CASE STUDY OF NIGERIAN
BOTTLING COMPANY
CHAPTER ONE
INTRODUCTION
1.1 Background of the Study
This paper explores the relevance of forensic
accounting in the detection and prevention of fraud in our private and public
sectors respectively due to the prevalent increase in the rate of
misappropriation and embezzlement of funds using Nigerian private and public
sectors as a study. The financial irregularities is a severe problem of concern
globally. It is common that almost every individual cannot wash his or her
hands clean of it, starting from the public sector to the private sectors.
Accounting as a social science plays significant roles in our society and
serves as a legitimating device for the market economic system and also a form
of social language and certainly a business language.
However,
accounting figures are heavily exposed to fraud due to their influence on
numerous crucial decision that affect various key social actors with far
reaching implications. For instance, accounting figures are sources of rewards
for management, a basis for the assessment of firm performance and grouping in
the sense of profitable and none profitable firms and investors decisions.
These numerous needs and interest makes accounting figures to be extremely
susceptible to fraud. Fraud in accounting is fraudulent financial reporting and
misappropriation of firms resources and
this has been occurring in our society thereby making great emphasis on
how fraud will be detected and prevented. Though the auditors responsibility
has been increased to consider the risks of fraud while conducting audit of
financial statements; thereby calling for stronger technique and skills on
those who perform these audits. Hence the primary responsibility of an auditor
is to verify whether the financial statements show a true and fair view of the
business white their secondary responsibility is the prevention and detection
of errors and fraud.
The
third party emphasized that an auditor must be in a position to detect all
kinds of fraud, but the auditors are not so persuaded as they believe that it
is not their primary duty to detect fraud. So there is a gap between auditors
and third, parties (sale hi and Azary, 2009a) and this has brought about the
introduction of somebody who has higher
skill to do the secondary responsibility of an auditor called a “forensic
accountant”.
Enyi
(2009) submits that all normal statutory audits should contain some elements of
forensic enquiry as the evidence of fraudulent activities can be easily
discovered if a thorough evaluation of
the adequacy and compliance of the internal control mechanism is made may not
be achieved by an auditor without some understanding society of forensic
accounting methods. Events of the recent years in our society that involves the
public sectors and private sectors have contributed to the growing demand for
forensic accounting to help detect and prevent fraud accountant has been ascribed
to the fact that the audit system in an organization had failed to detect
certain errors in the managerial system. The following have been figured as
being responsible for the growth of forensic accounting which includes:-
Ø Failure of internal audit
and audit committee to unearth hidden aspects of corporate fraud.
Ø The apparent lack of
independence of internal auditors
Ø The often compromised method
of appointing statutory auditors
Therefore, forensic
accountants were introduced in order to prevent, detect and respond to harm
caused by fraud that an auditor could not detect or prevent. A forensic
accountant has the sole aim of unveiling fraudulent activities within and
outside the organization. In general terms, forensic accounting involves
reporting where fraud is established and the report is considered as evidence
in the court of law. The engagement of forensic accounting techniques are
usually geared towards finding where money went how it got there and who was
responsible.
In respect to the above submissions
and endemic nature of fraud in Nigeria
and the necessity of specialized skills to unveil such frauds, it becomes
imperative to bring in the services of forensic accounting techniques into our
society to help solve the problem of fraud activities we experience in our
society.
A forensic accountants have
been described as experienced auditors accountants and investigators of legal
and financial documents that are hired to look into possible suspicious of
fraudulent activity within a company; or are hired by a company who may just
want to prevent fraudulent activities from occurring. They also provide
services in areas such as accounting, anti trust, damages, analysis, valuation
and general consulting. Forensic accountants have also been used in bankruptcy,
insurance claims personal injury claims, fraudulent claims, construction,
royalty audits and tracking terrorism by investigating financial records.
Forensic accounting is an amalgamation of forensic science and accounting.
Therefore, there is every
need to inculcate the services of a forensic accountant in our private and
public sectors to fill in the gap that an auditor could not cover hence
bringing up the trust of investors and general public in our organizations to
be fresh again and strong as it use to be that is the observation of the
researcher after being motivated to carryout a research on the relevance of
forensic accounting to fraud detection and prevention in private and public
sectors.
1.2 Statement of the Problem
The
increase in the rate of fraud –public and private fund embezzlement has caused
a serious concern to the investors, general public and owners of the business.
Hence, the investors and general public have been disappointed in the failure
of the responsibilities of auditors in their work.
Fraud
has been discussed in two different ways viz fraudulent financial reporting and
misappropriation of assets refers to deliberate and calculated activities and
attempts to misrepresent transactions in the financial statement in order to
derive or take undue advantage. On the other hand misappropriation of assets
refers to deliberate and calculated activities to take firms resources without
authorization, this includes stealing. However all these fraudulent financial
reporting and misappropriate of rim resources exist due to their influence on
numerous crucial decisions that affects various key social actors with a far
reaching implication for example, accounting figures are sources of rewards for
management; a basis for the assessment of firm performance and grouping in the
sense of profitable and non profitable firm. These numerous needs and interest
makes accounting figures to be extremely susceptible to fraud.
Therefore
most people now are of the view that the emergence and inclusion of forensic accounting
techniques to fraud detection and prevention in public and private sectors in
Nigeria is needed to arm the accounting profession to deal with the problem of
unearthing ingenious fraud schemes arising from audit’s failure to detect and
prevent it. Though the study of forensic accounting in Nigeria is very few in our universities
irrespective of the numerous universities we have in Nigeria thereby not having a good
number of forensic accountants to curb the excessive fraud activities going on
in our public and private sectors.
This
study, therefore is aimed at ascertaining the impact the available forensic
accountants will create on detecting and preventing fraud using the forensic
accounting techniques and thus its contribution in bridging the audit
expectation gap. Below are some of the statement of problem that was looked
into
1.
To what degree do people believe in the opinion of auditors concerning
their report on an audited financial statements
2.
To what extent has the negligence of auditors to their job caused
financial misappropriation in our sectors.
3.
In what way has the 50% unindependent quality of an auditor affected
their opinion to the public concerning the financial statement of our sectors.
1.3 Objectives of the Study
The
overall objective of this study is to find out the perception of accountant
techniques in fraud detection and prevention can enhance the chances of fraud
discovery and thus help in closing the audit expectation gap between the
auditor responsibilities and publics expectation. For this study we looked into
the following objectives which is as follows:-
(i)
To ascertain the extent to which forensic a accounting has helped in
detecting and preventing fraud in public
and private sectors in Nigeria.
(ii)
To ascertain if the forensic accountant should be analytically minded
and inquisitive.
(iii)
To find out if there is need for the services of forensic accountant to
fraud detection and prevention in our public and private sectors.
(iv)
To ascertain if the services of the forensic accountants are needed in Nigeria.
(v)
To find out the view of staffs of the sectors as to whether on a cost
benefit basis, the introduction of some forensic accounting techniques in an
audit is capable of stemming the tide of financial fraud and bridge the audit
expectation gap.
1.4 Research Questions
The
following research questions were formulated for the purpose of this study.
They includes:-
(i)
In what ways has the forensic accounting helped in detecting and
preventing fraud in Emanite limited and
Nigerian bottling company Enugu
(ii)
Should a forensic accountant be analytically minded and inquisitive.
(iii)
What are the needs for forensic accountant’s services in fraud
detection and prevention in organization.
(iv)
Why do the services of forensic accountant been needed in Emanite Ltd Emene Enugu State and Nigerian bottling company Enugu
(v)
What are the views of staff of Emenite Ltd Emene Enugu and Nigerian
bottling company as to whether the cost benefit basis, the introduction of some
forensic accounting techniques in an audit is capable of stemming the tide of
financial fraud and thus bridge the audit expectation gap.
1.5 Hypothesis
(1) H0- There
is no relationship between forensic accounting and fraud detection and
prevention in Emenite Limited Enugu and Nigerian bottling company Enugu.
H1- There is no relationship between forensic
accountant and analytical mind and inquisitiveness in fraud detection and
prevention in Emenite Limited Enugu and Nigerian bottling company Enugu.
(2) H0- There
is a relationship between forensic accounting and analytical mind and
inquisitiveness in fraud detection and prevention in Emenite Limited Enugu and
Nigerian bottling company Enugu.
H1- There is a relationship between forensic
accounting and analytical mind and inquisitiveness in fraud detection and
prevention in Emenite limited Enugu and Nigerian
bottling company Enugu.
(3) H0 –There is no relationship between forensic
accountant and there services in fraud detection and prevention in Emenite Ltd
Enugu and Nigerian bottling company.
H1- There is relationship between forensic
accountant and there services in fraud detection and prevention in Emenite
Limited Enugu and Nigerian bottling company.
(4) H0- There is no relationship between forensic
accountant and the need for there services in Emenite Limited Emene Enugu and Nigeria bottling company Enugu.
H1- There is relationship between forensic
accountant and the need for there services in Emenite Limited Emene Enugu and Nigeria bottling company Enugu.
