Abstract
This research work examines the role of the forensic
accountant in fraud detection in Nigeria with comparative analysis
of public and private sectors. Forensic accountant plays a significant role in
the Nigeria
organizations whereby he investigates with the use of technological equipment
in its assignment. The researcher employs primary data (questionnaire and
personal interview) in its data collection. Hypotheses was analyzed with the
use of z- test at 5% level of significance and the result reveal that a good
forensic accountant will assist in the growth and development of any
organization in which he carried out his assignment. This work recommend among
others that a high degree of mutual trust, respect and understanding should
exist among the lives of the forensic accountant, the public, private sectors
and management in order to achieve the organizational objectives.
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 Problems 1
1.3
Research Questions 2
1.4
Objectives of the Study 3
1.5
Statement of Hypothesis 4
1.6
Significance of the Study 6
1.7
Scope of the Study 6
1.8
Limitation of the Study 7
1.9
Definition of Terms 7
Chapter
Two: Review of Related Literature
2.1
Introduction 11
2.1.1Financial Crimes
and Scandals 14
2.1.2Financial Audit
and Fraud Audit 16
2.1.3The role of
Information Technology and the
Digital
Environment in Modern Day Fraud 17
2.2
Historical Background of Forensic
Accounting 20
2.2.1Definition and
Meaning of Forensic
Accounting/Accountant
21
2.2.2Definition and
Meaning of Fraud 24
2.3
Types of Fraud 26
2.4
Nature and Extent of Financial Crime 32
2.5
Causes of Fraud 36
2.6
Fraud Detection, Prevention and Control 37
2.7
Roles of Forensic Accounting in
Litigation
Support
45
2.8
Forensic Accounting Process 53
2.9
Forensic Accounting Model Curriculum 54
Chapter
Three: Research Method and Design
3.1
Introduction 56
3.2
Research Design 56
3.3
Description of Population of the Study 57
3.4
Sample Size 57
3.5
Sampling Techniques 57
3.6
Sources of Data Collection 58
3.7
Method of Data Presentation 59
3.8
Method of Data Analysis 59
Chapter
Four: Data Presentation, Analysis and Interpretation
4.1 Introduction 61
4.2 Data Presentation 61
4.3 Data Analysis 62
4.4 Hypothesis Testing 81
Chapter
Five: Summary of Findings, Conclusion and
Recommendations
5.1
Introduction 89
5.2 Summary of Findings 89
5.3
Conclusion 91
5.4
Recommendations 92
References
94
Appendix
I 96
Appendix
II 97
CHAPTER ONE
INTRODUCTION
1.1 Background to the Study
The trend and the
volume are increasing on a daily basis and all levels of the society are
involved. The rich, the poor, the young and the elderly, the male and female
all are neck deep in fraud and fraud related activities that say a lot about
our moral and family situations. From the politicians to the bank
directors/executives, from the legal officers to the law enforcement personnel,
from the civil servants to the school teacher, from the trader in the market to
the hawkers on the street, the tendency for fraud and fraud related crimes is
endless.
The first and most
sophisticated way of carrying out the fraudulent activities in many
organizations is through the accounting and financial records. It is a
recognized fact that the management of Enron-the celebrated energy company in
USA defrauded by her top management – used creative accounting to make the
company look good and powerful on paper than it really was using special
purposes subsidiaries that have a single purpose and that did not need to be
included in Enron’s balance sheet to hide risky investment activities and
financial losses. However, forensic accounting helped subsequently to determine
that many of Enron’s recorded assets and profits were inflated, and in some cases,
completely fraudulent and nonexistent. Some of the company’s debts and losses
were recorded in offshore entities, remaining absent from Enron’s financial
statements (Folger, 2011).
1.2 Statement of Problem
The study seeks to
address issues of concern to researchers that bothers on fraud and corruption
which includes:
The continuous increase
in crimes, fraud and embezzlement is not withstanding the presence of law
enforcement agencies. The evidence to prove the guilt of criminals and
fraudsters are properly led in the court of law. The law enforcement agencies are
able to effectively and efficiently prosecute criminals and fraudsters without
prejudice.
The emerging economy is
able to survive and realize its developmental goals in a fraudulent
environment. Forensic accounting services can be used in reducing the rate of
fraud, crime and corruption. The government assist in protecting shareholders
who have suffered from corporate failure due to fraud. The services of forensic
accountant help in reducing the rate of fraud, crime and corruption.
1.3
Research Questions
·
What is the role
of forensic accounting towards the inherent weakness of programmes, policies,
systems and agencies set up by the government or the institutions?
·
How do we ensure
that fraudster does not escape the arms of the law by the use of forensic
techniques?
·
What is the main
function of forensic accounting?
·
What are the necessary
tools that aid economy to achieve its developmental goals?
·
What are the
services of forensic accountant and forensic accounting in minimizing corporate
crime and fraud?
·
How does
government prevent and protect shareholders from the harm of corporate failure?
1.4
Objective of the Study
This study seeks to:
·
To find out the
inherent weakness of other programmes, policies, systems and agencies set up by
the government or the institutions to prevent and fight against the commission
of fraud, crime and corruption.
