examination of financial records, transactions, and accounts to uncover instances of fraud, embezzlement, or other forms of financial misconduct (Dada, 2018). Forensic auditors utilize a combination of accounting principles, investigative techniques, and legal procedures to analyze evidence and establish the extent of financial wrongdoing (Ramadhan, 2016). Unlike traditional auditing, which primarily focuses on ensuring compliance with accounting standards and regulations, forensic auditing delves deeper into uncovering the root causes and perpetrators of financial fraud (Okoye, 2022).

The scope of forensic auditing extends beyond the detection of financial fraud to include a wide range of investigative activities (Bhasin, 2023). In addition to examining financial statements and transactions, forensic auditors may also conduct interviews, collect testimonies, and analyze digital evidence such as emails and electronic communications (Gbegi & Adebisi, 2018). Moreover, forensic auditing often involves collaborating with other professionals, such as lawyers, law enforcement agencies, and digital forensic experts, to gather and analyze evidence effectively (Amuthi & Shankari, 2021). This multidisciplinary approach enables forensic auditors to uncover complex financial schemes and provide expert testimony in legal proceedings (Borrego et al., 2023).

Forensic auditing is characterized by a proactive and investigative mindset, aimed at uncovering potential financial misconduct before it escalates (Nandini & Ajay, 2021). Unlike traditional auditing, which focuses on verifying the accuracy of financial statements, forensic auditing seeks to identify red flags and anomalies indicative of fraudulent activity (Gordon et al., 2021). By analyzing patterns and trends in financial data, forensic auditors can identify unusual transactions, unauthorized activities, and potential conflicts of interest (Ogutu & Ngahu, year). This proactive approach enables organizations to mitigate financial risks and safeguard their assets effectively (Fazli et al., 2021).

The ultimate goal of forensic auditing is to provide credible and admissible evidence that can be used to hold perpetrators of financial fraud accountable (Bhandari, 2022). Forensic auditors must adhere to strict standards of evidence collection and documentation to ensure the validity and reliability of their findings (Wolfe & Hermanson, 2022). This often involves maintaining a chain of custody for evidence, documenting findings in detailed reports, and providing expert testimony in legal proceedings (Enofe et al., 2019). By providing irrefutable evidence of financial misconduct, forensic auditing helps organizations recover stolen assets, pursue legal action against perpetrators, and deter future instances of fraud (Mansor, 2021).

Financial Performance

Financial performance evaluation is a critical aspect of organizational management, involving the assessment of various key metrics and indicators (Mukoro et al., 2022). These metrics provide insights into the financial health, efficiency, and profitability of an organization, guiding strategic decision-making processes (Ajao & Okwu, 2018). Key metrics commonly used to evaluate financial performance include profitability ratios, liquidity ratios, efficiency ratios, and solvency ratios (Eyisi & Ezuwore, 2023). Profitability ratios, such as return on assets (ROA) and return on equity (ROE), measure the organization’s ability to generate profits relative to its assets and equity capital (Dahli, 2020).

Liquidity ratios assess the organization’s ability to meet its short-term financial obligations (Alao, 2020). These ratios, including the current ratio and the quick ratio, provide insights into the organization’s liquidity position and its ability to cover immediate financial needs (Chep’chieng, 2022). Efficiency ratios, such as asset turnover ratio and inventory turnover ratio, evaluate the organization’s efficiency in utilizing its assets and resources to generate sales and revenue (Daniel & Gbegi, 2018). These ratios help identify areas of operational inefficiency and opportunities for improvement (Abdul-Baki, 2019).





This chapter presents the methodology adopted for the study, which aimed to investigate the impact of forensic auditing on the financial performance of Nestle Food Nigeria. The methodology encompasses research design, population of the study, sampling technique and sample size determination, sources and method of data collection, method of data analysis, validity and reliability of the study, and ethical considerations.

Research Design

The research design employed for this study was a quantitative survey research design. This design was chosen because it allows for the collection of numerical data that can be analyzed statistically to identify patterns, relationships, and correlations between variables. Additionally, a survey design provides a structured approach to gathering data from a large sample size efficiently, which is suitable for investigating the impact of forensic auditing on financial performance across multiple dimensions (Saunders et al., 2019).

Population of the Study

The target population for this study consisted of employees and management personnel of Nestle Food Nigeria. The justification for selecting this population of 171 respondents was based on the accessibility and relevance of individuals directly involved in the financial management processes of the organization. By including employees and management personnel, the study aimed to capture diverse perspectives and insights regarding the impact of forensic auditing on financial performance within the organization (Creswell & Creswell, 2018).