(5) H0- There
is no relationship between accounting and the negative view about the cost
benefit basis, the introduction of some forensic accounting techniques in an
audit which is not capable of stemming the tide of financial fraud and thus not
cover the audit expectation gap the organization workers have in mind.
H1- There
is relationship between accounting and the negative view about the cost benefit
basis, the introduction of some forensic accounting techniques in an audit
which is not capable of stemming the tide of financial fraud and thus not cover
the audit expectation gap the organization workers have in mind.
1.6 Significance of the
Study
The research under took this
research on the topic “the relevance of forensic accounting to fraud detection
and prevention in private and public sectors- Nigerian bottling company Plc and
Emene Enugu as a case study” due to the increase in the financial
misappropriation and embezzlement in our private and public sectors and the
failure of auditors to accurately represent the public, shareholders, investors
in the duty they (auditors) owe them because of limited or no independence
right which they have now n our country in order to make quick money, there is
need to introduce someone who is more sincere and can go beyond investigating
only paper work, someone who can do police work, lawyer job and state security
service (SSS) job. That is going as far as investigating how the
misappropriation started, people that are involved, reasons for their
involvement someone who has initiative mind on private investigation and
accounting, that can recognize financial fraud, who can look beyond the
financial numbers to find out what is not right and scrutinize on that.
The researcher discovered
that the shareholders, investors, general public, company and the government
will benefit in the inclusion of forensic accountants to the diction and
prevention of fraud in our private and public sectors. Since their
investigation goes beyond the investigation of an ordinary auditor. Again, the
researcher discovered that if forensic accountants will be given proper and
adequate support by the beneficiates named above to do their job in dependently
with full cooperation without interference. From the perpetrators of the
financial misappropriation, the sky will be their starting point in detecting
and preventing fraud in our private and public sectors and also help reduce the
level of embezzlement and financial misappropriate we experience in our
organizations.
1.7 Scope and Limitations of the Study
For
the purpose of this study, I focused on a selected private sector and a
selected public sector which is Emenite Ltd, Emene Enugu and Nigerian bottling
company Plc in Enugu
respectively. The two sectors (company) that was selected out of the numerous
private and public sectors in Nigeria
and has their accountants, auditors and senior staffs as the main target.
During
the research, the research had constraints on the area of insufficient fund,
inadequate time and space, resistance non challant attitude of most respondents
and difficulty in getting enough materials for his writing to carryout further
investigation of the research topic.
1.8 Definition of Terms
Forensic – “This means suitable for use in
a court of law; “pertaining to court”; being accepted as a standard in legal
cases”
Accounting – This is the process of recording,
classifying, summarizing, analyzing and interpreting financial transactions and
communicating
the results thereof to interested users
Auditing – This is an independent
examination of and expression of opinion on, the financial statements of an
enterprise by an appointed auditor in pursuance of that appointment and in
compliance with any relevant statutory obligation.
Forensic
accounting - This is a type of
accounting that provides accounting analysis that is suitable for the court and
which will form the basis for discussion, debate and ultimately dispute
resolution. It is actually the integration of accounting, auditing and
investigative skills to assist in legal matters.
Investigate – This is to discover and examine all
the facts about something, somebody’s character, background, political view,
fraud, information etc. using police or lawyer method of research.
Litigation - This is a process of bringing or
defending a claim before a law court
Misappropriation
-This is using somebody’s or some
people’s money embezzlement placed in a person’s care without authorization by
the owner for one’s benefit.
Private sector
- This is simply a business firm that issues
shares to the general public. It is a business part of economy or industry
managed and controlled by the state.
Fraud - This is the action or an
instance of deceiving somebody in order to make money or obtain goods
illegally.
Audit
expectation gap- This is described
as the gap between the auditors actual standard of performance and the various
public expectations of auditors performance.
Fraudulent
financial Reporting - This refers to
deliberate and calculated activities and attempts to misrepresent transactions
in the financial statement in order to derive or take undue advantage.
REFERENCING
Anwar, N. (2008). “Forensic Accounting: A Dynamic
tool for Combating Corruption”. The
Financial Express, I –I Dhaka.
Bologna, G. J., & Lindquist, R.
J. (1987). Fraud Auditing and Forensic Accounting
New Jersey: New Tools and Techniques. New Jersey: Wiley Publishers (Chpt 3).
Buckhoff, & Schrader, R. (2000). “The Teaching
of Forensic Accounting in the United States”.
Journal of Forensic Accounting.1(1),135 – 146.
Chariri, A. (2007). “The Relevance of Forensic
Accounting in Detecting Financial
Frauds”. Journal Orgamisasi dan managem, 3 (2), 81-88
Crubley, D. (2003). “What is Forensic Accounting”.
(online) Available www.edwardspub.com.
Emma, I. O., &
Okoro, S. C. (2001). “Forensic Accounting and Audit Expectation Gap – the Perception of Accounting Academics”.
(online) available: www.ssrn.com.
Kasum, A. S. (2009). “The Relevance of Forensic
Accounting to Financial Crimes in
Private and Public Sectors of Third World Economics:
A study from Nigeria”.
Proceedings of the 1st International
Conference on Government Fraud Ethics and Social Responsibility. Illorin,
Nigeria
pp.11-13.
Kleyman, T. (2006). “A course in Forensic
Accounting”. (unpublished honors
College Theses, 40.) (online) Available: www.digitalcommons.pace.edu/honorscollege_theses/40.
CHAPTER TWO
LITERATURE
REVIEW
2.1 Origin OF Forensic
Accounting
Forensic accounting is not as new as many
people think, it has existed for many fears with the growing complexity of business
environment and the growing number of fraud in our organization. In the
beginning auditors took responsibility for detection of fraud, and forensic
accounting techniques were used in their audit activities. Beginning from early
1940s, auditors and the accounting profession began to redefine the duties of
an audit through the auditors are primarily known for expressing their opinion
as to whether the financial statements of an organization showed a true and
fair view of the entity’s transaction. With the strident calls and pressures on
modern audit to once again assume responsibility for fraud gave birth to
forensic accounting. People believe that audit and forensic accounting will
soon reunite again. This forensic accounting techniques is believed to detect
and prevent fraud which will help in bridging the audit gap as it relates to
inability of an audit to detect fraud.
Joshi
(2003) ascribed the origination of forensic accounting to Kutilya, the first
economist to openly recognize the need for the forensic accountant whom he
(Joshi) said, mentioned 40 ways of embezzlement centuries ago. He, however
stated that the term forensic accounting was coined by Peloubet in 1946.
Crumbley (2001) wrote on same when he stated that a form of forensic accounting
can be traced back to an 1817 court decision. He stated also that a “young
Scottish accounting issued a circular advertising his expertise in arbitration
support in 1824” but that Peloubet was probably the first to publish the phrase
forensic accounting. Investigation of
fraud and corruption is confirmed thus, not to be new, even in Nigeria.
It is only gaining prominence because of the growing wave of crime under the
seemingly new nomenclature in the past few years (Coenon 2005).
In
some western countries in the 1980s particularly in the USA, forensic accounting was
introduced. This profession identifies a field composed of accounting, auditing
and investigative skills (Bozkurt 2000). In this concept, forensic accountants
are believed to be providing an account analysis to determine the facts
necessary to resolve a dispute before it is brought before a court or the
Lawsuit process takes its course. The term forensic accountants are generally
used for certified Public Accountants (CPAs) who perform the activities of analyzing,
examining, investigating, auditing and questioning that follows an organized
way in order to find the truth or reach an expert opinion by starting with the
truth. Forensic accounting and Litigation support involves the services
provided by CPAs on legal issues (Crumbely 1995).
Maurice
E. Peloubet is his 1946 essay – “forensic Accounting: its place in Today’s
Economy”. By the late 1940s, forensic accounting had proven its worth during World
War II; however formalized procedures were in place until the 1980s when major
academic studies in the field were published (Rasey 2009).
Forensic
accounting is the specially area of the accountancy profession which describes
engagements that results from actual or anticipated disputes or Litigation.
They are expected to trace money laundering and identify theft activities as
well as evasion. Insurance company’s hire forensic accountants to detect insurance
fraud such as arson and law offices employ forensic accountants to identify
marital assets in divorce cases (Weygandt et al. 2008).
2.2 Forensic Accounting Definition
Forensic accounting, also called
investigative accounting or fraud audit, is a merger of forensic science and
accounting. Forensic science according to Crumbley (2003) “may be defined as
application of the laws of nature to the laws of man”. “He also defined
forensic as suitable for use in a court of law (Crumbley et al 2005).
He refers to forensic scientists as examiners and
interpreters of evidence and facts in legal cases that also offers expert
opinions regarding their findings in court of law. The science in question here
is accounting science, meaning that the examination and interpretation will be
of economic information.
Joshi
(2003) defined forensic accounting as the application of specialized knowledge
and specific skill to stumble up on the evidence of economic transactions. Zysman
(2001) put forensic accounting as the integration of accounting, auditing and
investigative skills. Simply put forensic accounting is accounting that is
suitable for legal review offering the highest level of assurance and including
the now generally accepted connotation of having been arrived at in a
scientific fashion (Crumbley, 2006).
