1.1 Background to the Study
Historically, Forensic Accounting is certainly not a new field, research findings have shown that the profession has been in existence a long-time ago. For example, in ancient Egypt, the officers in charge of Pharaoh’s grains, gold and other asset were called the “eyes, and ears’ of pharaohs’.
Criminally, in Nigeria, ‘corruption and other financial and economic crimes is the base of Nigerian development efforts. Corruption bestrides the lives of the citizen. The judgment of transparency international is a reflection of what the nation has given to the world 419, money laundering, illegal oil bunkering etc. Ribadu (2004) stated that all these crime continued in Nigeria system in spite of government landscape steps to address them, because many people in power want the old dispensation to continue. He reiterated that there are those even though they are paid to check the activities of the culprits, yet are willing to share in the proceeds with the event that they themselves become culprits. These economic and financial crimes are the greatest threat to Nigeria economic and developmental growth as the nation has nothing to show for its huge earnings from oil.
Also, Waziri (2009) stated that corruption afflicts virtually all parts of the Nigeria society. In its 2004 report on worldwide corrupt practices transparency international survey which covered 146 countries in the world, which rated Nigeria as the third most corrupt country in the world. The focus of the transparency international 2004 report was more on oil sector as a revenue source for most oil producing countries.
According to Owolabi (2007), chairman of Transparency International Board of directors observed in 2004 that in oil producing countries, public contracting in the oil sector is plaque by revenue vanishing into the pockets of western oil executives, middlemen and local officials. He suggested that oil companies could help fight corruption by making public details of payment made to government and state-controlled oil firms. More also, the growth of public limited liability companies and large increase in the number of investors, and the divorce of ownership from control of companies has called for regular forensic accounting work of corporate financial reports in Nigeria.
Several instances of corporate scandal and failure in resent past have put professional accounting bodies into a new perception that goes beyond statutory audit and the trend of corporate governance or performance. Furthermore, modern organized corporate frauds are widely spread and well resources by manager, entrepreneur and politicians. Therefore, there is need to respond to this changing criminal threat by the Accountant and legal experts also needed to combat the corporate challenge, this has arouse the call for forensic accountant in enabling corporate performance in Nigerian companies.
1.2 Statement of Problem
This project is to address some of the deficiencies by looking towards a forensic accountant as the best antidote to curbing financial and economic crimes, and also to prevent and reduce misappropriation of corporate funds. Also, the failure of statutory audit to prevent and reduce this misappropriation of corporate funds and increase in corporate crimes has put pressure on professional accountant and legal practitioners is to find a better way of exploring fame in business world. A nation-wide study conducted by Kessler international showed that 39% of organizations have considered the need for a forensic accountant.
1.3 Research Questions
The following research questions are raised in order to achieve the objectives of this study.
1. Is there any relationship between forensic accounting and corporate performance in Nigeria?
2. How can the practices of forensic accounting play an important role in solving the vexed problems in a company’s corporate performance?
3. To what extent can public confidence and trust be restored through the practices of forensic accounting and corporate governance in Nigeria?
4. To what extent is the level of awareness of forensic accounting practices in Nigeria?
5. How can the application of forensic accounting detect and minimize computers related fraud or e-crime in Nigeria companies?
6. How can the application of forensic accounting services in quoted Nigeria companies detect fraudulent activities?
7. Can the credibility of audited financial statement of quoted Nigeria companies being undermined?
1.4 Objectives of the Study
1. To examine if there is any relationship between forensic accounting and corporate performance in Nigeria.
2. To evaluate how the practices of forensic accounting could play an important role in solving the vexed problems of a company’s corporate performance.
3. To evaluate how forensic accounting and corporate performance can provide professional investigative and litigation support services in Nigeria.
4. To ascertain the level of awareness of forensic accounting practices in Nigeria.
5. To determine the extent at which forensic accounting practices detect and minimize computer related fraud or e-crimes in Nigeria companies.
6. To determine whether the application of forensic accounting services in Nigeria quoted companies can detect fraudulent activities.
7. To ascertain whether audited financial statement in quoted Nigeria companies are being undermined.
1.5 Statement of Hypotheses
The following null and alternative hypotheses have been formulated to serve as a base for this research.
Ho: There is no significant relationship between forensic accounting and good corporate performance.
HI: There is significant relationship between forensic accounting and good corporate performance.
Ho: Litigation support services by forensic accounting cannot lead to appropriate judgment for economic and financial crime eradication in Nigeria.
HI: Litigation support service by forensic accounting can lead to appropriate judgment for economic and financial crime eradication in Nigeria.
Ho: Forensic accounting practices cannot assist in the detection or minimization of computer fraud or electronic related fraud.
HI: Forensic accounting practices can help eradicate computer fraud or e-crimes in Nigeria quoted companies.
Ho: Forensic accounting and extent of fraud detection are not in any way related.
HI: Forensic accounting and extent of fraud detection are positively related.
Ho: Forensic accounting cannot help to ascertain the level of credibility of audited financial statement.
HI: Forensic accounting has a major role to play in ascertaining the level of credibility of audited financial statement.
1.6 Significance of the Study
The significance of this study is to corporate companies, investors, Nigeria government, and the general public. The study will educate these groups on the importance of a forensic accountant and corporate performances among them thereby help to restore the lost confidence by the public and the government as regard forensic accountant and corporate performance in Nigeria.
The study will also be beneficial to academicians and other future researchers/users in similar subject matter.
1.7 Scope of the Study
The area of coverage is restricted to Nigeria situation by the use of questionnaire and direct interview. Also covers a survey of quality corporate management and control in forensic accounting services in Nigeria. This study is undertaken to evaluate the impact of forensic accountant and corporate governance within Nigeria geographical states. The study limit itself to some quoted firms in the Nigeria stock exchange (NSE), with special emphasis on the impact it can have on restoring the credibility of audited financial statements of companies, as well as fight against corruption and computer related frauds in Nigeria and it is between the period of 2010-2013.
1.8 Limitation of the Study
There is no study undertaken by a researcher that is perfect. This could be as a result of some constraints that affect the researcher in the course of the study. The limitation of the study is concerned with those constraints which could come up in the course of the project work. Some of these constraints are,
1. Inadequate research materials.
2. Inadequate primary data. This is the means of getting first hand information about the subject matter.
3. Policy of the respondent company/individual e.g. different depreciation method used will seriously affect the research data.
1.9 Definition of Terms
· Investigation: The use of specialized investigative skills in carrying out an inquiry conducted in such a way that the outcome will have application of the law.
· Forensic Accounting: Is defined as the practice of vigorous data collection and analysis in the area -of litigation support consulting, expert witnessing, and fraud examination.
· Forensic Audit: This refers to the examination of all evidence regarding an assertion to ascertain its correspondence to establish criteria carried out, in a manner suitable to a law court.
· Litigation: This simply means the judicial process of, carrying out legal context.
· Electronic Crimes: Are crimes committed through the use of information technology (I.T)
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