This study examined the effect of forensic accounting on financial crime prevention in Nigerian corporate business organisations. The study adopted field survey design. The population of the study comprised the staff of banks and audit firms in River States. The study used purposive sampling technique for questionnaire administration while regression analysis and ANOVA was used for data analysis. The results of the study revealed that forensic accounting has significant effect on reduction and prevention of financial crime in Nigeria.
The study concludes that there is significant differences between the roles of forensic accountant and that of traditional accountant in preventing financial fraudulent crimes, and that the application of forensic audit to tackle financial crime in Nigeria business organisations is still at the infant stage. The study recommended that organisations should have a strong internal control system in place to reduce the occurrence of fraud and conclude that there is significant differences between the roles of forensic accountant and that of traditional accountant in preventing financial fraudulent crimes. �i�����
The incidence of various financial crimes in recent time poses a threat accounting profession because of its perennial nature. This has resulted to questions as to whether accountants actually play any significant role towards the attainment of accountability and prevention of fraud especially that which is currently happening in our major or key financial institutions.
With an upsurge in financial accounting fraud in the current economic scenario experienced, prevention of fraud and other financial crimes has become an emerging topic of great importance for academic, research and industries. In this age of high technology, fraud investigators can no longer be satisfied with just auditing or accounting skills, these investigators should be trained as forensic auditors and this training should include an extensive knowledge of accounting information systems (Bressler, 2006; Manning, 2005; Ramaswamy, 2005). The failure of internal auditing system of the organization in identifying the accounting frauds has led to use of specialized procedures to detect financial fraud, collective known as forensic accounting (Kranacher and Stern 2004).
Fraudulent financial activities are illicit activities committed with the purpose of acquiring riches either individually, in group or organised manner thereby violating existing legislation or accounting policies governing the economic activities and administration of the organisation (Yio and Cheng, 2004).
The integration of accounting, auditing and investigative skills yield the specialty known as Forensic Accounting. Forensic Accounting provides an accounting analysis that is suitable to the court which forms the basis for discussion, debate and ultimately dispute resolution. It encompasses both litigation support and Investigative Accounting. It is a specially practiced area of accounting that describes engagement that result from actual or anticipated disputes or litigation.
Forensic Accounting is sufficiently thorough and complete so that an accountant, in his/her considered independent professional judgment, can deliver a finding as to accounts, inventories or the presentation thereof that is of such quality that it would be sustainable in some adversarial legal proceeding, or within some judicial or administrative reviews.
The primary orientation of forensic accounting is explanatory analysis (cause and effect) of phenomena, including the discovery of deception (if any), and its effects introduced into an accounting system’s domain (Silverstone, 2004). Forensic accountants are called upon to play important pre-emptive roles, offering independent assurance in such diverse areas as audit committee advisory services, merger and underwriting due diligence, investment analyst research and enterprise risk management.
Fraud investigations and prevention on the other part involves the training of possibly forensic accountants to ensure the integrity of financial statements by actively investigating for fraud, identifying all areas of risk and fraud symptoms, pursuing each anomaly and aggressively. The term ‘fraud’ is generally used to describe any criminal deception, false representation by means of a statement or conduct, in order to gain a material advantage.
Ideally, fraud detection and prevention ought to be recognized as an important responsibility throughout every organization and every employee ought to be familiar with the disciplinary consequences for breach of trust.
Fraud and other financial crime is an independent criminal offence, and it is the main phenomenon that gave birth to forensic accounting, especially those related to economic crime. These economic crimes are known to be an unpleasant fact and a disheartening issue in the heart of many organizations, and the control of it, is a concern for any organization that employs employees, accountants or other hired professional that have access to the organization’s income, receipts or funds.
Most of our financial institutions today fail to recognize that the phenomenon “fraud” can appear to be more dangerous when compared to other forms of problem like armed robbery attack which can only affect the institution within a short period of time, such may have no long term effect on their operations.
In recent years, appropriate legislation was enacted to criminalize all corrupt conducts including unjust enrichment. Key institutions like Independence Corrupt Practices Commission (ICPC), Economic and Financial Crime Commission (EFCC) were established to fight corruption. Ribadu (2004) asserted that corruption and economic crime cases are usually very complex and complicated. Some involve documents or subjects that are very technical requiring a well-schooled investigator to unravel. Therefore, forensic accountants are required to compliment the effort of anti – corruption agencies.
