CHAPTER ONE
INTRODUCTION
1.1 BACKGROUND OF THE STUDY
In recent times, cases of financial and economic fraud have been on increase. But the incident of fraud is not fixed and every day new systems and systems of defrauding people, corporate bodies surface, even social habits and the environment as a body. Hence, it is paramount to embrace important security and fraud detection measures that are proficient enough to detect and prevent any form of fraud, no matter how complicated it. One of these measures is forensic accounting. This is developed above all in the field of public and private finances and is one of the types of audits that are mainly accountable for the investigation of fraud (Okoye, Adeniyi & Nwankwo, 2019). Forensic accounting is seen to have metamorphosed in response to certain arising fraud similar cases. The aspersion that lately rocked the corporate world with classical examples being the frequently cited Enron and WorldCom cases have also brought the field of forensic accounting to the limelight. Forensic accounting is perceived as enveloping all other investigation linked areas in bringing to light financial fraud. The rising sophistication of financial fraud needs that forensic accounting be added to the tools needed to bring about the successful investigation and prosecution of the individuals involved in fraudulent activities (Modugu & Anyaduba, 2013). Bamidele, Ibrahim & Omole (2018) opined that quality of financial reporting is the yardstick of preparation and presentation of both financial and nonfinancial information by the financial institution for efficient and effective planning and trusty decision. However, the aim of financial reporting is to make available information that may be helpful enough for appraising management effectiveness in utilizing resources under its control to appease its users’ needs. The study further concludes that financial analyst, investors and management experts have marshalled dozens of forensic accounting methods that aid the assessment of attainment index manipulation by a suspect company. The study noted that because the preparation of financial statements is the responsibility of company’s management’, transactions could be doctored and structured to suit their best interest in order to achieve enticing outcomes and hike their earnings at the detriments of shareholders and other stakeholders. The study however, emphasized that the quality of a company’s earnings, accountability and quality financial reporting system are frequently ignored which calls for forensic accountant skillful examination. As a consequence, the need for the present study to analyze the relevance and contributions of forensic accounting services towards making sure accountability among the quoted BANKS in Nigeria. Ojaide (2000) submitted that there is an alarming hike in the number of fraud and fraudulent activities in Nigeria harmering on the visibility of forensic accounting services. Okoye and Akamobi (2009), Owojori and Asaolu (2009), Izedomin and Mgbame (2011), Kasum (2009) have all acknowledge in their separate works the increasing incidence of fraud and fraudulent activities in Nigeria. These studies have argued that in Nigeria, financial fraud is gradually becoming a normal way of life. As Kasum (2009) noted, the perpetuation of financial irregularities are becoming the specialty of both private and public sector in Nigeria as individual bring off fraud and corrupt practice according to the capacity of their office. In consequence, there is a general expectation that forensic accounting may be able to stem the tide of financial misconduct witnessed in most sectors of the Nigerian economy. In consequence, there is a general hope that forensic accounting may be able to stem the tide of financial misconduct witnessed in most sectors of the Nigerian economy. In consequence, the study fills this gap by addressing the following research questions Forensic Auditing practices and Accountability of resources in Banks in Nigeria.