·
To find out ways
in ensuring that fraudster does not escape the arms of the law by the use of
forensic techniques.
·
To seek out ways
in ensuring that law enforcement agencies carry out their activities without
prejudice.
·
Providing the
necessary tools that will aid an emerging economy to achieve its developmental
goals irrespective of the challenging fraudulent environment.
·
Using the
services of forensic accountant and forensic accounting as a tool in minimizing
corporate crime and fraud.
·
To know how
government will prevent and protect shareholders from the harm of corporate
failure through effective and efficient policing of the activities of corporate
managers.
1.5
Statement of Hypotheses
Hypothesis is a
tentative statement of relationship between dependent and independent
variables. This hypothesis intends to gather data and test. The following
hypothesis are tested:
Hypothesis One
Ho: The activities and functions of forensic accountants
will not help to reduce fraud and corruption in an emerging economy.
Hi: The activities and functions of forensic accountants
help to reduce fraud and corruption in an emerging economy.
Hypothesis Two
Ho: That despite the different regulatory agencies
established by government, nothing seemed to have been achieved in an attempt
to reduce corporate fraud and corruption.
Hi: That despite the different regulatory agencies
established by government, something seemed to have been achieved in an attempt
to reduce corporate fraud and corruption.
Hypothesis Three
Ho: That forensic accounting service employed in the
private and pubic sector or organization and other institution through their
expert suggestion will not assist in the growth and development of such
organization.
Hi: That forensic accounting service employed in the
private and pubic sector or organization and other institution through their
expert suggestion will assist in the growth and development of such
organization.
1.6
Significance of the Study
·
This study will
in no small way assists in bringing to bear the knowledge of forensic
accounting in a more familiar way to citizen of Nigeria.
·
The suggestion
provided, if adequately implemented will obviously minimize if not completely
erase the rate of fraud and corruption in most Nigerian organizations.
·
The study
further highlights the relevance of forensic accountant to the legal system in
terms of being an expert witness.
·
This study will
be of immense value to other researchers in the field of academics by proving
secondary data for their research work.
·
It will also aid
management’s effectiveness and efficiency in using forensic techniques to
reducing fraudulent activities in their establishment.
1.7
Scope of the Study
This study examines the
relevance of the forensic accountant in fraud detections in Nigeria. This
study will illustrate the role of the forensic accountant as it impact on
organizational timeframe performance in Nigeria between 2008 – 2013.
For the course of this
study, the researcher used a high sample size of 50 for effective survey.
1.8
Limitations of the Study
The essential
constraint militating against this research work is the inability to assess a
sizeable number of accountants, accounting firms, banks and other financial
institutions given the time constraint for the completion of this work.
1.9
Definition of Terms
Industrialization:
Is a process of social and economic
change whereby a human society is transformed from a pre-industrial to an
industrial state.
Forensic
Industrialization: Is an expertise
laboratory, combined with the rapid response capacity across analytical
techniques, which can give customers a rapid analysis and understanding of
crucial industrial processes and issues.
Forensic
Accounting: Is the identification
interpretation and communication of the evidence of economic transaction and
reporting system. It is the application of legal and financial skills in the
conduct of evidence with respect to unresolved issues in the business
communities.
Forensic: Is a scientific method in the investigation of
crime. It can also be seen as a method of fraud investigation which includes
the analysis of records to prove or disprove.
Accounting: Is seen as a systematic identification, measuring,
recording, classifying, summarizing, interpreting and communicating of
financial or economic information so as to enable the users of the information
make an informed judgement therefrom.
Fraud: Is a legal term that refers to the intentional
misrepresentation of the truth in order to manipulate or deceive a company or
individual.
Auditing: Is a systematic process of objectively obtaining an
evaluating evidence regarding assertions about economic actions and events to
ascertain the degree to correspondence between those assertions and established
criteria and communicating the results to interested users.
It is also the
independent examination of, and expression of opinion on the financial
statement of an enterprise by an appointed auditor in pursuance of that
appointment and in compliance with any relevant statutory and professional
obligation.
Financial
Auditing: Is the verification of
financial statement of a legal entity with a view to express an audit opinion,
which is intended to provide reasonable assurance, but not absolute assurance,
that the financial statement are presented fairly in all material respects,
and/or give a true and fair view in accordance with the financial reporting
framework.
Compensation:
It is the given payment to reduce
the bad effect of loss, injury, etc. It is also the money that someone pays you
because they have harmed or hurt in some ways.
Fraud
Detection: This is a suitable
aspect in the forensic process whereby crimes are being discovered in the
process of analytical lacuna’s or mistrusted high five in an organizational
statement or assignment.
Fraud
Preventions: This is a system or
fiduciary process of safeguarding the assets under control as a crucial factor
in declaring them responsible for the prevention of fraud and other
irregularities in the organization.
Control
of Fraud: It is a systematic
process by the forensic accountant whereby he put all necessary act that will
lead to the greatness of the enterprise in which he endog himself safe and all
other crime committed at past being eradicated with its professional skill and
ability of bringing out the best in the enterprise.
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