Effects Of Forensic Accounting In Fraud Detection

Effects Of Forensic Accounting In Fraud Detection

Abstract

This study delved the goods of forensic account in fraud discovery. Data was collected from the staff of Nigeria National Petroleum Corporation( NNPC) with the aid of questionnaire as the exploration instrument. Convenience slice styles was applied to elect 53 repliers from the population of the scholars on which questionnaire were administered. Fifty of the questionnaire were completed and returned. The collected data were anatomized and presented using frequence distribution tables in which simple probabilities of frequence were shown. Pearson Correlation Measure was applied to test the stated suppositions. The objects of the study are; to determine the chances of fraud discovery through forensic account in the petroleum sector, to help in narrowing the inspection anticipation gap and to ascertain forensic account ways like motive substantiation, inspection trail etc to stem the drift of fiscal fraud. Two propositions are considered in this study; Fraud diamond and the white- collar fraudster propositions. the proposition of fraud diamond in place of a triangle. They argued that the diamond offers better view of the factors leading to fraud. According to them fraud diamond is the introductory factors that contribute to the circumstance of fraud. In other words, the fraud diamond is a triangular representation of those conditions that make fraud possible. These conditions are motive, occasion, and vindication. The white- collar fraudster propositions set out that the following features for fraudster, likely to be married, member of a church or synagogue , educated beyond high academy, no arrest records, age range teens to aged than 60 times. It was argued that fraud and other white- collar crimes can be brought under control by the effective use of the fraud triangle. They argued that the fraud triangle exposes those conditions that impact people to be engaged in fraudulent practices. It serves as an effective fraud forestallment measure as it helps to exclude the causes of fraud by mollifying the effect of motive, occasion and vindication. The study set up that there’s need to understanding the legal rudiments of fraud and other fiscal crimes in order to ascertain fraud, every association’s fiscal statements should be reviewed for pointers of fiscal fraud and other affiliated problems and there’s need for the operation of associations to have knowledge in finance and account related cases. Some of the recommendations of the exploration work are; the part of forensic accountants must be honored in every association, critical thinking, unshaped problem working, investigative inflexibility, logical proficiency, and legal knowledge are more important chops of forensic accountants and there’s need for a statutory law feting the part of forensic accountant in both government and private associations.

Chapter One

Preface

Background to the Study

fiscal irregularity is a severe global problem. It’s the major concern to developing nations. It’s so aboriginal that fraud and corruption is gradationally getting a normal way of life. Financial irregularities are so common that nearly every existent can not wash his or her hands, clean of it; starting from the public sector to the private sector, from the presidential manor of a nation, down the political office- holding graduation, to the ward councilors; from managing directors of a company, through middle operation skeleton and to as low as couriers( Kasum, 2007).

Individual perpetrates fraud and loose practice according to the capacity of their office. Although fiscal irregularities affects private and public sector, the magnitude of public office fraud, together with the extent to which citizens are affected, calls for alarm( Kasum, 2007).

No plutocrat is entirely free and accordingly abuse of any quantum will impact negatively, on where it should fairly be used. The effect of these can be on an association or a whole nation. If the effect isn’t direct it may be circular as it may affect installations and structure that’s supposed to be salutary to the concerned.

Unless it’s insolvable, individual or establishment affected negatively by the fraudulent or loose practices will want to seek requital. Individual, commercial body and interested government organs takes action towards seeking requital using divergent institutions like the police and the law court. Whatever an investigator wants to do, won’t be complete if the extent to which the affected person is affected isn’t quantified.

From business, government, nonsupervisory authorities, and the courts the world over, substantiation indicates that a advanced position of moxie is necessary to dissect current complicated fiscal deals and events( Emmanuel etal., 2010). This and other financial areas are where the service of the experts “ forensic accountant ” are been engaged for a veritably long time worldwide and presumably, lately, in Nigeria( Kasum, 2007).

disquisition of fraud and corruption is verified therefore, not to be new, indeed in Nigeria. It’s only gaining elevation because of the growing surge of the crime under the putatively new title the last five times( Emma, 2009).

