INTRODUCTION

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The growth of the public limited liability companies and large increase in the number of investors
owning share and the divorce of ownership from control of companies has called for regular
auditing of corporate financial reports.

The objectives of the ordinary audit of financial statement by the independence auditor according
to AICPA (1992) is the expression of an opinion on the fairness or otherwise in all material respect
the financial position, results of operation and its cash flows in compliance with generally accepted
accounting principles.

However, modern organized corporate frauds are sophisticated and well-resourced by managers,
entrepreneurs and politicians to mention but few. Financial irregularity is a severe problem of
concern globally. It is a major concern of developing nations. It is so endemic that fraud and
corruption is gradually becoming a normal way of life. Financial irregularities are so common that
almost every individual cannot wash his or her hands, clean of it. Starting from the public sector
to the private sector, from the presidential villa of the nation down the political office-holding
ladder, to the ward councilors from managing directors of a company, through middle management
cadre and to as low as messengers. Individual perpetrates fraud and corrupt practice according to
the capacity of their office. Although financial irregularities affect private and public sector, the
magnitude of public office fraud, together with the extent to which citizens are affected, calls for
alarm.

There is the need to respond to this changing criminal threat and the skills of non-traditional
investigators like accountant and legal experts are not enough to combat the corporate ill, this has
arouse the call for forensic accountant.

Before the latest economic downturn, the accounting profession had already undergone radical
changes as a result of the Enron and WorldCom debacles, as well as other accounting scandals.
With the spotlight on the accounting profession, a new market with a new breed of accountants —
forensic accountants — has emerged.

Forensic accounting is a comparatively new specialty within the old and distinguished world of
accounting. Its role has enlarged in recent decades because of a number of factors. One is the far
greater ease with which fraud can be perpetrated in the digitized world. Forensic accounting is one
of the fastest growing professions.

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OBJECTIVES OF
THE STUDY

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In view of the importance of the role of forensic accountants and the study of forensic accounting
to the economy, the need for its inclusion in our day to day activities, in corporate businesses,
government Ministries, Departments and Agencies, and even as a course of study in our tertiary
institutions becomes paramount.

This study will stand as a challenge to everyone involved and among others is aimed at achieving
the following objectives:

 To elucidate what Forensic Accountants really do and what Forensic Accounting

Entails.

 To highlight some of the most enhanced relevant skills which a Forensic Accountant must
possess.
 To enumerate the clear differences that exist between Forensic Audit and other fields of
accounting.
 To identify various challenges facing the Practice of Forensic Accounting in an
organization and suggest how the challenges may be overcome.

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 RESEARCH
METHODOLOGY

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Generally researchers must specify the method of research with which they are to gather all the
relevant information relating to their subject of the survey. This method of research to be specified
at the beginning of the survey is called Research Design.

RESEARCH DESIGN

Research design is the framework or blueprint for conducting a good research project. It details
the procedures necessary for obtaining information the needed to structure or solve research
problems (Malhotra and Birks, 2000). This area looks into how the research exercise was planned,
structured and the systematic process with which the research studies was conducted. Based on
the trend of the topic, the researcher used explorative research design. For the purpose of this
study, explorative design may be divided into two namely:

1. The survey of knowledgeable persons – primary data. This will be accomplished through
personal, phone or mail interview and questionnaire.
2. The Research of Secondary Data. This is the use of extracts from ready-made

materials related to the topic of study.

SOURCES OF DATA

Data will be collected from selected forensic accountants in audit firms most especially in Lagos
and Abeokuta. These areas were selected due because they are the places the researcher is familiar
with. The data would be derived from interview sessions with respondents and questionnaire.
Secondary data are used to corroborate the findings made from the interview session. The purpose
of data collection procedure is to get data for the problem defined. Data can be classified into
primary or secondary:

Primary data are data collected specifically by then researcher for the research while secondary
data are data already published and collected for their other purposes than specific needs at hand.

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 REVIEW
OF
LITERAUTRE

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WHAT GAVE BIRTH TO FORENSIC ACCOUNTING?

Massive accounting scandals at Enron, WorldCom, and many others, as well as the collapse of one
of the “Big Five” accounting firms, Arthur Anderson, have increased the public’s awareness of
fraud and fraudulent financial reporting. This increased awareness of fraud, along with recent
financial catastrophes including the collapse of commercial banks and major turmoil on Wall
Street and in Nigeria Broad Street, Union Dicon Salt, Lever Brothers now Unilever, Cadbury, the
sack of the management and board of five banks by the Central Bank of Nigeria (CBN) due to
financial abuses and more recently startling revelations of gross impropriety in the Oil Subsidy
Scheme and Police Pension Fund Fraud has made the need for forensic accountants even greater
in recent months (Solnik, 2008 and Tunde 2012). The American Institute of Certified Public
Accountants (AICPA) has called forensic accounting one of the “hot” new careers in accounting
and indicates there will be a shortage of fraud professionals in the next decade (AICPA, 2004).

