ABSTRACT
The impact of forensic accounting on financial fraud detection in Nigerian deposit money banks (a case study of UBA Bank) was investigated in this study. Three research questions were developed to do this. The study was conducted at UBA Bank in Abuja. In this study, the survey design and basic random sample procedures were used. The study’s sample size has been found to be 42 UBA employees. The questionnaire was used to collect data for the study, and the data was analysed using a frequency distribution table. According to the findings, forensic accounting is ineffective in detecting and preventing fraud in Nigeria; forensic litigation has a favourable influence on the recovery of assets lost due to fraud; and In Nigeria, the extent to which forensic accounting minimises fraudulent incidence is unacceptably low.
Based on the findings, the researcher proposed that the Nigerian government, as well as the managements of businesses and non-profit organisations, improve the essential equipment, software, and other technology items to aid accountants in the identification and prevention of fraud. Furthermore, most accounting practises and practises in Nigeria are stagnated or out of date with trending skills and effective skills; hence, organisations should build training chances for accountants to get familiar with more effective abilities.
CHAPTER ONE
INTRODUCTION
1.1Â BACKGROUND OF THE STUDY
Fraud is an endemic that are gradually becoming a normal way of life in both public and private sectors, from the presidential cabinets, down to the political officer, to the ward councillors, from managing directors of companies, through middle management cadre and to lower managers in Nigeria (Gbegi & Adebisi, 2014). Financial fraud has for long been categorized as a menace that led to the collapse of many reputable institutions in the world which include Enron, Bernie Madoff scandals, WorldCom, Lehman Brothers, Tyco International Ltd, and Adelphia Communications Corporation in the USA, Parmalat crises in Italy and HIH Insurance Ltd in Australia. In Nigeria, the cases of Cadbury Nigeria Plc; Afribank Nigeria Plc, NAMPAK, Oceanic Bank Nigeria Plc, and African Petroleum Plc were relatively caused by massive fraud (Sule, Ibrahim, & Sani, 2019). Despite the several legislations put in place to reduce, alleviate and if possible eliminate the occurrence and incidences of fraud, it is worrisome that incidences of fraud have become so widespread that it is fast assuming an epidemic proportion in Nigeria.
In fact, fraud has become a daily occurrence in Nigeria firms.
Forensic accounting is the tripartite practice of utilizing accounting, auditing and investigative skills to assist in legal matters. It is a specialized field of accounting that describes engagements that result from actual or anticipated disputes or litigation. Forensic accounting can, therefore, be seen as an aspect of accounting that is suitable for legal review and offering the highest level of assurance (Apostolou, Hassell & Webber, 2000). Ojaide (2000) notes that there is an alarming increase in the number of fraud and fraudulent activities in Nigeria, requiring the visibility of forensic accounting services. According to the Centre for Forensic Studies (2010) report, the increasing need for forensic and investigative accounting in the banking sector results from the complexities of modern day banking with large volume of complex data. This makes it difficult to monitor transactions by applying manual audit processes. This in turn makes the control utility of auditing ineffective. Virtually all the weaknesses and challenges identified in the banking industry in Nigeria’s post-consolidation, and criminal investigations and prosecutions arising from them, are issues for forensic accounting. Hence, Modugu and Anyaduba (2013) conclude that the general expectation is that forensic accounting may offer some respite to the seeming vulnerability of conventional accounting and audit systems to financial fraud.
According to Abdulrahman (2019), financial related fraud and increase in financial crime has led to the need of forensic accounting in order to aid investigation and prosecution of the syndicates of financial crimes just liked in the case of some prominent political parties ex-governors in Nigeria are presently facing trials on money laundering, embezzlement, misappropriation of funds, security fraud, breach of contract from different court of laws within the country and many more including some public civil servants that converted public treasury as personal assets to their pockets.
Ehioghiren and Atu (2016) opined that forensic accounting encompasses three major areas, investigation, dispute resolution and litigation support. Forensic accounting has been identified as tool in detecting and implementation of white-collar Investigations (Hansen, 2009). Degboro and Olofinsola (2007) described forensic accounting as the application of criminalist methods, and integration of accounting investigative activities and law procedures to detect and investigate financial crimes and related accounting misdeeds. According to Enofe, Olorunnuho and Okporua (2016), forensic accountants play a role in litigation support services in the public sector and are relevant in documentation and reporting. It was observed that forensic accounting plays a significant role in curbing crime and corrupt practices in any public sector since it provides a mechanism to hold people accountable, such that those who manage resources in a fiduciary capacity do not easily abuse that trust without detection. Gbegi and Adebisi, (2014) observed that the forensic accounting skills and techniques could help to investigate fraud occurrence 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, bankruptcy, contract disputes, and possible criminal financial transactions.