Research continuously confirms that precluding fraud and uncovering deceptive account practices are in strong demand as companies and government likewise, respond to near scrutiny of their fiscal conditioning by shareholders and government agencies( Emma, 2009).

The Nigeria Deposit Insurance Corporation( NDIC) Annual Report for 2007 revealed that the banking sector alone lost N10 billion to fraudsters in that time. numerous of these crimes are delicate to identify because the perpetrators have concealed their conditioning through a series of complex deals( Emmanuel etal., 2010).

From business, government, nonsupervisory authorities, and the courts the world over, substantiation indicates that a advanced position of moxie is necessary to dissect current complicated fiscal deals and events. As a result, forensic account has been thrown into the van of the campaign against fiscal deception.

In addition, according to a paper presented at the 2008 Accountants Conference organized by the Institute of Chartered Accountants of Nigeria( ICAN), it was stated that the use of forensic account procedures to descry fiscal reporting fraud should be espoused. The composition argued thatforensic accountants and fiscal statement adjudicators have different mindsets. Hence, lCAN should enhance its plan to have specialists in forensic account and auditing and the paper encourages professional accountants to gain class of International Fraud Investigation and Forensic Accountancy Bodies so that they can face and repel the arising challenges in the area( Emmanuel etal., 2010).

Forensic account, also called investigative account or fraud inspection, is a junction of forensic wisdom and account. Forensic wisdom according to Crumbley( 2003) “ may be defined as operation of the laws of nature to the laws of man ”. He refers to forensic scientists as observers and practitioners of substantiation and data in legal cases that also offers expert opinions regarding their findings in court of law. The wisdom in question then’s counting wisdom, meaning that the examination and interpretation will be of profitable information.

Marianne( 2005) stated that forensic account involves the operation of counting generalities and ways to legal problem. It demands reporting, where the responsibility of the fraud is established and the report is considered as substantiation in the court of law or in the executive proceeding.

It provides an account analysis that’s suitable to the court, which will form the base of discussion, debate and eventually dispute resolution( Marianne, 2005).

These means that forensic account is a field of specialization that has to do with provision of information that’s meant to be used as substantiation especially for legal purposes. The persons rehearsing in this field( i.e. forensic accountants) probe and validate fiscal fraud and white- collar crimes similar as embezzlement and probe allegations of fraud, estimates losses damages and means and analyses complex fiscal sale( Marianne, 2005).

This exploration will be considering the part of forensic accountants in detecting fraud in the petroleum assiduity using Nigeria National Petroleum Corporation( NNPC) as a case study.

NNPC was established on April 1, 1977 as a junction of the Nigerian National Oil Corporation and the Federal Ministry of Mines and Steel. NNPC by law manages the common adventure between the Nigerian civil government and a number of foreign transnational pots, which includeRoyal Dutch Shell, Agip, ExxonMobil, Chevron, and Texaco( now intermingled with Chevron). Through collaboration with these companies, the Nigerian government conducts petroleum disquisition and product. In 2007, the head of the Nigerian sect of translucency International said hires for NNPC workers were too low to help graft. The NNPC Towers in Abuja is the headquarters of NNPC. conforming of four identical halls, the complex is located on Herbert Macaulay Way, Central Business District Abuja. NNPC also has zonal services in Lagos, Kaduna, Port Harcourt and Warri. It has an transnational office located in London, United Kingdom(Google.com)

Statement of the Problem

Some people believe that the objectification of ultramodern forensic auditing ways in an inspection in Nigeria is demanded to arm the account profession to deal effectively with the problem of exhuming ingenious fraud schemes arising from inspection failure to descry frauds. According to Hassan( 2012), the position of corruption in NNPC is so high that it’s affecting the profitable well being of the nation. The control system borrow in all Nigerian parastatals is so pervious that it gives room for corruption( Marwan, 2013). former report on conditioning in NNPC have shown that the pot has the loftiest position of fraud in the oil painting sector, no good internal control system is in place to reveal these fraudulent practices and utmost adjudicators auditing the account of NNPC have no knowledge on ultramodern ways of discovering fraud( Adeola, 2011).