PROBLEM OF THE STUDY
In recent times, fraud detection or white-collar crimes was to be part of the regular accounting function. Fraud was something the internal or external auditors were meant to guard against through their recurring audits. With the rise in fraud cases in banks in Nigeria, one may ask, does it require that the internal as well as the external auditors do not execute their functions properly or is there any restricting factor stopping them from doing so? For example, laundering, some staff in banks make away from the bank vault on daily basis what an armed robber cannot escape with thus promoting occupational theft. The outcome of these inconsistency is that bank customers will always doubt the future of their banks since these actions will definitely result to bank distress. According to Abiola (2009), the need for forensic accountant grew because of the unproductiveness of audit system in the organization, as the organizational internal and external audit was unable to pin point needed errors in the managerial system. Professionals in the field listed out that the intense economic pressure, with more companies facing bankruptcy, jobs and careers are at risk and employees feel pressured to keep up and encourage performance levels, pressuring a lot of persons to commit fraud and whatever the reasoning may be, more and more forensic accountants are being called up to meticulously search through documents, find out fresh information and assist in putting together the irregular pieces of company’s financial puzzle to resolve the problems. Also, Abiola (2009), opined that internal audit and audit committee as a part of the management function could not throw light on the different fact and other hidden aspects of corporate fraud. The failure of statutory audit to prevent and reduce misappropriation of corporate fund and an increase in corporate crimes has put pressure on the professional accountant and legal practitioner to find a better way of exposing this evil frame in business world such as; the problems of loss of customers/depositors, the persistent increase in business failure fueled and encouraged by frequent incessant fraudulent activities in our financial institutions, the problem of lack of confidence on the part of the investing public to commit their resources to financial institutions due to fraud, the problem of how financial institution will embrace forensic audit as a useful tool in prevention and detection of fraud. In view of the above, it became very necessary for the researcher to look into these forensic auditing practices and accountability of resources in Banks in Nigeria.
OBJECTIVES OF THE STUDY
The study seeks to evaluate forensic auditing practices and accountability of resources in banks in Nigeria.
Following objectives include;
- To analyze if forensic accounting ensures quality financial reporting among the selected banks in Nigeria.
- To analyze if Forensic Accounting led to Fraud Reduction among the selected banks in Nigeria.
- To determine the length to which forensic auditing would serve as a tool to the lapses in internal and external auditing.
- To ascertain how theft in Nigerian financial institutions can be minimized through effective forensic auditing.
- To examine if there is a significant relationship between forensic Auditing practices and Accountability of resources in Banks in Nigeria.
RESEARCH QUESTIONS
- Does forensic accounting ensure quality financial reporting among the selected banks in Nigeria?
- How did Forensic Accounting lead to Fraud Reduction among the selected banks in Nigeria?
- The length to which forensic auditing would serve as a tool to the lapses in internal and external auditing?
- How can theft in Nigerian financial institutions be minimized through effective forensic auditing?
- What is the relationship between forensic Auditing practices and Accountability of resources in Banks in Nigeria?
RESEARCH HYPOTHESES
H01: There is no significant relationship between Forensic Auditing and Quality Financial Reporting among the selected banks in Nigeria
H02: Forensic Accounting does not have significant relationship with theft Reduction among the selected banks in Nigeria.
H03: there is a significant relationship between forensic Auditing practices and Accountability of resources in Banks in Nigeria.
Justification of the Study
This study will look intensively on forensic auditing practices and accountability of resources in banks in Nigeria. It will be beneficial to stakeholders in the educational sector such as teachers, parents, students, school management, and ministries of education, educational researchers, and the society at large.
This study is essential for several reasons: It contributes to an understanding of the current state of the banking sector in the country, providing insights into whether the forensic auditing practices and accountability of resources has positively or negatively impacted the banks in Nigeria, if the practices has helped in curbing fraud in banks in Nigeria. The study sheds light on the specific impacts of forensic auditing practices and accountability of resources on Nigerian banks. The study can serve as a valuable resource for students, scholars seeking to research more on the topic in question.
Educational researchers will see it as an addition to the literature on forensic Auditing practices and Accountability of resources in Banks in Nigeria; giving them a concise and significant outlook of the topic. The recommendations will enhance good banking practices.
Similarly, it is hoped that the results of this study will provide an insight to Nigerians to improve curb fraudulent activities in Nigerian banks.
1.6 Scope of the Study
The scope of the study is limited to forensic Auditing practices and Accountability of resources in Banks in Nigeria only. The study was carried out in five (5) branches of First bank in Lagos Nigeria. The study was also limited to activities of few selected banks in Ikeja. The study made use of both primary and secondary data. Questionnaires will be distributed and used for data collection from respondents.