Coenen
(2005), stated that forensic accounting involves the application of accounting
concepts and techniques to legal problem. It demands reporting, where the
accountability of the fraud is established and the report is considered as
evidence in the court of law or in the administrative proceeding (Joshi). It
provides an accounting analysis that is suitable to the court which will form
the basis of discussion, debate and ultimately dispute resolution (Zysman,
2001). These means that forensic accounting is a field of specialization that
has to do with provision of information that are meant to be used as evidence
especially for legal purposes. The person practicing in this field investigate
and document financial fraud and white-collar crime such as embezzlement
investigate allegations of fraud, estimates losses damages and assets and
analysis complex financial transaction. They provide those services for corporation,
attorneys criminal investigators and the government (Coenen, 2005).
In
conclusion, the researcher came to the understanding that forensic accounting
is accounting that provides accounting analysis that is suitable for the court
and which will form the basis for discussion, debate and ultimately dispute resolution.
It is actually the integration of accounting, auditing and investigative skills
to assist in legal matters.
2.3 Objectives of Forensic Accounting
a forensic accountant is often retained to
analyze interpret, summaries and present complex financial and business related
issues in a manner which is both understandable and properly supported. A
forensic accountant can be engaged in public sector practice. Their main
objective is to detect and prevent fraud that auditor could not do. Their engagement is geared towards findings where
money went, how it got there and whom was responsible. They are trained to look
beyond the numbers and deal with business reality of the situation (Zysman
2001). Forensic accountants uses their professional accounting skills,
investigative skills and an investigative mindset to resolve disputes or
anticipated dispute where there are risks, concerns or allegations of fraud or
other illegal or unethical conduct. Finally, their objective in the area or
place they are employed is to identify substance over form when dealing with an
issue.
2.4 Assignment a Forensic Accountant Performs
and his Engagement
A
forensic accountant as other professionals has a definite assignment he
performs and areas he is been-engaged to exercise his duties.
Coenen
(2005) identifies the following as areas where a forensic accountant is
engaged.
(i)
Investigating corporate fraud
(ii)
Litigation services
(iii)
Business valuation
(iv)
Computer forensic
However, Zysman (20010 in a
more elaborate form captured the assignment performed by forensic accountant as
including.
(i)
Criminal investigation –Forensic accountant do
this type of investigation on behalf of the police with the aim of presenting
evidence in a professional and concise manner
(ii)
Shareholders and partnership
disputes-
These assignments involves analysis of numerous year financial record for
valuation and qualification of the issue in dispute.
(iii)
Personal injury claims/motor
vehicle accidents –A forensic accountant is often asked to quantity the economic losses
resulting from a motor vehicle accident. He needs to be familiar with the
legislation in place which pertains to motor vehicle accidents. Also in the
case of medical malpractice and wrongful dismissal, it often involves similar
issues in calculating the resulting economic damage.
(iv)
Business interruption/other
types of insurance claims- Insurance policies differ significantly as to their terms and
conditions. These assignments involve a detailed review of the policy to investigate.
Coverage issues and the appropriate method of calculate the loss. He is often
asked to assist from either an insured or insurers perspective in the
settlement of a case. Example of this assignment includes property losses and
employee dishonestly claims business interruptions.
(v)
Business/Employee fraud
investigations- These type of assignment involves fraud tracing, asset identification
and recovery, forensic intelligence gathering and due diligence reviews. By
employee fraud investigations it involves procedures to determine the existence
nature and extent of fraud and may concern the identification of a perpetrator.
These investigations often entail interviews of personnel who had access to the
funds and a detailed review of the documentary evidence.
(vi)
Matrimonial Disputes- This also involves the
tracing, locating and evaluation of assets
(vii)
Business Economic Losses- This assignment involves
setting contract dispute, construction claims, expropriation product liability
claim and trade mark issues.
(viii) Professional Negligence- This to ascertain the breach and quantity the loss
involved.
(ix)
Mediation and arbitration
2.5 Typical
Approach to Forensic Accounting Assignment Zysman (2005)
Outlined the following steps in executing forensic accounting assignment.
(i)
Meet with the client to obtain an understanding of the important facts,
players and issues at hand.
(ii)
Perform a conflict check as soon as the relevant parties are
established.
(iii)
Perform an initial investigation to allow subsequent planning to be
based upon a more complete understanding of the issues.
(iv)
Develop an action plan that take into account the knowledge gained by
meeting with the client and carrying out the initial investigation and which
will set out the objectives to be achieved and the methodology to be utilized
to accomplish them.
(v)
Obtain the relevant evidence- this may involve locating documents
economic information, asset, a person or company, another expert or proof of
the occurrence of an event.
(vi)
Perform the analysis –this may involve calculating economic damages,
summonsing a large number of transactions; performing a trace of assets;
performing present value calculations utilizing appropriate discount rates;
performing a regression or sensitivity analysis; utilizing charts and graphics
to explain the analysis; utilizing a computerized application such as spread
sheet, data base or computer model.
(vii)
Prepare the report- often a report will be prepared which may include
sections on the nature of the assignment, scope of the investigation, approach utilized,
limitations of scope and findings and or opinions. The report will include
schedules and graphics necessary to properly support the explanation. Joshi
(20030 stated that the job demands reporting, where the accountability of the
fraud is established and the report is considered as evidence in the court of
law or in the administrative proceedings.
2.6 Characteristics of a
Forensic Accountant in Fraud Defection and Prevention
For a forensic accountant to
perform his duty fully well, he must posses some qualities or features, which
includes:-
(i)
Curiosity – A strong desire to know or learn something
(ii)
Persistence – He must have the ability of doing his work not minding
the difficulties he might encounter during his work. Refusing to give up in any
negative situation he might meet.
(iii)
Creativity – He must be a person who knows how to apply his skills and
imaginative mind to work. Creating something out of nothing.
(iv)
Discretion –A forensic accountant must be careful in all his deeds and
able to pass a right judgment after his investigation. He does the right thing
and say the truth.
(v)
Confidence – A forensic accountant must be one whom people have
confidence and trust on. They must believed and relied on in all ramification
and should show that in the discharge of their (forensic accountant) duties.
(vi)
Analytical –He should be able to study or examine things in details.
And also give his judgment in a detailed form. That is, he must be detailed
oriented as well.
(vii)
Ethical –He must be somebody who has moral principals that is morally
correct and has rules that guides his actions.
(viii) Initiative- He must have the
power of understanding situation and people’s feelings immediately without the
need for concision reasoning or study.
(ix)
Evaluative –He must have the capability of forming an idea to assess
something or value of that something
(x)
Inquisitive –A forensic accountant must be someone who ask questions a
lot about what he is investigating on. Other qualities includes
(xi)
Sound professional judgment
(xii)
Insightful
(xiii) Function well under pressure
(xiv) Be skeptic
(xv)
Be responsive
(xvi) Generates new ideas and
scenarios
(xvii) Be a team player
(xviii) Makes people feel at ease
(xix) Has the ability of
organizing
Finally, a forensic
accountant must be open to consider all alternatives, scrutinize the fine
details and at the same time see the big picture. In addition, a forensic
account must be able to listen effectively and communicate clearly and
concisely any type of fraud he detects or can be prevented.
2.7 Who Retains a Forensic Accountant
The services of a forensic accountant is need
by many, both the private sectors and public. Below are groups that retains a
forensic accountant for a proper auditing, investigating, detecting and
prevention of fraud.
(i)
Lawyers
(ii)
Police forces
(iii)
Insurance companies
(iv)
Government regulatory bodies and agencies
(v)
Banks
(vi)
Courts
(vii)
Business communities etc.
2.8 How Can a Forensic
Accountant be of Assistance
A
forensic accountant can be of assistance to the people or group that retains
him in two major ways which includes:-
(i) Litigation
support –By this support we mean assisting to obtain documentation necessary to
support or refute a claim.
v Review of relevant
documentation to form an initial assessment of case and identify area of loss.
v Assistance with examination
for discovery including the formulation of questions to be asked regarding the
financial evidence.
v Attendance at the
examination for discovery to review the testimony, assist with understanding
the financial issues and to formulate additional questions to be asked.
v Review of the opposing
experts damages report and reporting on both the strengths and weaknesses of
the positions taken.
v Assistance in the areas of
settlement discussion and negotiations.
v Attendance at trial to near
the testimony of the opposing experts and to provide assistance with cross
examination.
(ii) Investigative
support:-
v Reviewing of the factual
situation and provision of suggestions regarding possible courses of action.
v Assisting in protecting and
recovering of assets
v Co-ordination of other
experts like
(a)
Private investigations
(b)
Public investigators
(c)
Forensic document examiners
(d)
Consulting engineers
v Assisting in the recovery of
assets by way of civil action or criminal prosecution.
