FORENSIC ACCOUNTING IN QUOTED NIGERIAN COMPANIES: ISSUES AND PROSPECTS

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FORENSIC ACCOUNTING IN QUOTED NIGERIAN COMPANIES: ISSUES AND PROSPECTS

ABSTRACT

The central point of this research work was how forensic accounting could be used in ensuring credibility of audited financial statements, Detection of fraud in reporting audited financial statements as well as detection of computer related fraud. The researcher desires to reflect the positive impact which forensic accounting can have, when incorporated into the mainstream of Nigerian quoted companies. Questionnaires were administered to generate the necessary primary data, and were analyzed descriptively, and the various hypotheses were tested using inferential statistical analysis. Review of relevant literature was carried out so as to get a deeper insight and proper understanding of the subject matter. The result of the hypotheses testing proved that forensic accounting has a positive relationship with the credibility of audited financial statements, as well as detection of fraud in reporting audited financial statements, but a negative and insignificant relationship with computer computer/electronic related fraud. It is therefore suggested that forensic accounting/auditing should be embraced and integrated into the mainstream of Nigerian organizations as a result of its low awareness and standardization in Nigeria. It is recommended that forensic accounting be introduced into the curricular of tertiary institution in Nigeria in order to tap from the opportunities that are abound in choosing forensic accounting as a career.

TABLE OF CONTENT:

CHAPTER ONE

INTRODUCTION

1.1     Background of the Study

1.2     Statement of the Research Problem

1.3     Objectives of the Study

1.4     Significance of the Study

1.5     Research Questions

1.6     Research Hypothesis

1.7     Conceptual and Operational Definition

1.8     Assumptions

1.9     Limitations of the Study

CHAPTER TWO

LITERATURE REVIEW

2.1     Sources of Literature

2.2     The Review

2.3     Summary of Literature Review

CHAPTER THREE

RESEARCH METHODOLOGY

3.1     Research Method

3.2     Research Design

3.3     Research Sample

3.4     Measuring Instrument

3.5     Data Collection

3.6     Data Analysis

3.7     Expected Result

CHAPTER FOUR

DATA ANALYSIS AND RESULTS

4.1     Data Analysis

4.2     Results

4.3     Discussion

CHAPTER FIVE

SUMMARY AND RECOMMENDATIONS

5.1     Summary

5.2     Recommendations for Further Study

Bibliography

CHAPTER ONE

1.0      BACKGROUND

A lot of attention from the public, press, investors, the financial community and regulators has been placed on financial statement fraud due to the high profile reported fraud at large companies, such as Enron Corporation, Rita Aid, WorldCom, Adelphia (Rezaee 2003), and more recently Cadbury Nigeria. The top executives of these and other corporations were accused of “cooking the books” and in many cases were indicted and subsequently convicted. Loss of market capitalization resulting from the reported financial statements fraud committed by Enron, WorldCom, Tyco, Quest and Global crossing is estimated about $460 billion (Cotton, 2002). Cadbury Nigeria will likely record a loss of $15 million on the year 2006 (Shen-Hoorver, 2006).

According to Rezaee (2003), “the reliability, transparency and uniformity of the financial reporting process allows investors to make intelligent decisions published audited financial statements that reflect a true and honest financial performance, instead of a rosy picture, and inflated and fraudulent earnings are useful to market participants, including investors and creditors.

Thus, it is expected that most publicly quoted companies in Nigeria have a responsible corporate governance, a reliable financial reporting process, effective audit function, conduct their businesses in an ethical and legal manner and through continuous improvement enhance their earning quantity and quality. Nevertheless, the pervasiveness of reporting financial statement frauds caused by ‘cooking the books’ and related alleged audit failure have eroded the public confidence in corporate Nigeria.

Usually, investors and indeed, the general public expect an audit to detect all forms of fraudulent activities. This notion is inaccurate, as Izedonmi, (2000) puts it “it is the primary responsibility of the management to ensure that fraud and errors are prevented or detected in the enterprise”. The recent corporate scandals have proved beyond reasonable doubt that fraud and other irregularities can still go undetected even after an audit of financial statements have been carried out.

Another issue of serious concern is the high rate of E-crime in Nigeria. As Commander Barbara Etter stated in a presentation in 2001 “E-crime presents as one of the major challenges of the future to Australian Law Enforcement. As Information and Communication Technology (ICT) becomes even more pervasive, aspect of electronic crime will feature in all forms of criminal behaviour, even those matters currently regarded as traditional offences. This is similar to the Nigerian scenario.

The recent financial scandals have raised the awareness that accountants should be alert to potential fraud and other economic disputes and can provide significant assistance in preventing, investigating and resolving such matters. Forensic accountants provide these services with knowledge of court requirements and proceedings so that effective legal action is possible even though most actions are concluded without the involvement of the court.