Though, studies on forensic account are veritably many in Nigeria, this study intend to reveal how forensic account can be used in diving fraudulent practices in NNPC.

Aim and Objects of the Study

This study is aimed at catching on the effect of forensic account in fraud discovery, while specific ideal of the study include

To determine the chances of fraud discovery through forensic account in the petroleum sector.

ii. To ascertain the extent to which motive substantiation stem the drift of unlawful pullout of fraud.

iii. To ascertain how inspection trail has reduced inconsistency in entries.

Applicable Research Questions

The following exploration questions were formulated for the purpose of this study.

i. How has forensic account be useful in fraud discovery?

ii. How has motive substantiation helped to stem runs of unlawful pullout of finances?

iii. Does inspection trail is sufficient to reduce inconsistency in entries?

Applicable Research Hypothesis

For the purpose of this study, the following exploration suppositions were framed and tested in this study

thesis 1

H0 There’s no significant relationship between forensic account and fraud discovery.

H1 There’s significant relationship between forensic account and fraud discovery.

thesis II

H0 There’s no significant relationship between motive substantiation and unlawful pullout of fund.

H1 There’s significant relationship between motive substantiation and unlawful pullout of fund.

Significance of the Study

The significance of this study can be drawn from the statement of the problems and objects above

1. To contribute to the growing literatures on the use of forensic account system in discovery of fraud.

2. To further expose to the operation of Nigeria National Petroleum Corporation( NNPC) the significance of forensic account toward fraud discovery.

Compass Of The Study

This study concentrate on the goods of forensic account ways to discover fraud, confining the compass of the study to Nigeria National Petroleum Corporation( NNPC). This restriction will enable the experimenter to exhaustively handle the exploration content effectively and efficiently well.

Description of Terms

For the purpose of this report, I don’t define different generalities as forensic account. These generalities are formerly well established in the literature and away and don’t need farther explanations.

still, the ensuing delineations were considered necessary for this design

External inspection- An inspection performed by an adjudicator engaged in public practice leading to the expression of a professional opinion which lends credibility to the assertion under examination.

Forensic inspection- An examination of substantiation regarding an assertion to determine its correspondence to established criteria carried out in a manner suitable to the court. An illustration would be a Forensic inspection of deals records to determine the amount of rent owing under a parcel agreement, which is the subject of action.

Internal inspection- An inspection performed by an hand who examines functional substantiation to determine whether specified operating procedures have been followed.

Investigative account- Is frequently associated with examinations of felonious matters. A typical investigative account assignment would be an disquisition of hand theft. Other exemplifications include securities fraud, insurance fraud, effects and proceeds of crime examinations.

REFERENCES

Adeola,F. Y( 2011). The need to deregulate the Nigerian oil painting sector. Social wisdom journal, 3( 2), 40 – 45.

EmmaI. O and OkaroS. C( 2011) “ Forensic Account and inspection Anticipation Gap – The Perception of Accounting Academics ” Department of Accountancy, Nnamdi Azikiwe University, Awka, Nigeria.

//en.m.wikipedia.org/wiki/Nigerian_National_Petroleum_Corporation

Hassan,L.O( 2012). Forensic account; a new tool for fraud discovery. Social wisdom journal, 3( 5), 56 – 60.

Kasum,A.S( 2007) “ The applicability of forensic account to fiscal crimes in private and public sectors of third world husbandry a study from Nigeria ” Department of Accounting and Finance University of Ilorin, Nigeria.

Marianne O( 2011) “ Forensic Account and the Law The Forensic Accountant in the Capacity of an Expert Witness ” http// ssrn.com/abstract=2026071

Marwan ,K.O( 2013). The position of corruption in government pots. Social wisdom journal, 6( 2), 45- 60