2.9 Scopes of Forensic Accounting
Forensic
accounting like other professions covers so many afferent areas of disciplines
which includes as follows
(i)
Public sector accounting
(ii)
Financial accounting
(iii)
Investigative accounting
(iv)
Auditing
(v)
Legal matters
(vi)
Quantitative methods
(vii)
Medicine
(viii) Engineering
(ix)
Banks
(x)
Telecommunication
(xi)
Criminal matters
(xii)
Financial crime offences
(xiii) Insurance
(xiv) Corporate bodies
(xv)
Research
2.10 Fundamental Forensic Knowledge
A
forensic accountant must be knowledgeable in so many area like
(i) Professional
responsibilities and practice management
(ii) Laws,
courts and dispute resolution
(iii) Planning
and preparation
(iv) Discovery
(v) Reporting,
experts and testimony
(vi) Information gathering and preservation of documents, electronic
data, interrogations, interviews.
2.11 Relevance of a Forensic
Accountant in Detecting and Preventing Fraud
Adefila, Kasum and Olaniyi (2006), assertion
is that fraud and corrupt practices is globally endemic. However, the rate at
which public and private office holders in developing economics, Nigeria
inclusive perpetrate financial malpractice is dangerously alarming. These
people embezzles public fund not minding whatever consequences their activities
may have on the citizens of the country and users of the financial statement
report. On the other hand the auditors that are suppose to defect and prevent fraud
could not do that fully because they (auditors) believe that fraud detection
and prevention is their secondary assignment thereby not paying full attention
to it. This attitude of there’s has created a very big expectation gap which is
a gap between the auditors actual standard of performance and the various
public expectations of auditors performance. Hence a call for a robust and
bigger techniques to detect and prevent fraud arised, they called them forensic
accountant.
Forensic
accountants are somehow connected to auditors but they go beyond the practice
of auditors, doing things auditors could not do. Conventional audit techniques
cannot be guaranteed to detect fraud all the time because of the limitations
inherent in the modern audit process, but the introduction of forensic
accountants has bridged the audit expectation gap. The forensic accountant is a
blood hound of book keeping as opposed to a watch dog associated with an
auditor-they sniff out fraud and criminal transactions in our public and private
sectors financial records. They hound for the conclusive evidences. External
auditors find out the deliberate misstatements only but the forensic
accountants take a more proactive, skeptical approach to examining the books of
accounting. They make no assumptions of management integrity, show less
concerns for arithmetical accuracy and have nothing to do with assurance
standards but are kin in exposing fraud (Anwar, 2008) therefore, the relevance
of a forensic accountant to fraud detection and prevention in the public
sectors and private sectors is that they help identify and investigates
suspicious or fraudulent claims and provides expert witness services. A
forensic accountant also handles financial and forensic accounting issues. Its
important again is the conducts of fraud investigation and analysis. Also, a
forensic accountant identifies existing and emerging fraud risk. The relevance
of a forensic accountant to fraud detection and prevention in the public
sectors and private sectors in Nigeria
cannot be underemphasized.
2.12 Merits of Forensic Accounting
Accounting, as such, is a wide subject which
includes many areas of specialization. One of them is forensic accounting.
Accountants specializing in this field use accounting skills to investigate and
analyze financial information. They generate reports, stating their findings,
which are acceptable in the court of law for legal use this field requires
thorough knowledge about business, law and finance, along with accounting
skills. With this kind of knowledge, financial accountants are able to identify
fraud or embezzlement in a business organization. Forensic accounting is also
useful to assess losses, in cases where financial compensation is asked for. In
cases of divorce, forensic accounting comes into the picture for establishing
adequate compensation required for spouse and child support. The field of
forensic accounting is useful in many cases involving finance. However, it has
its own set of pros and cons.
Below are the
advantages of forensic accounting:-
v
Fraud identification and prevention – fraud is quite common in big
organizations where the number of daily financial transactions is huge. In such
an environment, an employee can easily undertake fraudulent activities without
being caught. Forensic accounting helps in analyzing whether the company’s
accounting polices are followed or not, and whether all the transactions are
clearly stated in the books of accounts. Any deviation observed in the books of
accounts can help in identifying fraud, and necessary measures can be taken to
prevent it in the future.
v
Making sound investment decision- As forensic accounting helps in
analyzing the financial standing and weaknesses of a business, it provides a
path for investors to make thoughtful investment decisions. A company dealing
with fraud is definitely not a good option for investment. Therefore, the
reports of forensic accountants act as a guide for potential investors of a
company. Many organizations also apply for loans from various financial
institutions. By performing a forensic accounting analysis, such institutions
can come to a decision on whether they would like to find a company or not.
v
Formulation of economic policies- Various cases of fraud that become
evident after forensic analysis act as a reference for the government to
formulate improved economic polices that would be able to curb such fraudulent
activities in the future. By doing so, the government can strengthen the
economy and prevent such illegal activities in the country.
v
Rewarding career opportunity- As a career, forensic accounting is
extremely rewarding, as it not only involves regular accounting activities, but
also involves identification, analysis and reporting of the findings during an
audit. The acceptance of reports generated by a forensic accountant by the
court of law, gives them an upper hand as compared to other accountants.
v
Forensic accounting provides expert witness in a competent court of
jurisdiction on matters of high technical relevance.
v
Forensic accounting is also helpful in personal injury claims and motor
vehicle accidents in quantifying the economic loses resulting from a motor
vehicle accidents and personal injury sustained in the factories.
v
Forensic accounting is useful in carrying out inquiry in such a manner
that he outcome will have application in court of law.
v
It serves as basis in dispute resolution in legal matters
v
It provides accounting and auditing analysis
v
Forensic accounting is used in quantifying economic damages and
calculation of economic loss resulting from breach of contract it is sued to
provide documentary evidence and support in financial crime litigation.
v
It is used to reduce instance of business fraud and abuses.
2.13 Demerits of Forensic
Accounting
v
Confidentially issue – since the scrutiny of a company’s financial
records is done by an external forensic accountant, the chances of leakage of
confidential matter is always there. It is true that their code of ethics
clearly mentions that forensic accountants and other members involved in the
scrutiny must not engage in disclosing confidential data to outsiders, but the
possibility of disclosure cannot be nullified.
v
It involves a wide range of investigations since the investigator goes
beyond the financial misappropriation only but how it happened and people
behind it.
v
It requires specialized knowledge in accounting and auditing the
services cannot be issued by any body who does who does not possess the
qualities of an accountant or auditor.
v
It is only limited to criminal matters and financial crime offences.
v
It involves too many approaches in resolving disputes in the court of
law.
v
Forensic accounting requires special skills such as investigation
accounting and auditing skills.
v
It is not economical to conduct forensic accounting since it involves
wide range investigation. It is cost intensive. To mention but a few above.
2.14 Difference Between a
Forensic Accountant and an Auditor
To most people the
term forensic accountant and an auditor are more likely used interchangeable or
viewed as one without knowing that one is an extension of another. Forensic
accountant is extension of an auditor, reason being that an auditor only
verifies whether the financial statements show a true and fair view of the
business while a forensic accountant investigates the truth of some records, or
how they got the way they are –forensic accountant are mainly known for
detecting and preventing fraud.
Furthermore, below are the detailed differences between a
forensic accountant and an auditor
v Timing –forensic accounting
are only conducted with sufficient predication while an auditor is conducted on
a regular basis.
v Scope –forensic accounting
are conducted to resolve specific allegations while audits are general
examination of financial data.
v Objective –forensic
accounting is to determine whether fraud has/is occurring and to determine who
is responsible while audits are conducted to express an opinion of the
financial data.
v Relationship –forensic
accounting is adversarial as the forensic accountant efforts are to affix blame
while audit by nature is non adversarial.
v Methodology-forensic
accounting uses techniques to collect evidence, review outside data (ie public
records) and interviewing while audits examine financial data.
v Presumption –forensic accounting
approach the resolution of a fraud to establish sufficient proof to support or
refute an allegation of fraud while auditors are required to approach. The
audit with professional skepticism.
v Forensic accountants need to
possess skills and expertise in two fields namely private investigation and
accounting but no such sill is needed in auditing.
v Forensic accounting is
expected to recognize financial fraud and scrutinize on that because of their
quality of investigative intuition while an auditor only reviews transactions
which needs no special intuition before it is done.
v Forensic accounting covers
money laundering, property damage, business purchase, tax avoidance, loss
profits due to misuse and illegal activities and divorce asset evaluation while
auditors centres on error detection, rectifying those erros and preventing such
errors in future.
v Forensic accounting produces
an opinion used for legal purposes while an auditor produces audit opinion or a
review opinion not used in court of law.
v Forensic accounting is the
process of reconstruction. Often times it is necessary to create or recreate a
set of records from a variety of data, not necessarily form the routine
documents. Forensic accountants may need to employ many detection techniques in
order to rebuild the history using correlative analysis because his far more
skilled thand have a strong background in transactional accounting as well.
