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FORENSIC ACCOUNTING AND NIGERIA BUSINESS ENVIRONMENT

Dept: ACCOUNTING File: Word(doc) Chapters: 1-5 Views: 3

Abstract

The focal point of this work is on how forensic accounting could aid fraud detection and prevention when incorporated into the mainstream of Nigeria business environment. Review of relevant literature were carried out in order to gain deeper insight and understanding of the subject matter. Questionnaires were administered in order to generate the necessary primary data and were descriptively analyzed. The various hypotheses were tested using chi-square statistical analysis. The result of the hypotheses revealed that corporate fraud reduction is dependent on forensic accounting. It however revealed that forensic accounting cannot promote responsible corporate governance. Based on the findings of this research work, the researcher came to a conclusion that corporate fraud and poor corporate governance cannot be completely eliminated, it can only be reduced to a barest minimum. It is recommended that the study of forensic accounting courses should be introduced into the Nigeria educat

• BACKGROUND OF THE STUDY

The recent multi-billion dollars corporate scandals (Enron, Tyco, World Com, Adelphia and others) have shaken the business world. The public and governmental reactions to these events has been enormous. It has triggered congressional action that resulted in legislation (Sarbanes-Oxley Act, 2002) and auditing standards (Statement of Accounting Standard No. 99) that require  companies and their auditors to be more aggressive in detecting and preventing fraud, which in turn, has elevated the importance of the accounting profession in protecting the integrity of the financial system in order to prevent such scandals.

Additionally, in today’s society, there is widespread growth in white-collar crimes evidenced by both fraudulent financial reporting and misappropriation of assets. Racketeering and terrorist groups often rely on money-laundering schemes to conceal and disguise their activities such as identity theft, present new challenges to accountants. The impact on the accounting profession has been dramatic. The environment has created many job opportunities in the accounting profession at federal, state and governmental agencies, such as the Securities and Exchange Commission, the revenue service and the office of the inspector general, all have an increased impact on accountants and others with forensic accounting investigation skills.

However, modern organized corporate frauds are sophisticated, and well resourced by manager, entrepreneur and politicians to mention but few. There is the need to respond to this changing criminal threat and the skills of non-traditional investigators like accountant and the legal experts are needed to combat the corporate ill, this has arouse the call for forensic accountant.

In the light of the foregoing discussion, forensic accounting has to do with the use of the use accounting discipline to help determine issues of fact in business litigation. It involves the application of accounting, business, legal and financial skills in settling commercial or legal disputes (Omoniyi, 2004).

The focal point of this research work is on how forensic accounting could aid fraud detection and prevention when incorporated into the mainstream of Nigeria business environment.

 

 

• STATEMENT OF THE PROBLEM

The failure of statutory audit to prevent and reduce misappropriation of corporate fraud and an increase in corporate crime in Nigeria business environment has put pressure on the professional accountant and legal practitioner to find a better way of exposing crime in the business world. The specific problems which this research intend to address are as follows:

1. Can forensic accounting reduce corporate fraud and mismanagement?
2. Can forensic accounting promote responsible corporate governance?
3. Is forensic accounting the same as fraud investigation?
4. Are there any special skills a forensic accountant must possess?
5. What are the potential red flags of fraud?
6. Can forensic accounting provide an objective valuation of claims?
7. Prospects and challenges of forensic accounting profession.
8. Are employees often the first to notice fraud?

 

• OBJECTIVE OF THE STUDY

The problem of fraud in Nigeria business environment need to be seriously addressed. The objectives of this research work are;

1. To find out how the knowledge of forensic accounting can reduce corporate fraud and mismanagement.
2. To ascertain if forensic accounting can promote responsible corporate governance.
3. To determine whether forensic accounting is the same as “fraud investigation”.
4. To ascertain if employees are often the first to notice fraud.
5. To examine the relevant or special skills which a forensic accountant should posses.
6. To examine the potential red flags of fraud.
7. To examine the prospects and challenges of forensic accounting profession.
8. To determine if forensic accounting can provide an objective valuation of claims.

 

• SCOPE OF THE STUDY

The focus of this study is on forensic accounting with special emphasis on corporate fraud reduction and mismanagement in Nigeria business environment. Data will be obtained from various stakeholders in the Nigeria business environment.

 

• RELEVANCE OF THE STUDY

When viewed from the perspective of forensic accounting in Nigeria business environment, the significance of this research will be appreciated.

The primary focus of this research is to enlighten non-forensic accountant on how corporate fraud and mismanagement can be tackled.

The research is also aimed at creating understanding of the duties of foreign accountants in litigation support, the potential for forensic accounting services in the Nigeria business environment, special skills and characteristics of forensic accountant.

Future researchers on this field will find this work as a veritable reference point and will create a better insight into the relationship between forensic accounting and corporate fraud.

 

• HYPOTHESES

Hypotheses shall be developed and tested to ensure a more effective and result oriented work. The null hypothesis (Ho) and the alternative hypothesis (H1) will be used for the purpose of this study.

 

Hypothesis (1)

Ho:  Corporate fraud reduction is not dependent on forensic accounting.

H1:  Corporate fraud reduction is dependent on forensic accounting.

Hypothesis (2)

Ho:  Forensic accounting cannot promote responsible corporate governance.

H1:  Forensic accounting can promote responsible corporate governance.

 

• LIMITATION OF THE STUDY

Some of the constraints encountered by the researchers in the course of the research are:

1. Insufficient Research Materials: The researcher encountered some constraints in the collection of information, very limited materials were obtained from the library.
2. Time Constraint: Limited time available also posed some challenges to the researcher.
3. Dearth of Funds: The unavailability of funds was also a barrier to this research work.