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PROJECT TOPIC AND MATERIAL ON Application of Forensic Accounting Skills and Detection of Financial Crimes in Nigeria
The Project File Details
- Name: Application of Forensic Accounting Skills and Detection of Financial Crimes in Nigeria
- Type: PDF and MS Word (DOC)
- Size: 263KB
- Length: 81 Pages
The study examined the application of forensic accounting on crimes detection and prevention in quoted manufacturing firms in Nigeria and equally determine whether forensic accounting skills aid the detection of financial crimes. The study sample was made up of four (4) manufacturing selected firms in Awka. Structured questionnaire designed by researchers was used to collect data from accounting /finance, top chief executives, and management personnel in each firms respectively in Awka, totaling forty- two (42) respondents. The Statistical Package for Social Sciences (SPSS) version 23 was used to analyze the data collected. The result revealed Forensic accounting skills has significant effect on the activities of manufacturing firms in Nigeria. Also the application of forensic accounting skills aid the detection of financial crimes in manufacturing firms in Nigeria then the application of forensic accounting skills strengthen corporate governance of manufacturing firms in Nigeria.
TABLE OF CONTENTS
CHAPTER ONE: INTRODUCTION
1.1 Background of the study 1
1.2 Statement of the problem 3
1.3 Objectives of the study 4
1.4 Research questions 5
1.5 Research hypotheses 5
1.6 Significance of the study 6
1.7 Scope of the study 7
CHAPTER TWO: REVIEW OF RELATED LITERATURE
2.1 Conceptual framework 8
2.1.1 Concept of forensic accounting 8
2.1.2 Forensic accounting skills 10
2.1.3 Relevance of forensic accounting skills in detecting financial crimes 12
2.1.4 Differences between forensic accountant and traditional accountant 17
2.1.5 Challenges of forensic accounting application in Nigeria 19
2.1.6 The nature of forensic accounting assignments 20
2.2 Theoretical framework 22
2.2.1 Fraud triangle theory 22
2.3 Empirical studies 26
2.4 Summary of literature review 29
CHAPTER THREE: RESEARCH METHODOLOGY
3.0 Introduction 31
3.1 Research design 31
3.2 Area of the study 31
3.3 Population of the study 32
3.4 Sample size of the study 32
3.5 Source of data 33
3.6 Instrument of data collection 33
3.7 Validity of instrument 34
3.8 Reliability of instrument 34
3.9 Method of data analysis 35
CHAPTER FOUR: DATA PRESENTATION AND ANALYSIS
4.1 Introduction 36
4.2 Descriptive statistics 37
4.3 Test of hypotheses 38
4.3.1 Test of hypothesis one 38
4.3.2 Test of hypothesis two 39
4.3.3 Test of hypothesis three 41
4.4 Discussion of findings 43
CHAPTER FIVE: SUMMARY OF FINDINGS, CONCLUSION AND RECOMMENDATIONS
5.1 Summary of findings 45
5.2 Conclusion 45
5.3 Contribution of knowledge 46
5.4 Recommendations 46
- BACKGROUND OF THE STUDY
The first decade of the twenty-first century experienced a tsunami or blizzard in the number of reported corporate scandals, frauds, and failures (Ball, 2009). According to Oseni (2017) the nature of such fraud rendered traditional auditing and investigation inefficient and ineffective in fraud detection and prevention. 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 & Ugbale-Ekatah, 2014). The scandals contributed to loss of confidence by financial statements users on the ability of traditional auditing and investigation to contribute viable solutions (Huber, 2012). Fraud includes all the multifarious means human ingenuity can devise, that are resorted to by individuals to get an advantage over another by false suggestions or suppression of the truth. It includes surprises, tricks, cunning or dissembling, and any unfair way by which another is cheated (Black’s Law Dictionary, 2016).
According to Mukoro, Yamusa, and Faboyede (2013) the first and most sophisticated way of carrying out the fraudulent activities in many organizations is through the accounting and financial records, as witnessed in the cases of Enron, WorldCom, Global Crossing, Tyco, Cadbury Nig. Plc., Oceanic Bank Plc., Afri Bank, among others. Thus, the need to counter, stop and prevent the perpetration of frauds in modern organization led to the development of forensic accounting (Mazunder, 2011). One of the modern approaches that can be used from the prevention to detection is called forensic accounting. It touches almost all disciplines especially, accounting, auditing, investigation, law and psychology (Enofe, Agbonkpolor & Edebiri, 2015).
Forensic accounting is that branch of accounting that deals with recovering proceeds of fraud, money laundering and other related corrupt practices that may occur in an organization. Forensic accounting utilizes accounting, auditing and investigative skills (Zysman, 2004). The phase ‘Forensic Accounting’ was first coined by Peloubet in 1946. Peloubet was the first man to publish in his book the phase ‘Forensic Accounting’. The first form of forensic accounting can be traced to an 1817 court decision. Joshi (2003) traced the history of forensic accounting to Kutilya, the first economist to openly recognize the need for the forensic accountants. 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 & Otalor, 2013).