Their goal is to determine what happened, where the money went, how much money
was involved or a myriad of other unknowns while auditing is the verification
(attestation) that the transactions are valid and that the underlying
documentation and other sources of verification can support the reported
amounts. It is used to provide credibility to financial activities. Their goal
is to verify whether the financial statements show a true and fair view of the
business. There is no special techniques needed in auditing since their skills
is not up to the forensic accountants skills
v Forensic accountants reports
to a corporation’s general counsel while the auditor reports to a corporation’s
auditor committee.
v Forensic accountants has
background in accounting, criminology and law while an auditor generally have
backgrounds in accounting only.
v Forensic accountants who is
hired to review financial statements if there are concerns about management
fraud, may also targets a smaller fraud that is not material to a company’s
financial statement while an auditor are tasked with ensuring that financial
statements are free from material misstatement. To the extent they are
interested in any individual transaction, they want to know whether that
transactions and its treatment by a company conforms with generally accepted
accounting principles and how that transaction relates to the company’s
financial statements.
In conclusion, forensic accounting could be defined as
the application of auditing and accounting skills to situation that have legal
consequences, with evidence usable in a court of law. It is using accounting
skills to investigate and analyze financial information for use in legal
proceedings example fraud, embezzlement, or other financial crimes while
auditing is what is done by auditors, which includes checking the work of the
accounting department, but usually involves much more than the accounting work,
it also includes other activities of an enterprise, whose actions are reflected
in the accounting records.
2.15 Reasons for Forensic
Accountants Ineffectiveness
There are problems forensic
accountants encounters in the discharge of their duties as we all know that
everything that succeeds on earth must have challenges. Below are some of the
challenges forensic accountants encounter that makes them ineffective atimes.
i.
Lack of inability to identify the issues.
ii.
Lack of investigative intuitiveness
iii.
Inability to simplify the information
iv.
Ineffective oral communication
v.
Inability to understand the goals of a case in effective written communication
vi.
Inability to synthesize
vii.
Inflexible/close minded.
REFERENCES
Abduiqaderie Qarni, A.
(2004). “Audit Expectation gap in Saudi Arabia Perceptions
of Auditors, Preparers of Financial Statements and users Dundee, UK.
Anwar, N. (2008) “Forensic
Accounting: A dynamic tool for combating Corruption’.
The Financial Express , 1-1. Ohaka.
Bologna, G. J. & Lindquist, R.
J. (1987), Fraud Auditing and Forensic Accounting
New Tools and Techniques, New Jersey:
Wiley Publishers, (chpt.3).
Buckhoff, T., &
Schrader, R. (2000), ”The Teaching of Forensic Accounting
in the United States”.
Journal of Forensic Accounting. i(i),
135- 145.
Carnes, K. C., &
Gierlasinski, N. J. (2001), “Forensic Accounting Skills: will supply finally
catch up with demand”. Managerial Auditing Journal,
16(6), 378-382. http://dx.doi.org/10.1108/02686900110395514.
Chariri, A. (2007), “The
Relevance of Forensic Accounting in Detecting Financial
Frauds”. Journal Organisasi dan manajem, 3(2), 81-88.
Coenan, T. L. (2005),
“Forensic Accounting, A new twist on bear Counting”
(online) Tracey@sequence-inc.com.
Crumbley, D. L. (2001) “Forensic Accounting: Older than you
think”, JFA 2(2) 181.
Crumbley, D. L. (2003),
“What is Forensic Accounting’. (online): www.edwardspub.com.
Crumbley D. L. (2006),
“Forensic Accountants Appearing in the Literature” (online):
www.forensicaccounting.com.
Emma, I.
O. & Okaro, S. C. (2011), “Forensic Accounting and Auditing Expectation Gap- the Perception of
Accounting Academics.” (online):
www.ssrn..com.
Joshi, M. S. (2003),
“Definition of Forensic Accounting” (online): Available:
www.forensicaccounting.com.
Kasum, A. S. (2009), “The
Relevance of Forensic Accounting to Financial Crimes in Private and Public
Sectors of third world Economies: A study fraud Ethics and social
Responsibility. Illorin, Nigeria pp.11-13.
Kleyman, T. (2006), “A
course in Forensic Accounting” (Unpublished Honours College Thesis 40)
(online):www.digitalcommons.pece.edu /honorscollege-theses/40.
Koh, H. C. & Woo, E.-S.
(1998), “The Expectation Gap in Auditing. Managerial
Auditing Journal, 13(3), 147-154.
Ojo, M. (2006), Eliminating
the Audit Expectation Gap: myth or Reality? Muruch
Personal Repec Archive.
The Daily Sun Newspaper.
(online) available: www. Sunnewsonline.com (December
23, 2010).
Zysman, A. (2004), “Forensic
Accounting Demystified”, World Investigators
Network Standard Practice for Investigative and Forensic Accounting Engagements, Canadian Institute of Chartered Accountant, November, 2006.
(online) Available: www.docudesh.com.
CHAPTER THREE
RESEARCH
METHODOLOGY
3.1 Research Design
The study is mainly designed to find out the
relevance of forensic accounting to fraud detection and prevention in private
and public sectors in Nigeria
using Emenite Ltd, Emene Enugu and Nigerian bottling company Enugu.
The
structural framework of this study is based on the survey research design. In
designing the study, the research tried to reduce sources of invalidity by
avoiding the use of volunteer as treatment group, which implies that careful
selection was made by the researcher from the population as to whom the subject
matter under study by the researcher concerns.
3.2 Sources of Data
In
the course of this research, primary and secondary sources of data where used
for information collection n the achievement of the researchers objective of
the study.
3.3 Population of Study
A
population is made up of all conceivable elements relating to a particular
phenomenon of interest to the research study (Asika 2000). In this study, the
researcher used the random sampling method to select two (2) sectors in Enugu where he resides out of numerous private and public
sectors in Enugu.
The sectors selected comprises of one private sector and one public sector. The
sectors selected are
i. Private
- Emenite limited, Emene Enugu
State
ii. Public- Nigerian Bottling company Plc, Enugu State
A total of Ninety (90) copies of questionnaire where
distributed to Emenite Ltd and Nigerian company evenly, containing the same
information of which seventy-eight (78) was returned, out of which sixty-three
(63) were correctly filled while fifteen (15) were not correctly filled it then
suggests eighty- one percent (81%) success rate and nineteen percent (19%)
failure rate as calculated below
63 x 100 =
81% where 63 = number correctly filled
78 1 78 = total
number of questionnaire returned
100
= constant percentage
3.4 Sample Size Determination
Within the study area of private sector a
public sector were selected of which only ninety (90) respondents were selected
by random sampling since it is humanly impossible to interview every staff of
all the public and private sectors in Nigeria. Therefore, since the population
is known, this formular was used
n = N
1+
N(e)2
Where:
n = Sample size
N = Population
e = error margin (0.05)2
3.5 Method of Data Collection
For the purpose of obtaining necessary
information about the relevance of forensic accounting to fraud detection and
prevention in private and pubic sectors in Nigeria using the researcher administered
the constructed questionnaires in a structured and unstructured questions as
well as conducting personal interview with different categories of people which
are primary ways of gathering the necessary information needed for this
research study.
Also
secondary data source was used which includes information needed about the
research topic understudy were taken from already published materials such as
text books, journals, magazines, newspapers, libraries and unpublished
materials from internet and other peoples dissertation and also through desk
research.
3.6 Validation of The Instrument
The
data collection instruments in the course of this study were carefully chosen
and applied in such a way as to allow for validity. The questionnaire and
interview instrument used in this study indicated that there are some worth
characteristics validity in proving to be dependable as to allow for precision,
accuracy and error free.
3.7 Reliability of the Instrument
The questionnaire and interview turned
consistent result in collection of data and indicated their characteristics
reliability while the hypotheses were tested the chosen instrument equally
indicated their practicability in terms of economic convenience and
interpretability. The questionnaire consists of a good number of questions
drawn in a way to elicit the required information the questionnaire has.
3.8 Method of Data Analysis
The research used the statistical techniques
such as percentage table and Z test to analyze the data collected. From the
respondents that supports the topic and those that do not support the topic and
those that have no idea about the topic understudy. The hypotheses where also
analyzed with a percentage table to show the true view of people concerning the
topic understudy. This is to ease understanding and interpretation of the
result and then draw reasonable conclusion from them.
The
formular used is as follow
Z = P
–Po
P0C1-P0)
n
Where
P = % response positive to answers in
the questionnaire
P0 = positive side of the normal curve
usually 0.5
n = population used for the study and
for critical Z
Z ∂ = which ranged between 1
– 10%
Z
CHAPTER FOUR
DATA
PRESENTATION, INTERPRETATION AND ANALYSIS
4.1 Overview
In
this chapter, the information collected or gathered through questionnaire, oral
interview, journals, published and unpublished materials, text books and
newspapers were analyzed. Analysis is the breaking down of the ordering of the
quantitative information gathered through research. A total of ninety (90)
questionnaire were distributed and seventy-eight (78) was returned. Out of the
seventy-eight (78) that was returned, sixty-three (63) were correctly filled
while fifteen (15) were not correctly filled which showed eighty-one (81%)
percent success rate and nineteen percent (19%) failure rate. But for the
purpose of clearity and understanding we used the number that was correctly
filled to analyze to what extend do forensic accounting relevant to fraud
detection and prevention in the selected private and public sector out of the
numerous in Enugu
State.