There is an alarming increase in the number of fraud and fraudulent activities in Nigeria, requiring the visibility of forensic accounting services. Also the recent happening in the forensic audit of the oil sector where the present government is demanding for another forensic audit exercises to be carried out after a Nigerian audit firm has presented a report to the authority. In recent, several studies have centered on the detective role of forensic accounting in fraud management in Nigeria especially in banks. It is on this note that this study takes more in-depth look at forensic accounting and its use in fraud management by firms in Nigeria.
1.2 STATEMENT OF THE PROBLEM
Fraud has become a reoccurring trend in Nigeria. Infact, FBI (2018) report shows that Nigeria is among the top 5 hub of fraudsters as most perpetuators come from the country. Central Bank of Nigeria (2018) report and Nigeria Deposit Insurance Commission (2018) report both reported high amount of monies lost by banks to fraud annually. Collaborating with this is Economic and Financial Crime Commission (2018) report that big companies in Nigeria and influential individuals have continued to fall victim to fraudsters losing large amount of money in the process. In recent times, series of fraud have been committed both in the public sector and private sector of the economy. These in no doubt are perpetrated under the supervision of the internal auditors of the organization.
Thus, forensic accounting has evolved as a means of checking fraud since the traditional accounting system and auditing have failed in some areas in checking fraud. Forensic accounting is seen as taking more advance role in fraud prevention, detection, and management. However, its use and effectiveness has raised serious concerns as it has been argued that it is used mainly aftermath of the fraud to find the perpetuators and how it was carried out in order to avoid future occurrence. As a tool mainly for legal purposes, the sophistication of fraud perpetuators and the role of insiders who have knowledge on how to bypass the system and not get caught have also questioned the effectiveness and need for forensic accounting. In addition, however, there has not been adequate emphasis, especially survey evidence on how forensic accounting can help curtail financial and economic crimes beyond the several unreliable views that abound. All these problems and many more have provided the need for this study
1.3. PURPOSE OF THE STUDY
The broad objective of this study is to assess the Impact of Forensic Accounting on Financial Fraud Detection in Deposit Money Banks in Nigeria(A case study of UBA Bank. The specific objectives are:
1.To examine the effectiveness of forensic accounting in fraud detection and prevention.
2.To assess the effect of forensic litigation on recovery of funds lost to fraud.
- To investigate the extent to which forensic accounting have reduced fraudulent acts in Nigeria.
1.4. RESEARCH QUESTIONS
In order to achieve the objectives of this study, the following research questions were raised to guide the research:
1.To what extent is the effectiveness of forensic accounting in fraud detection and prevention?
- What is the effect of forensic litigation on recovery of funds lost to fraud?
- To what extent have forensic accounting reduced fraudulent occurrence in Nigeria?
1.5 SIGNIFICANCE OF THE STUDY
The study has the following significance:
- To the government, the study will enlighten the various governments on ways to give more power and responsibility to forensic accountants and auditors to checkmate fraud and reduce cost of operations.
- To the public, this study is aimed at enlightening the society on the function and operations of forensic accounting and significance of forensic accounting.
- To the business organization, it will enlighten them on the importance of forensic accounting in enhancing financial performance. It will also show them the mechanisms needed to improve the atmosphere for forensic accounting to carry out their function properly based on the findings.
- To the academia, it will enlighten it will provide support to their studies especially in the areas of forensic accounting.
1.6 SCOPE OF THE STUDY
This study covers only the effect of forensic accounting on fraud management in Nigeria using UBA bank Abuja as case study.
1.7 LIMITATIONS OF THE STUDY
The major constrain of this study is time factors as the researcher had a little time frame to carry out this study. More so financial constrains and language barriers were also major key factors that limited this study.
1.8. DEFINITION OF TERMS
Below are the definition of relevant terms of this study:
Accounting: This is the process of recording financial transactions pertaining to a business. The accounting process includes summarizing, analyzing and reporting these transactions to oversight agencies, regulators and tax collection entities.
Forensic Accounting: Forensic accounting, forensic accountancy or financial forensics is the specialty practice area of accounting that investigates whether firms engage in financial reporting misconduct. Forensic accountants apply a range of skills and methods to determine whether there has been financial reporting misconduct.
Fraud: Fraud is an intentionally deceptive action designed to provide the perpetrator with an unlawful gain or to deny a right to a victim. Types of fraud include tax fraud, credit card fraud, wire fraud, securities fraud, and bankruptcy fraud.
Fraud Detection: Fraud detection is a set of activities undertaken to prevent money or property from being obtained through false pretenses. Fraud detection is applied to many industries such as banking or insurance. In banking, fraud may include forging checks or using stolen credit cards.
Fraud Prevention: Fraud prevention is the implementation of a strategy to detect fraudulent transactions or banking actions and prevent these actions from causing financial and reputational damage to the customer and financial institution (FI).
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