FORENSIC ACCOUNTING AS TOOLS FOR FRAUD DETECTION AND PREVENTION IN NIGERIA

FORENSIC ACCOUNTING AS TOOLS FOR FRAUD DETECTION AND PREVENTION IN NIGERIA

ABstract

This study examines forensic accounting as a fraud detection and prevention tool in Nigeria. The research focuses on his five audit firms in Ogun State. A survey study design was adopted in this study. Data for the study were collected using a structured questionnaire. Collected data were analyzed with mean and standard deviation descriptive statistics and inferential correlation statistics using SPSS. The result of the analysis reveals among others that there is positive and significant relationship between awareness of forensic accounting audit and fraud prevention. The study also reveals that the forensic accounting face problems such as lack of expert in forensic accounting, lack of transparent organization, lack of wider coverage of forensic accounting nationally which still makes the awareness of forensic accounting low and not demanding. The study recommends among others that Audit firms should ensure that their staff/employees especially those in the aspect of forensic accounting are highly trained as this will help in delivering quality service to their clients thereby increasing fraud prevention and detention.

CHAPTER ONE

INTRODUCTION

1.1 Background to the Study

Forensic accounting according to Crumbley (2001) is the action of identifying, recording, settling, extracting, sorting, reporting and verifying past financial data or other accounting activities, for settling current or prospective legal disputes, or using such past financial data for projecting future financial data to settle legal disputes. It utilizes accounting, auditing and investigative skills when conducting any kind of investigation. Therefore, this study examines the role of forensic accounting in fraud prevention and detection in Nigeria. Nevertheless, financial crimes such as embezzlement, bribery, bankruptcy and security fraud are at the heart of what happens in most sectors in Nigeria (Adeniyi, 2016). The consequences and impacts of financial crime on business organizations in Nigeria are very severe and it is against this backdrop that forensic accounting has emerged.It is a response to the increasing sophistication and awareness of financial crime. Forensic accounting includes her three main areas of investigation, dispute resolution, and litigation support. Forensic accounting, as defined by Hopwood, Leiner, and Young (2008), is the mechanism by which criminal financial decisions are made in a manner that respects the country’s fundamental rules and regulations. accounting integration, auditing, and research skills (Dada, Owolabi, & Okwu, 2013). As Curtis (2008) noted, forensic accountants are essential to the legal system because they provide expert services such as the evaluation of forged invoices, the evaluation of suspected bankruptcies, and the analysis of financial documents in fraud schemes. . This led Onodi, Okafor, and Onyali (2015) to use forensics to detect and identify recent outbreaks of financial crimes through fraud and embezzlement that threaten traditional audits as industry accounting professionals. Suggested that investigative skills are required.

Forensic accounting is the branch of accounting that accounts for obligations arising from actual or anticipated disputes and litigation. Forensic testing can therefore be viewed as one aspect of accounting that is amenable to legal scrutiny and provides the highest level of assurance (Apostolou, Hassell, & Webber, 2000). As a result, incorporating modern forensic auditing techniques into Nigerian audits effectively addresses the problem of accounting professionals detecting sophisticated fraud schemes resulting from the failure of audits to detect fraud in Nigeria. It is considered timely to prepare. A report by the Center for Forensic Studies (2010) in Nigeria says that, when used properly, forensic audits can undo leaks that lead to business failure. this can be attributed

1.2 Problem Description

The importance of forensic accounting in ensuring the quality of financial statements cannot be overemphasized. Cressey (1953) states that ‘motives’ include financial needs, addictions and pressures. An “opportunity” that includes access to sensitive information held by the acquirer and the assurance that it will not be caught. “Rationalization,” which includes vengefulness and distrust of organizations and colleagues, is the reason behind deceptive behavior by ordinary people. According to current rankings by Transparency International (2007), Nigeria is perceived as a highly corrupt country. The ranking emerged from an avalanche of fraud, corruption and financial scandals that many Nigerians suspect. The emergence of fraud has left the Nigerian system so devastated that it is now the norm for all citizens of the country. Gerald and Hill (2002) define fraud as “deliberate deception to obtain an unfair or unlawful advantage or deprive a victim of legal rights.” Fraud is also the deliberate intent of an individual to act in a deceptive manner to acquire another’s property for their own benefit. Despite the rapid increase in the proportion of forensic accounting worldwide, the concept remains largely confined to developed economies, with simplified application in emerging markets (Somoye and Osho, 2017). Forensic audits are a longstanding social phenomenon. Scholars believed that forensic accounting went hand in hand with fraud detection and prevention accounting courses. Financial crime, mismanagement and embezzlement of public funds in Nigerian business organizations is steadily increasing. Many arrests have been made, but the number of indictments cannot be viewed in the same way. This may be due to a lack of application of forensic accounting knowledge in the investigative process or limited awareness of the use and application of forensic accounting in court proceedings. To justify the above claims, this study aims to raise the awareness of forensic accounting in fraud detection and to increase the knowledge of existing studies and studies. Against this background, this study seeks to examine forensic accounting as a tool for fraud detection and prevention in Nigeria. 1.3 Purpose of the survey

The general purpose of this study is to examine forensic accounting as a tool for fraud detection and prevention in Nigeria.

