ABSTRACT
This study examined the effect of
forensic auditing on financial fraud in Nigerian (DMBs). The study adopted
cross sectional survey design. The population of the study comprised the staff
of banks and audit firms in Abeokuta, Ogun State. The study used purposive
sampling technique for questionnaire administration while logistic regression
analysis was used for data analysis. The results of the study revealed that
forensic audit has significant effect on financial fraud control in Nigerian
(DMBs) with P value (0.007) which is less than 0.05 and that forensic audit
report significantly enhances court adjudication on financial fraud in Nigeria
with P value (0.000) which is less than 0.05. The study concluded that the
application of forensic audit to tackle financial fraud in Nigerian (DMBs) is
still at the infant stage. The study recommended that organisations should have
a strong internal control system in place to reduce the occurrence of fraud.
KEYWORDS: Forensic Audit, Nigerian DMBs, Financial Fraud, Litigation
and Organisations’ Failure.\
TABLE OF CONTENTS
CHAPTER 1
INTRODUCTION
OBJECTIVES OF THE STUDY
RESEARCH QUESTIONS
STATEMENT OF THE HYPOTHESES
CHAPTER 2
LITERATURE REVIEW
CONCEPT OF FORENSIC AUDITING
IMPORTANCE OF FORENSIC AUDITING SERVICES TO CORPORATE
ORGANISATIONS
CHALLENGES OF FORENSIC AUDITING SERVICES TO CORPORATE
ORGANISATIONS
CONCEPT OF FINANCIAL FRAUD
CONCEPTUAL MODEL OF THE STUDY
WHITE COLLAR CRIME THEORY
FRAUD DIAMOND THEORY
FRAUD TRIANGLE THEORY
FRAUD SCALE THEORY
EMPIRICAL REVIEW OF THE STUDY
CHAPTER THREE
METHODOLOGY
STUDY
AREA
RESEARCH DESIGN, POPULATION AND SAMPLE
LOGISTIC REGRESSION MODEL
OPERATIONALISATION OF THE VARIABLES
A PRIORI EXPECTATION
CHAPTER FOUR
RESULTS AND FINDINGS
TEST OF HYPOTHESES
INTERPRETATION
CHAPTER FIVE
CONCLUSION AND RECOMMENDATIONS
REFERENCES
CHAPTER 1
INTRODUCTION
Corporate
organisations like banks are essentially social-technical devices made up of
people and physical actors who process inputs and at the same time execute some
functions and / or tasks that lead to the accomplishment of certain goals and
these stakeholders who are probably within and / or outside the organisations
may for various reasons have engaged in fraudulent financial activities
(Akenbor and Oghoghomeh, 2013). The Nigerian banking sector is one of the most
controlled and regulated sectors. In spite of this, fraud has continued to rear
its ugly head in the sector. Fraudulent financial activities are illicit
activities committed with the purpose of acquiring riches either individually,
in group or organised manner thereby violating existing legislation or
accounting policies governing the economic activities and administration of the
organisation (Yio and Cheng, 2004).
Globally,
the occurrence of fraud in corporate organisations is becoming rampant and this
can be shown in the large number of reported cases of bribery, corruption,
embezzlement, money laundering, racketeering, fraudulent financial reporting,
tax evasion, forgery and other means through which both financial and economic
dishonesty are being perpetrated (Ofiafoh and Otalor, 2013). The accounting
profession had already undergone radical changes as a result of the Enron and
WorldCom debacles as well as other accounting scandals (Cotton, 2000). Hence,
with the spotlight on the accounting profession, a new market with a new breed
of accountants (forensic accountants) has emerged. Today, the occurrence of
fraud and other financial crimes have gone sophisticated and even the advent of
computerisation together with the introduction of internet facilities have
enhanced the problem of financial crimes. The detection and / or reduction of
these fraudulent activities are made more difficult and committing these crimes
much easier. Hence, Onodi, Okafor and Onyali (2015) are of the opinion that
forensic investigative skills are required to uncover and establish the occurrence
of financial crimes.
The
Centre for Forensic Studies (2010) states that if well applied, forensic
auditing could be utilised to reverse the leakages that cause corporate
failures. This can be attributed to the fact that proactive forensic auditing
practice seeks out errors, operational vagaries and deviant transactions before
they crystallise into fraud. This study focused on both management and
employees frauds. The management fraud include fraudulent disbursements, window
dressing, creative accounting and soon while employees fraud include asset /
cash theft, teeming and lading (roll over fraud) and soon. The problem of fraud
in banking industry is not limited to any economy, nation, continent or an
environment; it is a general phenomenon. The origin of bank failure in Nigeria
can be traced to the 1930s bank failure and crises (Owolabi, 2010). Nwankwo
(1992) writes that “the crises of confidence in Nigerian banking industry is
not a new one, it has been with us for quite a long time. In Nigeria now, the level
of fraud in Deposit Money Banks has reached an alarming peak. The Nigerian
Deposit Insurance Corporation (NDIC) annual report for the year 2014 revealed
that the increase in expected/actual loss in fraud and forgeries was mainly due
to the astronomical increase in the occurrence of web-based (online
banking)/ATM and fraudulent transfer/withdrawal of deposit frauds.
The
incidence of fraud and misappropriation of funds in recent time pose a threat
to traditional auditing as a branch of accounting profession because of its
perennial nature and this has resulted to the question as to whether the
statutory auditing actually play a significant role towards the attainment of
accountability and prevention of fraud especially that which was recently
witnessed in our commercial banks. Statutory audit appears to have shown a lack
of concern and reflective attitude towards fraud fighting, thereby failing to
offer the public desirable assurance to handle corruption and fraud (Akhidime
and Ugbale-Ekatah, 2014) cited in (Okolie and Taiwo, 2014). The gap identified
by this present study is the failure of traditional auditing to combat the
occurrence of fraud and other financial crimes in the Nigerian banking
industry. Hence, this study examined the effect of forensic auditing on
financial fraud in Nigerian Deposit Money Banks (DMBs) using logistic
regression analysis and with particular focus on DMBs, audit firms and the
Abeokuta zonal branch of the Central Bank of Nigeria (CBN) all in Abeokuta,
Ogun State, Nigeria.
Objectives of the study
The
core objective of this study is to ascertain the effect of forensic auditing on
financial fraud in Nigerian DMBs. Hence, from the study’s main objective, the
following specific objectives are addressed;
(i)
To ascertain the effect of forensic audit on
financial fraud in Nigerian DMBs.
(ii)
To find out whether forensic audit report can
enhance court adjudication on financial fraud in Nigeria.
Research questions
(i)
What
is the effect of forensic audit on financial fraud in Nigerian DMBs?
Login To Comment