Sampling Technique and Sample Size

A simple random sampling technique was adopted for this study to ensure that each member of the population had an equal chance of being selected as part of the sample. The determination of a sample size of 120 respondents was justified using the Taro Yamane sample size formula. This formula takes into account the size of the population and the desired level of confidence to derive a representative sample size that provides reliable results while minimizing sampling error (Charan & Biswas, 2019).



Data Presentation

Table 4.1 indicates that 90% of the distributed questionnaires were returned or completed, while 10% were not returned or remained incomplete. The high return/completion rate suggests a favourable response from the respondents, indicating their willingness to participate in the study. However, the 10% non-return/non-completion rate could be attributed to various factors such as lack of interest, time constraints, or difficulty understanding the questionnaire. Despite this, the overall response rate is satisfactory, ensuring a robust dataset for analysis and providing credible insights into the research objectives.



Summary of Findings

The findings from the study provide valuable insights into various aspects of forensic auditing and its implementation within Nestle Food Nigeria. Overall, respondents demonstrated a nuanced understanding of forensic auditing practices, highlighting both its effectiveness and associated challenges.

Beginning with perceptions regarding the effectiveness of forensic auditing in detecting and preventing financial fraud within Nestle Food Nigeria, a majority of respondents acknowledged its role in uncovering instances of fraud. Table 4.7 reveals that a substantial proportion either strongly agreed or agreed that forensic auditing has been successful in detecting financial fraud, indicating a positive perception of its effectiveness in this regard. Similarly, Table 4.8 shows that respondents perceived forensic auditing as contributing significantly to the prevention of financial fraud within the organization, further emphasizing its importance in safeguarding financial integrity.

Moreover, respondents recognized the challenges and limitations encountered in implementing forensic auditing within Nestle Food Nigeria. Tables 4.15 and 4.16 highlight the obstacles posed by the lack of skilled personnel and integration issues with existing financial systems, respectively. A considerable number of respondents expressed uncertainty regarding these challenges, suggesting a need for further exploration and clarification.

Cost emerged as another significant consideration in the implementation of forensic auditing practices. Table 4.18 indicates that a majority of respondents perceived cost as a major limitation, emphasizing the financial implications associated with forensic auditing implementation. This finding underscores the importance of cost-effective strategies and resource allocation in facilitating the adoption of forensic auditing practices within the organization.

Statistical analysis using one-sample t-tests confirmed the significance of respondents’ perceptions regarding forensic auditing and its impact on Nestle Food Nigeria. Table 4.19 demonstrates statistically significant mean differences for variables related to the detection/prevention of financial fraud, the financial performance of the organization, and the challenges associated with forensic auditing implementation. These results reinforce the credibility and validity of respondents’ perceptions, indicating that their views are not random but reflect genuine concerns and considerations.

Overall, the findings suggest a mixed outlook on forensic auditing within Nestle Food Nigeria. While respondents recognized its effectiveness in detecting and preventing financial fraud, they also identified significant challenges related to skilled personnel, integration with existing systems, and cost implications. These findings underscore the importance of addressing organizational barriers and implementing robust strategies to enhance the effectiveness and efficiency of forensic auditing practices within the organization.


The findings from the hypotheses testing provide valuable insights into the relationship between forensic auditing and various aspects of financial management within Nestle Food Nigeria. The results confirm significant associations between the implementation of forensic auditing and the detection/prevention of financial fraud, as well as its impact on the organization’s financial performance. Additionally, the study highlights the existence of challenges and limitations in implementing forensic auditing practices, including issues related to skilled personnel, integration with existing systems, and cost considerations.

Overall, the results underscore the importance of forensic auditing as a vital tool for ensuring financial integrity and transparency within organizations. Despite the challenges identified, the findings suggest that forensic auditing plays a crucial role in detecting and preventing financial fraud, thereby safeguarding the organization’s resources and reputation. Moreover, the study emphasizes the need for organizations like Nestle Food Nigeria to address these challenges proactively and implement effective strategies to maximize the benefits of forensic auditing while mitigating potential risks.