Onodi, Okafor, and Onyali (2015) posit that forensic investigative skills are required to uncover and establish the occurrence of financial crimes. Forensic accounting helped 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). According to Crumbley, Heitger and Smith (2009) forensic accounting 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.
1.2 STATEMENT OF THE PROBLEM:
Recently, series of fraud have been committed both in the public and private sectors of the economy (Ojaide, 2000; Kassum, 2009; Okoye & Akamobi, 2009; Owojori & Asaolu, 2009; Izedomin & Mgbame, 2011; Modugu & Anyaduba, 2013; Enofe, Okapor & Atube, 2013; Okoye & Gbegi, 2013; Gbegi & Adebisi, 2014). More so, the Nigerian banking sector, despite being one of the most controlled and regulated sectors, financial crimes such as embezzlement, bribery, bankruptcy, security fraud, among others, have taken the centre stage in the scheme of things in the sector.
The failure of major corporate governance mechanism to reduce financial fraud and the increasing sophisticated financial fraud has posed serious threat to investors, government, and general public (Eyisi & Agbaeze 2009).
Fraud in most cases is perpetrated under the supervision of internal auditors of organizations. It suffices to say that the independent of the internal auditor is not guaranteed because he works as an employee of the government or organization. Then come the idea of external auditors, yet frauds are still being committed on a daily basis. The above scenario indicated that as more and more development both in the Information Communication Technology (ICT) world and other fields, so fraudsters continue to groom their own tactics towards fraudulent practices. It now become pertinent that forensic accounting be introduced and practices since the external auditors do not or may not have the required training to be able to tackle modern frauds like white collar crimes such as security fraud, embezzlement, bankruptcies, contract disputes and possibly criminal financial transaction.
More so, this gave rise to the establishment of key institutions like Independence Corrupt Practices Commission (ICPC), Economic and Financial Crime Commission (EFCC), among others, to combat the menace of fraud in the society.
Numerous studies Okoye and Akamobi (2009), Owojori and Asaolu (2009), Kassum (2009), Izedomin and Mgbame (2011), Modugu and Anyaduba (2013) have all acknowledged the incidence of fraud and relevance of forensic accounting skills in Nigeria.
Therefore this study is set out to examine the application of forensic accounting skills and detection of financial crimes among quoted manufacturing firms in Nigeria.
1.3 OBJECTIVES OF THE STUDY
The main objective of the study is to examine the application of forensic accounting skills and detection of financial crimes in Nigeria. From the above, the following specific objectives were formulated to guide the study, they are stated below as follows:
- Determine whether forensic accounting skills are relevant to the activities of manufacturing firms in Nigeria.
- Ascertain whether the application of forensic accounting skills aids the detection of financial crimes in manufacturing firms in Nigeria.
- Examine whether the application of forensic accounting skills can strengthen corporate governance of manufacturing firms in Nigeria.
1.4 RESEARCH QUESTIONS:
- To what extent are forensic accounting skills relevant to the activities of manufacturing firms in Nigeria?
- To what extent does the application of forensic accounting skills aid the detection of financial crimes in manufacturing firms in Nigeria?
- To what extent can the application of forensic accounting skills strengthen corporate governance of manufacturing firms in Nigeria?
1.5 RESEARCH HYPOTHESES
The hypotheses were formulated in line with the objectives and research questions, to guide the study. The hypotheses are stated in their null form as follows:
H0: Forensic accounting skills has no significant effect on the activities of manufacturing firms in Nigeria.
H1: Forensic accounting skills has significant effect on the activities of manufacturing firms in Nigeria.
H0: The application of forensic accounting skills does not aid the detection of financial crimes in manufacturing firms in Nigeria.
H1: The application of forensic accounting skills aid the detection of financial crimes in manufacturing firms in Nigeria.
H0: The application of forensic accounting skills cannot strengthen corporate governance of manufacturing firms in Nigeria.
H1: The application of forensic accounting skills strengthens corporate governance of manufacturing firms in Nigeria.
1.6 SIGNIFICANCE OF THE STUDY
The study will aid in laying a solid framework for the design and implementation of forensic accounting practices in Nigeria. Since forensic accounting is still new in developing countries such as Nigeria, this study will aid policy makers and other stake holders to draft adequate policies to guide the practice of forensic accounting in Nigeria.
The study will also serve as a guide to student and independent researchers who may have interest in the subject matter. Findings and recommendations from this study will serve as a guide in carrying out other research studies in forensic accounting and fraud detection in organizations.
1.7 SCOPE OF THE STUDY
The study evaluates the application of forensic accounting skills and detection of financial crimes in Nigeria; the study of quoted manufacturing firms. The choice of firms is informed by the fact that forensic accounting skills have an important role to play in the growth and development of the nation.
The study covers manufacturing firms.