CHAPTER ONE

INTRODUCTION

BACKGROUND OF THE STUDY

The growing demand for forensic accounting is a known characteristic of most companies in the world. Forensic accounting arises from the effect and cause of fraud and technical error made by human. Forensic accounting is quite new in Nigeria as companies have realized that the service of a forensic accountant is needed as fraud cases have substantially increased in number. Forensic accounting is the application of financial skills and investigative mentality to unsettled issues, conducted within the context of the rules of evidence (Arokiasamy and Cristal, 2009).

Bologna and Lindquistn (1987) assert that forensic accounting as a discipline encompasses fraud knowledge, financial expertise, and a sound knowledge and understanding of business reality and the working of the legal system. Forensic accounting may be one of the most effective and efficient way to decrease and check accounting fraud. Presently, forensic accounting is gaining popularity worldwide. It is been taught as a major course in many educational institutions in various countries, Howard, and Sheetz, (2006).

It has been noted that “Government spending has always been a big business, but it has become so massive today that the public through its legislators is demanding to know whether the huge outlays of money are being spent wisely or whether they should be spent at all.” Officials and employees who manage public sector activities are by virtue of that duty, required to render adequate accounts of their activities to the public (Ribadu, 2005).

The incidence of fraud continues to increase across private and public sector organizations and across nations. Fraud is a universal problem as no nations is immuned, although developing countries and their various states suffer the most pain.

Forensic accounting is said to bring significant improvement in the quality of fraud detection and prevention. This study meant to help and remind the public sector organization of Kogi State, in the affected ministries to design an integrated approach to preventing and controlling fraud and corruption within the workplace through an establish service of Professional Forensic Accountants.

STATEMENT OF THE PROBLEM

Recently, 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.

The above scenario indicated that as more and more development both in the information Communication Technology (ICT) world and other fields, so fraudsters continue to groom their own tactics towards fraudulent practices.

It 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 accountant to provide litigation support and investigative accounting. These areas have become a complex area of concern for the accounting profession.

OBJECTIVES OF THE STUDY

The objective of the study is to find out the following:

1. To examine the role of Forensic Accountant in an organization.
2. To examine the possibility of reducing the occurrence of fraud cases using Forensic Accounting.
3. To find out whether Forensic Accountant can help in detecting and preventing fraud in the Public Sector
4. To examine if there is significance difference between Forensic Accountants and External Auditors.

RESEARCH QUESTIONS

1. What is the role of Forensic Accountant play in an organization?
2. Is there any possibility of reducing the occurrence of fraud cases using Forensic Accounting?
3. Can Forensic Accountant help in detecting and preventing fraud in the Public Sector?
4. Is there any significance difference between Forensic Accountants and External Auditors?

RESEARCH HYPOTHESES

HYPOTHESIS 1

H0:   Forensic Accountant does not play role in an organization.

H1:      Forensic Accountant plays a significant role in an organization HYPOTHESIS 11

H0:   The uses of Forensic Accounting do not significantly reduce the occurrence of Fraud cases in the public sector.

H1:      The uses of Forensic Accounting do significantly reduce the occurrence of fraud cases in the public sector.

HYPOTHESIS 111

H0:   There is no significant difference between Professional Forensic Accountants and Traditional External Auditor.

H1:    There is a significant difference between Professional Forensic Accountants and Traditional External Auditor.

SIGNIFICANCE OF THE STUDY

The ultimate goal of every organization including public and private sectors is to ensure that preventive measures like forensic accounting should be put in place. This goal can be achieved in Uyo local government council when they employ the services of Forensic Accountant.

 This study necessary because it would bring significant improvement in the quality of fraud prevention and protection.

 It would also be of immense benefit to public sector organization in Uyo local government council and Akwa Ibom State at large, to design an integrated approach to preventing and controlling fraud and corruption within the workplace through an establish service of Professional Forensic Accountants.

          Finally, it would serve as a reference source to students or other researchers who might want to carry out their research on the similar topic.

SCOPE OF THE STUDY

The study concerns about forensic accounting as a tool for fraud detection and prevention in Nigeria with a particular reference to Uyo local government council, Akwa Ibom State.

LIMITATION OF THE STUDY

The study limitation was inability of management to divulge certain information which they consider sensitive and fear of publication which might be detrimental to their operation.

Distance and its attendant cost of travel in order to obtain information which to write this study was also a major limitation. Another limitation to the study is short time factor which did not give time for thorough research work, hence gathering adequate information becomes very difficult.

Finally, lack of materials on the topic. This is new in the area of forensic accounting for detection and preventive of fraud in Nigeria. Therefore, the researcher resolved to seek friendly approach in order to obtain the needed materials or information from the organization under study through the administration of questionnaire.

DEFINITION OF TERMS AND ACRONYMS

1. FORENSIC ACCOUNTING: According to Manning (2002) defined forensic accounting as the application of financial accounting and investigative skills at a standard acceptable by the courts, to address issues in dispute in the context of civil and criminal litigation.
2. ACCOUNTING: This is defined as the process of identifying, measuring, and communicating economic information to permit informed judgements and decisions by users of the information (Frank Wood & A. Sangster, 2005).
3. ACCOUNTING FRAUD: Accounting fraud is an act of knowingly falsifying accounting records, such as sales or cost records, in order to boost the net income or sales figures; accounting fraud is illegal and subjects the company and the executives involved to civil lawsuits (Arokiasamy and Cristal, 2009).
4. FRAUD: fraud is an act or course of deception, deliberately practiced to gain unlawful or unfair advantage; such deception directed to the detriment of another (Anyanwu, 1993).
5. DETECTIVE CONTROLS: These controls are designed to detect and report the occurrence of an omission, an error or a malicious act (Adeniji, A. 2004).
6. PREVENTIVE CONTROLS: These are controls that predict potentials problems before they occur and make adjustments (Adeniji, A. 2004).
7. CORPERATE FRAUD: These are the activities undertaken by an individual or company that are done in an dishonest or illegal manner, and are designed to give an advantage to the perpetrating individual or company (Investopedia, 2015).

This material content is developed to serve as a GUIDE for students to conduct academic research