4.2 Data Analysis
1. Is forensic
system new in Nigeria
Table – 4.01
Responses
|
Emenite Ltd
|
Nigerian bottling coy
|
Total
|
Percentage
|
Yes
|
10
|
2
|
12
|
19
|
No
|
25
|
26
|
51
|
81
|
No idea
|
-
|
-
|
-
|
-
|
Total
|
35
|
28
|
63
|
100
|
Table 4.01 revealed that nineteen (19%) percent
believe that forensic accounting is new in Nigeria while eight-one percent
(81%) says that it is not new in Nigeria.
2. Is
there need for the services of a forensic accountant to be employed in your
organization.
Table – 4.02
Responses
|
Emenite Ltd
|
Nigerian bottling coy
|
Total
|
Percentage
|
Yes
|
32
|
27
|
59
|
94
|
No
|
-
|
-
|
-
|
-
|
No idea
|
3
|
1
|
4
|
6
|
Total
|
35
|
28
|
63
|
100
|
Table 4.02 shows
that ninety-four percent (94%) of the respondents admits that the services of a
forensic accountant is needed in there organization while six percent (6%) said
that they do not know whether the services of forensic accountant is needed in
there organization.
3. Has
forensic accountants helped in detecting and preventing fraud?
Responses
|
Emenite Ltd
|
Nigerian bottling coy
|
Total
|
Percentage
|
Yes
|
32
|
27
|
59
|
94
|
No
|
-
|
-
|
-
|
-
|
No idea
|
3
|
1
|
4
|
6
|
Total
|
35
|
28
|
63
|
100
|
Table 4.03 reveals that total of ninety-four percent
(94%) of respondents believed that forensic accountant has contributed much in
detecting and preventing fraud because of the way they carryout there duty
while total of six percent (6%) of the people have no idea as to whether
forensic accountant has made impact in detecting and preventing fraud.
4. Do
you think that forensic accountants are analytically minded and inquisitive as
people said.
Responses
|
Emenite Ltd
|
Nigerian bottling coy
|
Total
|
Percentage
|
Yes
|
21
|
18
|
39
|
62
|
No
|
6
|
8
|
14
|
22
|
No idea
|
8
|
2
|
10
|
16
|
Total
|
35
|
28
|
63
|
100
|
Table 4.04 shows that a
total of sixty-two percent (62%) respondents believe that forensic accountants
are analytically minded and inquisitive 22% of the respondents said that they
are not analytically minded and inquisitive because of the way auditors
carryout there own job but sixteen percent (16%) of the respondents said that
they do not have any idea as to whether forensic accountants are analytically
minded and inquisitive.
5. Do
you believe that the money paid to a forensic accountant is equivalent to the
services rendered by him
Table – 4.05
Responses
|
Emenite Ltd
|
Nigerian bottling coy
|
Total
|
Percentage
|
Yes
|
21
|
18
|
39
|
62
|
No
|
5
|
7
|
12
|
19
|
No idea
|
9
|
3
|
12
|
19
|
Total
|
35
|
28
|
63
|
100
|
Table.4.05 implies that a
total of sixty-two percent (62%) of the respondents strongly believe that what
is being paid to forensic accountant is commensurate with the services they
render while nineteen percent 919%) of the respondents said no to that and
nineteen percent (19%) of the
respondents also said they have no idea of it.
6. Is
forensic accountant is different from the traditional auditor
Table -4.06
Responses
|
Emenite Ltd
|
Nigerian bottling coy
|
Total
|
Percentage
|
Yes
|
32
|
27
|
59
|
94
|
No
|
-
|
-
|
-
|
-
|
No idea
|
3
|
1
|
4
|
6
|
Total
|
35
|
28
|
63
|
100
|
Table-4.06 revealed that a total of fifty-nine (59)
respondents representing ninety-four percent (94%) are of the opinion that
forensic accountants are far better than the auditors in carrying out their
duties while four (4) respondents which represents six percent 6% have no ideas
as to whether forensic accountants are better than the traditional auditors
they know.
7. Is
there need for a forensic accountant to possess a sense of urgency and
commitment?
Table 4.07
Responses
|
Emenite Ltd
|
Nigerian bottling coy
|
Total
|
Percentage
|
Yes
|
33
|
27
|
60
|
95
|
No
|
-
|
-
|
-
|
-
|
No idea
|
2
|
1
|
3
|
5
|
Total
|
35
|
28
|
63
|
100
|
In table 4.07 above, sixty (60) respondents
ninety-five percent (59%) agrees that there is every need for a forensic
accountant to possess a sense of urgency and commitment to their duties knowing
fully well how tasking there job is while three (3) respondents representing
five (5%) percent said they do no have idea of it since they are not familiar
with what forensic accountants do.
8. Do
you believe that the use of a forensic accountant in an audit investigation
will increase the cost of the audit?
Table 4.08
Responses
|
Emenite Ltd
|
Nigerian bottling coy
|
Total
|
Percentage
|
Yes
|
4
|
7
|
11
|
18
|
No
|
30
|
20
|
50
|
79
|
No idea
|
1
|
1
|
2
|
3
|
Total
|
35
|
28
|
63
|
100
|
From table 4.08, eleven (11) respondent representing
eighteen percent (18%) believes that the
use of a forensic accountant in an audit investigation will increase the cost of
the audit while fifty (50) respondents representing seventy-nine percent (79%)
of the respondents strongly believe that n additional cost will be incurred by
the organization when forensic accountants will be carrying out their duties
and also believe that whatever money paid to them worths there services and two
respondents (2) representing three (3%) percent said they have no idea of the
question that was asked.
9. Does
the benefits of using forensic accountants, however, out weight their cost
Table 4.09
Responses
|
Emenite Ltd
|
Nigerian bottling coy
|
Total
|
Percentage
|
Yes
|
30
|
20
|
50
|
79
|
No
|
3
|
6
|
9
|
14
|
No idea
|
2
|
2
|
4
|
7
|
Total
|
35
|
28
|
63
|
100
|
In reference to the table
above, it means that a total of 50 respondents representing seventy-nine
percent (79%) are of the opinion that the benefits of using forensic
accountants outweighs their cost while nine (9) respondents representing
fourteen percent (14%) said that the benefits of using forensic accountants
does not outweigh their cost and four (4) respondents said they have no idea of
the relationships between the benefit and cost involved in using forensic
accountant.
10. Do
you believe that forensic accountants in Nigeria are up to a hard job
because of the high rate of dishonesty in the country.
Table 4.10
Responses
|
Emenite Ltd
|
Nigerian bottling coy
|
Total
|
Percentage
|
Yes
|
33
|
27
|
60
|
95
|
No
|
2
|
1
|
3
|
5
|
No idea
|
-
|
-
|
-
|
-
|
Total
|
35
|
28
|
63
|
100
|
From table 4:10, sixty (60)
respondents representing ninety-five percent (95%) are of the opinion that
forensic accountants in Nigeria will find it more difficult to do their job
because of the high level of dishonesty in the country while three (3)
respondents representing five percent (5%) believe that the high level of
dishonesty in Nigeria will not make the job too hard for forensic accountant to
do.
11. Do
you believe that a forensic accountant who is not affected by the limitation of
the audit process is in a better position to discover fraud and thus bridge the
expectation gap between the auditor and investors.
Table 4.11
Responses
|
Emenite Ltd
|
Nigerian bottling coy
|
Total
|
Percentage
|
Yes
|
32
|
25
|
57
|
90
|
No
|
3
|
3
|
6
|
10
|
No idea
|
-
|
-
|
-
|
-
|
Total
|
35
|
28
|
63
|
100
|
In table 4.11 above fifty-seven (57) respondents
representing ninety percent (90%) believes that a forensic accountant who is
not affected by the limitation of the audit process is in a better position to
discover fraud and thus bridge the expectation gap between the auditor and
investors while six (6) respondents representing ten percent (10%) believes that
a forensic accountant who is affected discover fraud and thus bridge the
expectation gap between the auditor and
investors.
12. Do
you believe that the knowledge forensic accounting by accountants, auditors and
senior staff in your organization will make some positive impact on the nations
fight against fraud and embezzlement (A) Yes (B) no (C) no idea
Table 4.12
Responses
|
Emenite Ltd
|
Nigerian bottling coy
|
Total
|
Percentage
|
Yes
|
28
|
22
|
50
|
79
|
No
|
6
|
4
|
10
|
16
|
No idea
|
1
|
2
|
3
|
5
|
Total
|
35
|
28
|
63
|
100
|
Table 4.12 reveals that
fifty (50) respondents representing seventy-nine percent (79%) believes that
the knowledge of forensic accounting by their accountants, auditors and senior
staff.
Will make some positive
impact on the nations fight against fraud and embezzlement while ten (10)
respondents representing sixteen percent (16%) of the population said no to the
question and three (3) respondents representing five percent 5% of the
population have no idea of the questions.