Forensic accounting as defined in the forensic accounting directory of the Florida Atlantic University (FAU) is “the practice of utilizing accounting, auditing and investigative skills to assist legal matters. It encompasses two main areas: litigation support and investigation. Litigation support represents the financial presentation of economic issues related to existing or pending litigations. Investigation is the act of determining whether criminal matters such as employee theft, fraud (including falsification of financial statements), identity theft and insurance fraud have occurred”.

In the light of the above, and beyond the traditional audit, the researcher intends to uncover how forensic accounting can help minimize fraudulent financial reporting and electronic crimes in Nigerian quoted companies.

1.1      RESEARCH PROBLEMS

The recent corporate scandals involving Cadbury Nigeria and many more have raised doubt as to the credibility of audited financial statement being published by quoted Nigerian companies. This undermines the initial trend of placing total reliance on the opinions of independent parties (auditors) who examine the account prepared by management. Also, the proliferation of e-crime and other computer related applications have led to an increase in e-fraud, unauthorized and unethical information technology.

The specific questions, which this study seeks to answer, are:

1.           Are audited financial statements in quoted Nigerian companies losing their credibility?

2.           How can forensic accounting prevent and minimize fraudulent financial reporting in quoted Nigerian companies?

3.           How can forensic accounting detect and minimize computer related fraud or E-crime in quoted Nigerian companies?

4.           What is the level of awareness of forensic accounting in Nigeria?

5.           Should forensic accounting be practiced in Nigeria giving the peculiarity of the audit environment?

1.2      AIM AND OBJECTIVES OF THE STUDY

The problems of fraudulent financial reporting and electronic fraud in quoted Nigeria companies need to be seriously addressed, to this end, this study aims at x-raying forensic accounting as a suitable solution to the problems of credibility of traditionally audited financial statement. Specifically, the objectives of this research work are:

1.           To determine whether audited financial statements in quoted Nigerian companies are losing their creditability.

2.           To ascertain whether forensic accounting/audit can prevent and minimize fraudulent financial reporting in quoted Nigerian companies.

3.           To determine whether forensic accounting can detect computer related fraud in quoted Nigerian companies.

4.           To describe the specific forensic challenges of e-crime in quoted Nigerian companies.

5.           To expose the existence and development of forensic accounting in Nigerian quoted companies.

6.           To expose the practice of forensic accounting in Nigeria.

1.3      RESEARCH HYPOTHESIS

The following hypotheses shall be tested in this study.

1.           Forensic accounting is determined by the level of creditability of the traditional audited financial statement.

2.           Forensic accounting and the level of fraud detection are positively related.

3.           Forensic accounting procedures would help in the detection or minimization of computer-related or electronic-related fraud.

1.4      SIGNIFICANCE AND RELEVANCE OF THE STUDY

This study is significant and relevant in the following ways:

1.           Investors: This study will reveal the added advantage which forensic accounting will bring into an audit engagement to enhance its quality and scope in terms of fraud detection in quoted Nigerian companies.

2.           The Accounting Profession: This study will help maintain or promote the image and credibility of the profession in terms of trust placed on the services of its members.

3.           Quoted Nigerian Companies: This study will assist in the fight against fraudulent activities and electronic crime by introducing new techniques by which companies will better achieve their objectives.

4.           The General Public: With the aid of this study, the tide of fraudulent financial reporting and E-crime in Nigeria will be reduced.

1.5      SCOPE OF THE STUDY

The focus of this study is on forensic accounting with special emphasis on the impact it can have in restoring the credibility of audited financial statements in quoted Nigerian companies, as well as on the fight against computer-related fraud or e-crime. To this end, quoted Nigerian companies shall form the fulcrum of this project work. Besides, data shall be from professional accountants/auditors, as well as those in public practice, and financial analyst across some major states in Nigeria.

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OWNERSHIP STRUCTURES, CORPORATE GOVERNANCE AND PERFORMANCE OF small MFIs in Nigeria(MSC)

YOU CAN CALL US BACK FOR THE COMPLETE THESIS. WE CAN ALSO HELP YOU WITH CORRECTIONS FROM YOUR SUPERVISOR. PLEASE CALL 08068231953, 08168759420 MSC THESIS TOPIC: OWNERSHIP STRUCTURES, CORPORATE GOVERNANCE AND PERFORMANCE OF small MFIs in Nigeria(MSC) Abstract The purpose of the study was to examine the relationship between ownership structures, corporate governance and the performance of small MFIs in Nigeria. Interest in this study was as a result of poor performance of these MFIs as indicated in the AMFIU Annual report of 2006. The study therefore sought to determine if this could be attributed to their ownership structures and therefore governance levels. A cross sectional survey design was used to undertake this study using a sample of 65 MFIs from which responses from 44 MFIs were received; giving a response rate of 67.7%. Findings of the study reveal that ownership structures and corporate governance are significant predictors of MFI performance accounting for 42.4%

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FORENSIC ACCOUNTING IN QUOTED NIGERIAN COMPANIES: ISSUES AND PROSPECTS

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