Abstract
This
research work was necessitated due to the increasing frauds and financial
malpractice in Nigeria
quoted companies and by extension, the developing world which placed financial
and accounting issues atop concern for both the international community and
financial institutions. The researcher aims at canvassing for the intervention
of forensic accounting to solve the vexed problem of financial crimes,
shareholders awareness of the concept of forensic accounting. The basic
methodology employed to achieve the research objectives was a combination of
structured interview and tailored questionnaire from the population of
companies quoted on the Nigeria
stock exchange (NSE). The Z-test binomial statistics was used as a statetistic
tool for the testing of hypothesis. The study showed among others that the
application of forensic accounting has a positive relationship with the
credibility of audited financial statement, as well as detection of fraud in
reporting audited financial statement. It was recommended that forensic
accounting practice should be encouraged and integrated, into the conduct of
business in the Nigeria
quoted companies.
TABLE
OF CONTENTS
Title Page i
Certification ii
Dedication iii
Acknowledgements iv
Abstract v
Table of Contents vi
Chapter
One: Introduction
1.1 Background to the Study 1
1.2 Statement of Problem 3
1.3 Research Questions 3
1.4 Objectives
of the Study 4
1.5 Statement
of Hypotheses 5
1.6 Scope of
the Study 6
1.7 Significance
of the Study 7
1.8 Limitation
of the Study 8
1.9 Definition
of Terms 8
Chapter
Two: Review of Related Literature
2.1 Introduction
10
2.2 Concept
of Forensic Accounting 12
2.3 Forensic Accounting and Auditing 15
2.4 Functions
of Forensic Accounting 16
2.5 Importance
of Forensic Accounting Services in
Nigeria Quoted Companies 17
2.6 Problems of Forensic Accounting 18
2.7
Possible
Remedies to the Problems of Forensic Accounting 19
2.8 The Forensic Accountant 20
2.9 The Role
of a Forensic Accountant in Solving the Vexed Problem of Corporate World 21
2.10 Qualities
of a Forensic Accountant 22
2.11 Duties and Responsibilities of a Forensic
Accountant 24
2.12 Procedure
for Conducting the Work of Forensic Accounting
25
2.13 Forensic
Accountant in the Audits 27
2.14 Financial
Statement Fraud 28
2.15 Prevention
and Detection Strategy of Financial Statement Fraud 29
2.16 Fraud
under Review 29
2.17 The Fraud
Triangle for Forensic Accounting 31
2.18 Role of
Information Technologies to Perform
Computer related Fraud 32
2.19 Forensic
Information Technology (IT) 34
2.20 Forensic
Accountants Testifying as Expert Witness
and Fraud Trial Education 35
2.21 Organization of Forensic Accounting Profession
in Nigeria
36
2.22
Connecting Link between Corporate Governance
and Forensic Accounting 37
Chapter
Three: Research Method and Design
3.1 Introduction
39
3.2 Research
Design 40
3.3 Description
of Population of the Study 40
3.4 Sample Size 41
3.5 Sampling
Technique 41
3.6 Sources of Data Collection 42
3.7 Method of Data Presentation 43
3.8 Method of
Data Analysis 43
Chapter
Four: Data Presentation, Analysis and Interpretation
4.1 Introduction
45
4.2 Presentation
of Data 45
4.3 Data
Analysis 49
4.4 Test of
Hypotheses 62
Chapter
Five: Summary of Findings, Conclusion and Recommendations
5.1 Introduction
71
5.2 Summary
of Findings 71
5.3 Conclusion
74
5.4 Recommendations
74
References 77
Appendix I 79
Appendix II 80
CHAPTER ONE
INTRODUCTION
1.1
Background to the Study
Historically,
Forensic Accounting is certainly not a new field, research findings have shown
that the profession has been in existence a long-time ago.
The
true and fair view of the financial statements by the statutory auditors is
designed to give credibility to such financial report. But going by the growing
rate of corporate scandals and collapse of corporate organizations, one has to
argue the relevance of this opinion.
EFCC
(2004) stated that modern financial crimes such as embezzlement, bribery,
bankruptcy, security fraud, among others, have taken the centre stage in the
scheme of things and on the scale of governmental preference. Besides, the detection
or minimization of these crimes are made more difficult and committing these
crimes much easier.
In
it 2004 report on worldwide corrupt practices transparency international survey
which covered 146 countries in the world, which rated Nigeria as the third most
corrupt country in the world, moreover, some basic and common financial crimes
have raised issues and find expression in employees theft, payroll frauds,
fraudulent billing system, management theft, corporate frauds and insurance
fraud, among others. Therefore the consequences and the effects of financial
crimes in corporate organization are very grave.
It
is against this background that forensic accounting from the public accounting
domain emerges. It responds simply to the growing sophistication and awareness
of these crimes. Forensic accounting encompasses three major areas of
investigation, dispute resolution and litigation support.
This
project aims at appraising how the investigation area of forensic accounting
can minimize financial crimes in corporate organization.