In conclusion, the findings provide valuable insights that can inform policymakers, regulators, auditors, and corporate stakeholders in enhancing financial management practices and strengthening governance frameworks. Moving forward, addressing the identified challenges and leveraging forensic auditing effectively can contribute to improved financial integrity, accountability, and sustainability within Nestle Food Nigeria and similar organizations. Top of Form


Based on the findings of the study, the following recommendations are suggested for Nestle Food Nigeria and other organizations aiming to enhance their financial integrity and transparency through forensic auditing:

  1. Invest in Skilled Personnel: Nestle Food Nigeria should prioritize the recruitment and training of skilled forensic auditors to effectively implement forensic auditing practices. This will ensure the organization has the expertise needed to detect and prevent financial fraud effectively.
  2. Integration of Forensic Auditing Systems: The organization should focus on integrating forensic auditing processes seamlessly with existing financial systems. This integration will facilitate the efficient detection of irregularities and improve overall financial management.
  3. Continuous Training and Development: Regular training programs should be organized for employees involved in financial management to keep them updated on the latest forensic auditing techniques and practices. This will enhance their skills and competencies in identifying potential fraud risks.
  4. Cost-Benefit Analysis: Nestle Food Nigeria should conduct a comprehensive cost-benefit analysis to evaluate the financial implications of implementing forensic auditing practices. This analysis will help the organization make informed decisions regarding resource allocation and budgeting for forensic auditing activities.
  5. Strengthen Internal Controls: The organization should strengthen its internal control systems to complement forensic auditing efforts. This includes implementing robust policies and procedures to prevent and detect fraudulent activities proactively.
  6. Regular Audits and Reviews: Nestle Food Nigeria should conduct regular audits and reviews of its financial processes and transactions to identify any anomalies or irregularities promptly. This proactive approach will help mitigate the risk of financial fraud and misconduct.
  7. Collaboration with Regulatory Bodies: The organization should collaborate with regulatory bodies and industry associations to stay updated on regulatory requirements and best practices in forensic auditing. This collaboration will ensure compliance with relevant standards and regulations.
  8. Embrace Technological Solutions: Nestle Food Nigeria should leverage technological solutions such as data analytics and artificial intelligence to enhance the effectiveness of forensic auditing processes. These technologies can help automate routine tasks and provide deeper insights into financial data, improving fraud detection capabilities.

Contribution to Knowledge

The study has made several notable contributions to the existing body of knowledge in the field of forensic auditing and financial management. Firstly, it has provided empirical evidence regarding the effectiveness of forensic auditing in detecting and preventing financial fraud within Nestle Food Nigeria. By conducting rigorous statistical analyses, the study has demonstrated a significant relationship between the implementation of forensic auditing practices and the reduction of financial fraud incidents. This contributes valuable insights into the practical application of forensic auditing techniques in real-world organizational settings.

Secondly, the study has shed light on the impact of forensic auditing on the financial performance of Nestle Food Nigeria. Through comprehensive data analysis, the research findings indicate a significant positive correlation between the adoption of forensic auditing practices and improvements in financial performance metrics. This contributes to a deeper understanding of how forensic auditing can not only safeguard financial resources but also enhance overall organizational performance.

Thirdly, the study has identified and analyzed the challenges and limitations associated with the implementation of forensic auditing in Nestle Food Nigeria. By exploring these barriers in detail, the research offers practical recommendations for overcoming obstacles and optimizing the effectiveness of forensic auditing processes. This contributes to the development of best practices for organizations looking to strengthen their financial integrity through forensic auditing.

Furthermore, the study has provided insights into the perceptions and attitudes of employees toward forensic auditing practices within Nestle Food Nigeria. By examining responses to survey questions, the research highlights areas of uncertainty and skepticism that may hinder the successful implementation of forensic auditing initiatives. This contributes to a nuanced understanding of organizational dynamics and employee perceptions regarding financial integrity measures.

Overall, the findings of this study contribute to bridging the gap between theory and practice in forensic auditing and financial management. By providing empirical evidence, practical recommendations, and insights into employee perceptions, the research adds valuable knowledge to the academic literature and informs decision-making processes within organizations like Nestle Food Nigeria and beyond.

Limitations of the Study

While the study has yielded valuable insights into the role of forensic auditing in enhancing financial integrity within Nestle Food Nigeria, it is essential to acknowledge several limitations that may have influenced the research outcomes. Firstly, the sample size of the study, although sufficient for statistical analysis, may not fully represent the diversity of perspectives and experiences within the organization. A larger and more diverse sample could provide a more comprehensive understanding of the issues surrounding forensic auditing implementation and its impact on financial performance.

Secondly, the study relied primarily on self-reported data obtained through questionnaires, which may be subject to respondent bias and social desirability bias. Participants may have been inclined to provide socially desirable responses, leading to potential inaccuracies or overestimations of the effectiveness of forensic auditing practices. Future research could consider complementing survey data with interviews or focus groups to gain deeper insights into the nuances of forensic auditing implementation and its outcomes.


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