13. How
did you heard about forensic accounting
Table 4.13
Sources
|
Emenite Ltd
|
Nigerian bottling coy
|
Total
|
Percentage
|
Internet
|
15
|
12
|
27
|
43
|
Radio/TV
|
2
|
3
|
5
|
8
|
Print media
|
8
|
6
|
14
|
22
|
Text books/ journal
|
5
|
5
|
10
|
16
|
Have not heard
|
5
|
2
|
7
|
11
|
Total
|
35
|
28
|
63
|
100
|
From table 4.13 twenty-seven
(27) respondents representing forty-three percent (43%) said the heard about
forensic accounting from internet while five (5) respondent that is eight
percent 8% heard about it from radio and television, fourteen (14) respondents
which is twenty-two (22%) percent read about forensic accounting print media,
ten (10) respondents which is sixteen percent (16%) read about it from text
books and journals. Seven (7) respondents which represents’ eleven percent
(11%) of the population has no idea of forensic accounting and have not heard
about it
4.3 Test of Hypothesis and Analysis
H0- There
is no relationship between forensic accounting and fraud detection and prevention in Emenite
Limited Enugu and Nigerian bottling
company Enugu.
H1- There
is a relationship between forensic accounting and fraud detection and prevention in Emenite Limited Enugu and
Nigerian bottling company Enugu.
Responses
|
Emenite Ltd
|
Nigerian bottling coy
|
Total
|
Percentage
|
Yes
|
6
|
4
|
10
|
16
|
No
|
28
|
22
|
50
|
79
|
No idea
|
1
|
2
|
3
|
5
|
Total
|
35
|
28
|
63
|
100
|
Calculated Z:-
Z = P – P0
P0
(1 – P0)
n
Where P = 79%, P0 = 0.5, n = 63, 1 = constant
Z =
0.79 – 0.5 0.29 0.29
0.5(1 -0.5) = 0.25 0.003968253968
63 63
0.29 =
Z =
0.062994078 4.6036
Critical Z :-
Z ∂ =
let ∂
be 5%
2
:. ∂ = 5 =
0.05
100
Z ∂ =
0.05 = 0.025
2 2
P0 = 0.5 – 0.025 = 0.4750
From table, 0.4750 is located at 1.9 by 0.06
1.9 + 0.06 = 1.96
Critical Z = 1.96
Decision Rule:
Since the calculated Z of
4.6036 is greater than the critical Z of 1.96, it then suggests that null
hypothesis is accepted while it was to be rejected – which states that, there
is no relationship between forensic accounting and fraud detection and
prevention in Emenite Limited Enugu and Nigerian bottling company Enugu.
Hypothesis two
H0- There is no relationship between forensic
accountant and analytical mind, and inquisitiveness in fraud detection and
prevention in Emenite Limited Enugu and Nigerian bottling company Enugu.
H1- There is a relationship between forensic
accountant and analytical mind, and inquisitiveness in fraud detection and
prevention in Emenite Limited Enugu and Nigerian bottling company Enugu.
Table 4.15
Responses
|
Emenite Ltd
|
Nigerian bottling coy
|
Total
|
Percentage
|
Yes
|
6
|
3
|
9
|
14
|
No
|
27
|
20
|
47
|
75
|
No idea
|
2
|
20
|
7
|
11
|
Total
|
35
|
28
|
63
|
100
|
Calculated Z
Z = P – P0
P0(1-P0
n
Where P = 75%, P0 0.5, n
= 63, 1 = constant
Z =
0.75 – 0.5 0.25 0.25
0.5(1 -0.5) = 0.25 0.003968253968
63 63
0.25 =
Z =
0.062994078 3.9686
Let ∂ = 10% = 0.1
Z ∂ =
0.1 = 0.05
2 2
P0 = 0.5 –
0.05 = 0.4500
From table, 0.4500 is located from table to be 1.6 +
05 = 2.1
Decision Rule
Since
the calculated Z which is 3.9686 is greater than critical Z that is 2.1, it
then suggests that null hypothesis was accepted while it was suppose to be
rejected. The null hypothesis says that there is no relationship between
forensic accountant and analytical mind and inquisitiveness in fraud detection
and prevention in Emenite Limited Enugu and Nigerian bottling company Enugu.
Hypothesis three
H0- There is no relationship between forensic
accountant and their services in fraud detection and prevention in Emenite Ltd
Enugu and Nigerian bottling company.
H1- There is relationship between forensic
accountant and their services in fraud detection and prevention in Emenite Ltd
Enugu and Nigerian bottling company.
Table 4.16
Responses
|
Emenite Ltd
|
Nigerian bottling coy
|
Total
|
Percentage
|
Yes
|
4
|
3
|
7
|
11
|
No
|
31
|
25
|
56
|
89
|
No idea
|
-
|
-
|
--
|
-
|
Total
|
35
|
28
|
63
|
100
|
Calculated Z
Using Z = P – P0
P0(1 – P0)
n
Where P = 89%, P0 0.5, n =
63, 1 constant
Z = 0.89 – 0.5 = 0.39 0.39
0.5(1 – 0.5) 0.25 0.003968258968
63 63
Z = 0.062994078 = 6.1911
Critical Z
Using Z
Z ∂ let
∂ = 5% = 0.05
2
Z ∂ = 0.05 = 0.025
2 2
P0 = 0.5 –
0.025 = 0.4750
From the table; 0.4750 is located at 1.9 by 0.06
1.9 + 0.06 = 1.96
Decision Rule:
Since the calculated Z above
is greater than the critical Z we therefore conclude that the null hypothesis
was accepted while it was to be rejected- there is no relationship between
forensic accountant and their services in fraud detection and prevention in
Emenite Limited Enugu and Nigerian bottling Company Enugu.
Hypothesis four
H0- There is no relationship between forensic
accountant and the need for their services in Emenite Limited Emene Enugu and
Nigerian bottling company Enugu.
H1- There is relationship between forensic
accountant and the need for their services in Emenite Limited Emene Enugu and
Nigerian bottling company Enugu.
Table 4.17
Responses
|
Emenite Ltd
|
Nigerian bottling coy
|
Total
|
Percentage
|
Yes
|
15
|
9
|
24
|
38
|
No
|
17
|
18
|
35
|
56
|
No idea
|
3
|
1
|
4
|
6
|
Total
|
35
|
28
|
63
|
100
|
Calculated Z
Using Z = P – P0
P0(1 – P0)
n
Where P = 56%, P0 0.5, n =
63, 1 constant
Z = 0.56 – 0.5 = 0.06 0.06
0.5(1 –
0.5) 0.25 0.003968258968
63 63
Z = 0.06 = 0.9525
0.062994078
Critical Z
Using Z
Z ∂ let ∂ =
5% = 0.05
2
Z ∂ = 0.05 = 0.025
2 2
P0 = 0.5 –
0.025 = 0.4750
From the table; 0.4750 is located at 1.9 by 0.06
1.9 + 0.06 = 1.96
Decision Rule:
Since
the calculated, Z is less than the critical Z it then suggests that there is a
relationship between forensic accountant and the need for their services in
Emenite Limited Emene Enugu and Nigeria bottling company Enugu.
Hypothesis five
H0- There is no relationship between forensic
accounting and the negative view about the cost benefit basis, the introduction
of some forensic accounting techniques in an audit which is not capable of
stemming the tide of financial fraud and thus not cover the audit expectation
gap in the organization.
H1- There is relationship between forensic
accounting and the negative view about the cost benefit basis, the introduction
of some forensic accounting techniques in an audit which is not capable of
stemming the tide of financial fraud and thus not cover the audit expectation
gap in the organization.
Table 4.18
Table 4.17
Responses
|
Emenite Ltd
|
Nigerian bottling coy
|
Total
|
Percentage
|
Yes
|
27
|
24
|
51
|
81
|
No
|
7
|
4
|
11
|
17
|
No idea
|
1
|
-
|
1
|
2
|
Total
|
35
|
28
|
63
|
100
|
Calculated Z
Using Z = P – P0
P0(1 – P0)
63
Where P = 81%, P0 0.5, n = 63, 1 constant
Z = 0.81 – 0.5 = 0.31 0.31
0.5(1 –
0.5) 0.25 0.003968258968
63 63
Z = 0.31
0.062994078 = 4.9211
Critical Z
Using Z
Z ∂ let ∂ =
5% = 0.05
2
Z ∂ = 0.05 = 0.025
2 2
P0 = 0.5 –
0.025 = 0.4750
From the table; 0.4750 is located at 1.9 by 0.06
1.9 + 0.06 = 1.96
Decision Rule:
From
the calculation above, the calculated Z is greater than the critical Z and it
then concludes that there is no relationship between forensic accounting and
the negative view about the cost benefit basis, the introduction not capable of
stemming the tide of financial fraud and thus not cover the audit expectation
gap in the organization.
CHAPTER FIVE
SUMMARY OF
FINDINGS
5.1 Summary of Findings
Through
my review, I was able to establish the extent of fraud and corruption in
developing economics and was also able to establish the impact of corrupt
practices on the living conditions of the citizens of these country using some
selected population as a representative to all the citizens of the country. The
need for the services of forensic accountant was also reported and its need in
the third world economics.
In
addition to the above, some empirical studies were done, where questionnaires
were administered to capture the perception of individuals in a selected
company’s representing numerous companies on the subject matter. The result of
the survey was presented in a tabular form and percentage computed so that
initial assessment and analysis could be done. They are presented as appendix
to the work.