According to a recent ranking by the Transparency International (2007), Nigeria is perceived as a very corrupt nation. This ranking emanated from the avalanche of cases of frauds, corruptions and financial scandals in which many Nigerians are suspected to be involved. These fraudulent practices are suspected to be perpetrated by highly skilled fraudsters, employing sophisticated methods – thus requiring equally highly skilled and versatile accountants to unravel the fraudulent schemes. This is where the Forensic Accountant comes in, with his/her scientific, evidence-based accounting, auditing and investigations, to assist in the judicial process, to avoid the miscarriage of justice in fraud-related judgments.
Enron and WorldCom debacles as well as other accounting scandals (Cotton, 2000). Hence, with the spotlight on the accounting profession, a new market with a new breed of accountants (forensic accountants) has emerged. Today, the occurrence of fraud and other financial crimes have gone sophisticated and even the advent of computerisation together with the introduction of internet facilities have enhanced the problem of financial crimes. The detection and / or reduction of these fraudulent activities are made more difficult and committing these crimes much easier. Hence, Onodi, Okafor and Onyali (2015) are of the opinion that forensic investigative skills are required to uncover and establish the occurrence of financial crimes.
From recent development, globally, electronic (e) banking e-business, e-… possibly e-fraud, e-corruption and e-financial scandals, it is almost obvious that the Traditional or Conventional Accountant may not be able to meet up with the level of sophistication of the financial crimes. It calls for equally sophisticated e-techniques to be able to prevent the occurrence of financial crimes and fraudulent practices in various organization concern.
In recent times, series of fraud have been committed both in the public sector and private sector of the economy. These in no doubt are perpetrated under the supervision of the internal auditors of the organization. It suffices to say that the independent of the internal auditor is not guaranteed because he works as an employee of the government or organization. Then come the idea of external auditors, yet frauds are still being committed on a daily basis.
It is now become pertinent that forensic accounting be introduced and practices since the external auditors do not or may not have the required training to be able to tackle modern frauds like white collar crimes such as security fraud, embezzlement, bankruptcies, contract disputes and possibly criminal financial transaction; including money laundering by organized criminals, also is the ability of the forensic accountants to provide litigation support and investigative financial and corporate fraud. These areas have become a complex area of concern for the accounting profession.
OBJECTIVES OF THE STUDY
The core objective of this study is to ascertain the effect of forensic accounting on financial crime prevention in Nigeria corporate business organizations.
While other specific objectives of the study includes the following:
- Evaluate the manner in which forensic accounting affect financial crime detection and prevention.
- Ascertain if forensic accounting will curb fraudulent activities.
- Examine the cause of not obtaining enough techniques used as evidence.
- Investigate how incidence of financial crime encourages or leads to business failures.
- Identify new techniques to uncover fraud, financial crimes and evasions of financial obligations or malpractices.
- To find out whether forensic audit report can enhance court adjudication on financial fraud in Nigeria.
In order to achieve the objective of the study, the following research questions have been raised in the project study, providing answers to them will help achieve the aim of this work. These questions include the following;
- To what extent does forensic accounting affect financial crime detection and prevention?
- How does forensic accounting will curb fraudulent activities?
- What are the cause of not obtaining enough techniques used as evidence?
- How incidence of financial crime does encourages or leads to business failures?
- Are there any new techniques to uncover fraud, financial crimes and evasions of financial obligations or malpractices?
- To what extent does forensic audit report can enhance court adjudication on financial fraud in Nigeria?
STATEMENT OF HYPOTHESIS
The Statement of Hypothesis is “a speculation of the way the variables of study behaves” it is a guide method to be used in their analysis. The needs for such guides rise to the following hypothesis;
Forensic Accounting and Fraud Investigation has no significant impact in reducing financial crimes in corporate organizations.
HO: There are no significant differences between the roles of forensic accountant and that of traditional accountant in preventing financial fraudulent crimes. m[�am[����
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