Specific goals are:

Explore the level of awareness of forensic accounting for fraud detection and prevention among accountants in Nigeria.
Determine how fraudulent activity in Nigeria can be minimized with forensic accounting.
Identify the issues faced by forensic accounting in fraud detection in Nigeria.
1.4 Research question

Will the perception of forensic accounting impact its implementation as a fraud detection and prevention tool in Nigeria? How can fraud in Nigeria be minimized with forensic accounting?
What are the pain points of forensic accounting in detecting fraud in Nigeria?
1.5 Research hypothesis

H0:
There is no significant link between forensic accounting and fraud prevention in Nigeria.
H1:
In Nigeria, there is an important relationship between forensics, forensic accounting and fraud prevention.

H0:
There is no significant association between forensic accounting awareness and fraud prevention in Nigeria. H1:
There is an important link between forensic audit awareness and fraud prevention.

1.6 Validity of research

This study will demonstrate the importance of forensic accounting in combating fraud and improving financial reporting and internal controls. This research keeps accountants alert to potential fraud and other illegal activities when performing their duties. It will also enable us to provide critical assistance in the prevention, investigation and resolution of financial crimes.

The study will also benefit the Nigerian Institute of Chartered Accountants, the Nigerian Institute of National Accountants, and the National Universities Commission to formalize the field and specialization of forensic accounting. The study will also benefit governments by stimulating interest in forensic investigations to monitor and investigate cases of suspected corruption. This will help the government through Parliament to enact legislation making forensic accounting/auditing a legal requirement for listed companies. This study encourages accountants to obtain further forensic training so that they can complete this investigative aspect of fraud and provide advice that can solve those problems that have weakened the quality assurance of financial statements. The study helps organizations hire forensic accountants to strengthen internal controls in various organizations and compare reports with basic and improved qualitative attributes to recognize those that comply with requirements. increase.

1.7 Scope of investigation

This research focuses on forensic accounting as a fraud detection and prevention tool in Nigeria. However, this investigation is limited to Achebe Professional Services LLP, UHY Maaji, and the Economic and Financial Crimes Commission (EFCC). This study, limited to accountants and those using and compiling financial data from the above organizations, provides information on how forensic accounting is used as a fraud detection and prevention tool in Nigeria. increase.

1.8 Operationalization of variables

The independent variable (i.e. forensic accounting) is operationalized into his three variables of fraud detection, expert advice and litigation support.

y = f(x)

Y = Fraud Detection and Prevention (FDP)

X = Forensic Accounting (FA)

Therefore, the independent variables are partitioned into X = (x1, x2, x3).

x1= fraud detection (FI)

x2= Expert Advice (EC)

x3= Litigation Support (LS)

functional relationship

y1 = f(x1) …………………Hyp1

FDP1 = f(FI)

y2 = f(x2) …………………………. …. Hyper 2

FDP2 = f(EC)

y3 = f(x3) ………………………………Hyp 3

FDP3 = ​​f(LS)

1.9 Definition of terms

Forensics:
According to Mariam Webster’s Dictionary, forensics “belongs to, is used in, and relates to court or public discussion or debate”. Forensic examination:
The Association of Certified Public Accountants (ACCA) defines forensic accounting as “special procedures performed to establish evidence.

Forensic accounting:
Investopedia defines forensic accounting as “the use of accounting, auditing, and investigative skills to conduct an audit of a company’s financial statements.”

Financial accounting:
Averkamp (2004) defines financial accounting as “the specialty of accounting that tracks the financial transactions of a company. displayed on the financial statement or in the financial statements.”

total:
According to Smith and Ashburn, “Accounting is the art of recognizing, classifying, summarizing, and interpreting the results of significant and financial transactions and events that are at least partially financial in nature.” .

scam:
Mariam-Webster’s dictionary defines fraud as “the willful distortion of the truth in order to induce others to give up something of value or lose their legal rights.”