For
the operational question 1 (table 4.01) in chapter 4, it gathers the opinion
from sampled people that 81% believes that forensic systems is not new in
Nigeria while 19% says it is new in Nigeria. In question 2 (table 4.02) 94% of
respondents believes that there is need for the services of a forensic
accountant to be employed in their organization while 6% have no idea on
employing them or not. Question 3 (table 4.03) states that 94% of the
respondents agreed that forensic accountants will help or has helped in
detecting and preventing fraud while 6% said that they have no idea. In
operational question 4 (table 4.04) and 5 (table 4.05) respectively has its 62%
respondents believe that forensic accountants are analytically minded and
inquisitive as people said and they also believe that the money paid to
forensic accountants worths the services they render while 22% says no to being
analytically minded and inquisitiveness of forensic accountants and 19% said no
also the money being paid to forensic as its equivalent to the services
rendered. 16% and 19% respectively have n idea of the questions asked.
In
question 6( table 4.06), 94% of the respondents in both sectors believes and
are of the opinion that forensic accountant is different from the traditional
auditor while total of 6% said that they have no idea of the question asked.
(table 4.07) that was used to get peoples opinion about question 7, states that
95% of respondents believes that there is need for a forensic accountant to
possess a sense of urgency and commitment while 5% of the respondent have no
idea. Also question 8 (table 4.08) explains that the use of forensic accountant
in an audit investigation will not increase the cost of the audit as supported
by79% of the respondents opinion is contrary to the 79% of the respondents and
7.9% f the respondents in question 9 (table 4.09) are of the believe that the
benefits of using forensic accounting outweighs its cost while 14% said no and
7% have no idea.
The
result of the respondents on whether they believe that forensic accountants in
Nigeria are up to a hard job because of the high rate of dishonesty in the
country and a forensic who is not affected by the limitations of the audit
process is in a better position to discover fraud and thus bridge the
expectation gap between the auditor and investors shows that 95% and 90% in
table 4.10 and 4.11 explaining question 10 and 11 respectively shows that they
are in support of the sampled questions while 5% and 10% respectively refuted
it. In question 12 (table 4.12) 79% of the total respondents are of the opinion
that the knowledge of forensic accounting by their accountants, auditors and
senior staff will make some positive impact on the nations fight against fraud
and embezzlement while 15% refuted it and 5% of the respondents have no idea
and in table 4.13 representing question 13 states that 43% of the respondents
heard about the forensic accounting on internet while 8%, 22%, 16% 11% heard
theirs on Radio/TV, print media, textbooks/ journals and have not heard respectively as shown in
the table.
Testing of
Hypothesis
Hypothesis one (1) suggests that the null hypothesis
should be accepted while it was to be rejected as calculate- it shows that the
calculated Z of 4.6036 is greater than the critical Z of 1.96 thereby stating
that there is no relationship between forensic accounting and fraud detection
and prevention in Emenite limited Enugu and Nigerian bottling company Enugu
coupled with the 79% of respondents that refuted the question, we then say that
there is a relationship between forensic accounting and fraud detection and
prevention in Emenite limited Emene and Nigerian bottling company Enugu.
For
hypothesis two (2), the calculated Z is still greater than the critical Z which
is 3.9686 > 2.1 respectively which accepted null hypothesis instead of the
other way round, though 75% of the respondents where against the null
hypothesis and it is a good significant figure. We therefore, holds that there
is a relationship between forensic accountant and analytical mind and
inquisitiveness in fraud detection and prevention n Emenite limited Enugu and Nigeria
bottling company Enugu.
Hypothesis
three (3), the calculated Z which is 6.1911 is greater than the critical Z
which is 1.96 and it represent that the null hypothesis was accept while in the
normal sense it was to be rejected and the respondents of the hypothesis shows
that 89% opined that there should be a relationship between forensic accountant
and their services in fraud detection and prevention in Emenite limited Enugu
and Nigerian bottling company which is significant and the result gotten may be
out of sampling error.
Hypothesis
four (4), the calculated Z which is 0.9525 is less than the critical Z which is
1.96, it still implies that the null hypothesis should be rejected which states
that there is no relationship between forensic accountant and the need for their
services in Emenite Limited Emene Enugu and Nigerian bottling company Enugu and
upholding the alternative.
Finally,
hypothesis five (5) reveals that there is no relationship between forensic
accounting and the negative view about the cost benefit basis, the introduction
of some forensic accounting techniques in audit which is not capable of
stemming the tide of financial fraud and thus not cover the audit expectation
gap in organization which was gotten from the calculation that states that the
calculated Z which is 4.9211 is greater than critical Z that is 1.96 thereby
still upholding the null hypothesis of which the respondents still showed the
null hypothesis of which the respondents still showed that the null should be
accepted.
5.2 Conclusion
The
place for forensic accounting education in Nigeria
cannot be over-emphasized and this is in view of the ravaging nature of fraud
on the economy of the private and public sectors in Nigeria.
In
summary, the study observed that fraud and corrupt practices are common in
developing countries –in private and public sectors, especially in Nigeria
and has created negative impact on our economy entirely. We found out
empirically that people are aware of forensic accounting and are of the opinion
that their services should be engaged in both private and public sectors
especially in Emenite Limited Emene Enugu and Nigerian bottling company Enugu in Nigeria
and their services are more required for fraud detection and prevention and
corruption related issues.
The
test conducted above (51), shows that the result for private and public sector
which was examined in chapter four (4) depicts that some wants the services of
forensic accountants while some are against it and some said nothing about.
Based on the result of the researchers result of his library study and other
sources of materials and empirical investigation he concludes as follows:-
v Forensic accounting practice
is neither new to the Nigerian private and public sectors and to the developed
nor is it in developing nations.
v That corruption in private
and public sectors in Nigeria, third world countries is alarming and is not
only crumbling their economy but also affecting innocent national’s standard of
living and their image
v That the services of the
experts (forensic accountants) are expected or required in our private and
public sectors and in our developing economy than in the developed economics
v That Nigerian universities
should start offering forensic accounting courses in our undergraduate and
post-graduate level so as to enlighten more people on the importance of
forensic accounting investigation in our private and public sectors as it will
help in a long way in our countries fight against fraud, embezzlement and
corrupt related issues.
5.3 Recommendation
Following the above findings and conclusion,
the researcher therefore recommends that
i.
Forensic accounting techniques should constitute an aspect of the
curriculum for the training of undergraduate and post graduate accountants in
Nigerian universities and make it to be a must study- especially at
post-graduate level, it should be encouraged that students should specialize on
the accounting techniques. Furthermore, the institute of chartered accountants
of Nigeria and other regulating bodies should include forensic accounting in
the curriculum of their professional examination. This is to ensure that all
hands is on deck to reduce, if not, to put an end to financial frauds in our
country.
ii.
The government should develop interest in forensic accounting and
accountants for monitoring and investigation of suspected and confirmed
corruption cases.
iii.
Practicing accountant should work towards specialization and possibly
establish firm for forensic accounting practice only
iv.
There should be more public enlightenment on the awareness of forensic
accounting –its need and benefits via radio, television, journal etc as that
will make the junior staff in any organization and layman to know the
importance of forensic accounting investigation in our private and public
sectors.
QUESTIONNAIRE
Section A
1. Is
forensic system new in Nigeria?
(A) Yes (B) No (C) No Idea
2. Is there need for the services of a forensic accountant to
be employed in your organization (A) Yes (B) No (C) No Idea
3. Has forensic accountants helped in detecting and preventing
fraud (A) Yes (B) No (C) No Idea
4. Do you think that forensic accountants are annalistically
minded and inquisitive as people say (A) Yes (B) No (C) No Idea
5. Do you believe that the money paid to a forensic accountant
is equivalent to the services rendered by him (A) Yes (B) No (C) No Idea
6. Forensic accountant is different from the traditional
auditor (A) Yes (B) No (C) No Idea
7. Do you believe that a forensic accountant who is not
affected by the limitations of the audit process is in a better position to
discover fraud and thus bridge the expectation gap between the auditor and
investors (A) Yes (B) No (C) No Idea
8. Is there need for a forensic accountant to possess a sense
of urgency and commitment (A) Yes (B) No (C) No Idea
9. Do you believe that the use of a forensic accountant in an
audit will increase the cost of the audit (A) Yes (B) No (C) No Idea
10. The benefits of using forensic accountant, however, outweigh
their costs (A) Yes (B) No (C) No Idea
11. The forensic accountant in Nigeria is up to a hard job because
of the high rate of dishonesty in the country (A) Yes (B) No (C) No Idea
12. How did hear about forensic accounting (a) internet (b)
radio/TV (c) Print media (d) Textbooks/journals
13. Do you believe that employing a forensic accountant would make
some positive impact on the detection and prevention of fraud in your
organization.
14. The knowledge of forensic accountant by accountants and
auditors in your organization will make some positive impact on the nations
fight against fraud and embezzlement (A) Yes (B) No (C) No Idea