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FORENSIC ACCOUNTING AND AUDIT AS A PANACEA FOR PREVENTING CORPORATE FRAUD IN NIGERIA

ACCOUNTING PROJECT TOPICS AND MATERIALS

CHAPTER ONE

1.1 BACKGROUND OF THE STUDY:

Forensic accounting integrate accounting, auditing and investigating skills. It is a specially practice area of accounting that describes engagement that result from actual or anticipated disputes or litigation. Forensic according to the Webster’s dictionary means, belonging to, used in, or suitable court of judicature or to public discussion or deliberate, it therefore means the forensic account provides accounting analysis that is suitable to court of judicature or to public discussion or debate which will form the basis for dissension, debate and ultimately dispute resolution. In the words of filmer (2003) forensic accounting is seen as a method of investigating financial transaction and business situations in order to obtain the truth of and develop an export opinion regarding certain fraudulent activities. Two areas of expertise make up the field of forensic accounting; litigation support includes business valuation revenue analysis, expert witness testimony and failure earning valuation while investigative accounting is the process of gathering evidence of criminal conduct and sustaining the content of damages.

Forensic accounting is hardly a new field, but in recent years, banks, insurance companies and even law enforcement agencies, the federal Bureau of investigation (FBI) nad Internal Revenue Services (IRS) have increase the use of these experts. A study conducted by Kessler international (a forensic Accounting and investigation) showed that there is a growing need for experience forensic Accountants. ABC now.com reports that industry insiders expect more companies to use forensic Accountants as preventive measures as the demand for trustworthy financial statements increase in the wake of the recent accounting scandals. Todd Avery, president of the risk consulting consulting firm and worldwide says, that may executives are paying greater attention to controls and fraud. Prevention today, then they were given a few years ago. Historically, forensic accountants who work in public practices were given often, called, after owners suspected that fraud has been committed. Now recent major corporate scandal have prompted business owners to turn forensic accountant to proactive. Fraud checkups. The frauds these specialists are looking for are usually two general types namely: financial statement fraud and the of assets (these two can co-exist in the situation in which management has taken assets and misstated financial statement to cover-up falsification). To uncover financial statement fraud, the forensic Accounting often analyses the financial statement by using ratio analysis and certain data-mining techniques such as Bedford’s a procedure used to determine the likelihood that data have been altered.

Other procedures used include inspection of documents, conduct of interviews with persons who would have knowledge about any fraud that has occurred. The occupational or corporate fraud committed by employees usually involve, the of assets. Embezzlement has been the most committed fraud for the last three (3) years. Employees may be involved in kick backs schemes, identify the or conversion of corporate assets for personal use. The forensic accountants coupled the observation of the suspected employee with physical examination of assets, investigation and inspection of documents and interviews of those involved. Ekechi (1990) was of the opinion that in order to attain the objective of fraud management, there is need for compliance with established policies, rules and procedures. Also rules that employees should be made about of the risk of attempting to defraud and action expected if caught. Finally for forensic accounting and audit to serve as technique or panacea for preventing corporate fraud in Nigeria banks, the forensic accountants must possess the required knowledge and skill in advanced and continued education in appropriate discipline, diversified accounting and audit experience, communication skills (oral and written) practical business experience, ability to work in a team environment and people skills and flexibility (Grippo, 2003) in view of this, this study was narrowed down to first bank Nigeria Plc. The bank began operation in 1894. it operates as a universal bank providing wholesales, retail co-operation, investment and transaction banking services to its customers in the Nigerian market. The bank divided its operation into three major divisions: a) Retail banking b) Wholesale banking c) Treasury and capital market and investment banking services.

1.2 STATEMENT OF THE PROBLEM

The level of corporation fraud in Nigeria today has an adverse effect on our nation. This epidemic has eaten deep into every aspect of our society and should be given great attention; fraud comes in many ways ranging from embezzlement, poor management of policy and procedure and while the list of possible incidences is exhaustive however, there are certain warning signals which can indicate the occurrence of this crime are: i) Inadequate regular payment of staff salaries. ii) Sta of the organization staying longer on a particular job. iii) Lack of proper supervision and control. With the above examples, one cannot help but state the following problems: a) The in depth knowledge and skills on forensic accounting as a tool for preventing corporate fraud in Nigeria b) The professional qualification of forensic accountants will help in detecting fraud in an organization. c) Diversified forensic auditing experience will service as a panacea for preventing top corporate fraud in Nigeria. d) Practical business experience by forensic accountant is a technique for controlling corporate fraud in Nigeria.

1.3 PURPOSE OF THE STUDY

The main purpose of this study is to find out how forensic accounting and audit service as panacea for preventing corporate fraud in Nigeria. Other purposes are: 1 To find out if the in-depth knowledge and skill in accounting and audit help forensic accountant in preventing corporate fraud in banks. 2 To investigate if the forensic accounting standard in carrying out their duties and fighting the growing rate of fraud in Nigeria. 3 To determine whether the forensic accountants deal with the materials weakness of the internal control system. 4 To find out if forensic accounting and audit took beyond the figure in preventing and detecting fraud in banks.

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