1.2
Statement of Problem
This
project is to address some of the deficiencies by looking towards a forensic
accountant as the best antidote to curbing financial and economic crimes, and
also to prevent and reduce misappropriation of corporate funds. Also, the
failure of statutory audit to prevent and reduce this misappropriation of
corporate funds and increase in corporate crimes has put pressure on
professional accountant and legal practitioners is to find a better way of
exploring fame in business world. A nation-wide study conducted by Kessler
international showed that 39% of organizations have considered the need for a
forensic accountant.
1.3 Research
Questions
The
following research questions are raised.
1.
Is there any relationship between
forensic accounting and corporate fraud in Nigeria?
2.
How can the practices of forensic
accounting play an important role in curbing a company’s corporate performance?
3.
To what extent can public confidence
and trust be restored through the practices of forensic accounting and
corporate governance in Nigeria?
4.
To what extent is the level of
awareness of forensic accounting practices in Nigeria?
5.
How can the application of forensic
accounting detect and minimize computers related fraud or e-crime in Nigeria
companies?
1.4
Objectives of the Study
1.
To examine if there is any
relationship between forensic accounting and corporate fraud in Nigeria.
2.
To evaluate how the practices of
forensic accounting could play an important role in curbing a company’s
corporate performance.
3. To evaluate how forensic accounting and
corporate performance can provide professional investigative and litigation
support services in Nigeria.
4.
To determine the extent at which
forensic accounting practices detect and minimize computer related fraud or
e-crimes in Nigeria
companies.
5.
To determine whether the application
of forensic accounting services in Nigeria quoted companies can detect
fraudulent activities.
1.5
Statement of Hypotheses
The
following null and alternative hypotheses have been formulated to serve as a
base for this research.
Hypothesis
One
Ho:
Forensic accounting has no relationship
with curbing the problem of corporate frauds for public confidence and crime
eradication in Nigeria.
HI:
Forensic accounting has a close
relationship with curbing the problem of corporate frauds for public confidence
and crime eradication in Nigeria.
Hypothesis Two
Ho:
Litigation support services by forensic
accounting cannot lead to appropriate judgment for economic and financial crime
eradication in Nigeria.
HI:
Litigation support service by forensic
accounting can lead to appropriate judgment for economic and financial crime
eradication in Nigeria.
Hypothesis Three
Ho:
Forensic accounting practices cannot
assist in the detection or minimization of computer fraud or electronic related
fraud.
HI:
Forensic accounting practices can help
eradicate computer fraud or e-crimes in Nigeria quoted companies.
Hypothesis Four
Ho:
Forensic accounting and extent of fraud
detection are not in any way related.
HI:
Forensic accounting and extent of fraud
detection are positively related.
Hypothesis Five
Ho:
Forensic accounting cannot help to
ascertain the level of credibility of audited financial statement.
HI:
Forensic accounting has a major role to
play in ascertaining the level of credibility of audited financial statement.
1.6 Scope of the Study
The
area of coverage is restricted to Nigeria situation b the use of questionnaire
and direct interview. Also covers a survey of quality corporate management and
control in forensic accounting services in Nigeria. This study is undertaken to
evaluate the role of forensic accounting: a panacea to curbing corporate fraud within
Nigeria
geographical states. The study limit itself to some quoted firms in the Nigerian
Stock Exchange (NSE), with special emphasis on the impact it can have on
restoring the credibility of audited financial statements of companies, as well
as fight against corruption and computer related frauds in Nigeria.
1.7 Significance of the Study
The
significance of this study is to corporate companies, investors, Nigeria
government, and the general public. The study will educate these groups on the role
and importance of a forensic accounting in curbing corporate frauds, thereby
help to restore the lost confidence by the public and the government as regard
forensic accountant and corporate performance in Nigeria and also reduce the
incidence of fraud and mismanagement and protects credibility.
The
study will also be beneficial to academicians and other future
researchers/users in similar subject matter.
1.8
Limitations of the Study
There
is no study undertaken by a researcher that is perfect. This could be as a
result of some constraints that affect the researcher in the course of the project
work.
Some
of these constraints are,
1. Inadequate research materials.
2.
Inadequate primary data.
3.
Policy of the respondent
company/individual e.g.
different depreciation method used will seriously affect the research data.
1.9
Definition of Terms
·
Investigation: The
use of specialized investigative skills in carrying out an inquiry conducted in
such a way that the outcome will have application of the law.
·
Forensic Accounting: Is
defined as the practice of vigorous data collection and analysis in the area
-of litigation support consulting, expert witnessing, and fraud examination.
·
Forensic Audit: This
refers to the examination of all evidence regarding an assertion to ascertain
its correspondence to establish criteria carried out, in a manner suitable to a
law court.
·
Litigation: This
simply means the judicial process of, carrying out legal context.
·
Electronic Crimes: Are
crimes committed through the use of information technology (I.T)
·
Corporate Governance: Is
defined as the system and standard by which companies are directed •and
controlled.
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