Joshi (2003) ascribed the origination of forensic accounting to Kutilya, the first economist to
openly recognize the need for the forensic accountant whom he 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 accountant 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 the
crime under the seemingly new nomenclature the last five years (Coenen 2005).

Forensic accounting, also called investigative accounting or fraud audit, is a merger of forensic
science and accounting.

Forensic auditing covers a broad spectrum of activities, with terminology not strictly defined in
regulatory guidance. Generally, the term ‘forensic accounting’ is used to describe the wide range
of investigative work which accountants in practice could be asked to perform. The work would
normally involve an investigation into the financial affairs of an entity and is often associated with
investigations into alleged fraudulent activity.

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Forensic accounting refers to the whole process of investigating a financial matter, including
potentially acting as an expert witness if the fraud comes to trial.

Forensic science according to Crumbley (2003) “may be defined as application of the laws of
nature to the laws of man”. 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.

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).

KPMG’s Fraud Survey (2003) reveals that more companies are: recently experiencing incidents
of fraud than in prior years; taking measures to combat fraud; and launching new antifraud
initiatives and programs in response to the Sarbanes-Oxley Act of 2002 (KPMG 2003).

PricewaterhouseCoopers’ (PWC) 2003 Global Crime Survey indicates that 37 percent of

respondents in 50 countries reported significant economic crimes with the average loss per
company of $2,199, 930 (PWC 2003). These survey results underscore the importance of forensic
accounting practice and education.

According to the Chancellor of the Exchequer Gordon Brown (2006), (former Prime Minister of
the United Kingdom), when speaking on the fight against terrorism, "What the use of fingerprints
was to the 19th century, and DNA analysis was to the 20th century, so financial information and
forensic accounting has come to be one of today's most powerful

investigative and intelligence tools available.”

Factors that increased the need for forensic accounting emanated from the governments’ and
banks’ efforts to crack down on international money laundering and on tax evasion. There is little
existing research in the area of forensic accounting because it is such a new field (McMullen &
Sanchez 2010).

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Researchers have sought to identify the most important qualifications of forensic accountants in
their roles as expert witnesses. An effective forensic accounting expert can have a significant
influence on the trier of fact (Rasmussen and Lauanae 2004, 166). From surveys

(Champagne et al. 1991; DiGabriele 2008) and experiments (Ponemon 1995; Cohen et al. 1996;
Crumbley 2005; Davis et al. 2009) the research to date provides insights into the roles of expert
witnesses (Beatty et al. 1999), but does not explore their actual use or the effectiveness of their
testimony in court cases.

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).

This means that forensic accounting is a field of specialization that has to do with provision of
information that is meant to be used as evidence especially for legal purposes. The persons
practicing in this field (i.e. forensic accountants) investigate and document financial fraud and
white-collar crimes such as embezzlement and investigate allegations of fraud, estimates losses
damages and assets and analyses complex financial transaction. They provide those services for
corporation, attorneys, criminal investigators and the Government (Coenen, 2005). Their
engagements are usually geared towards finding where money went, how it got there, and who
was responsible. They are trained to look beyond the numbers and deal with business reality of the
situation (Zysman2001).

Investigative and forensic accounting engagements are those that:

Require the application of professional accounting skills, investigative skills, and an

investigative mind-set; and
Involve disputes or anticipated disputes, or where there are risks, concerns or allegations of
fraud or other illegal or unethical conduct. (Canadian Institute of Chartered Accountant, 2006).

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2.2 COMPOSITION OF FORENSIC ACCOUNTING

Forensic accounting encompasses both litigation support and investigative accounting.

Litigation support provides assistance of all nature in a matter involving existing or pending
litigation. It deals primarily with issues related with the quantification of economic damages, while
investigative accounting is associated to the investigation of criminal matters (Zysman,

2001).

Under litigation support, forensic accountant assist in:

Obtaining document necessary to support or refute a claim.

Reviewing of the relevant documentation to form an initial assessment of the case in an

identified area of loss.
Examination for discovering, including the formulation of the act regarding the financial
residence.
Attendance at the examination for discovery to review the testimony, assist with understanding
the financial issues and to formulate additional questions to be asked.

Investigative accountant on the other hand;

reviews factual situation and provides suggestions regarding possible courses of

action,

assist with the protection and recovery of assets,

co-ordinate other experts (Zysman, 2001).

2.3 FORENSIC ACCOUNTING ENGAGEMENTS

Coenen (2005) identify the following as areas of specialty in forensic accounting:

Investigating corporate fraud

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 Litigation services

Business valuation

Computer forensic.

However, Zysman (2001) in a more elaborate form captured the assignment performed by forensic
accountant as including:
Criminal investigation; which are usually on behalf of the police with the aim of presenting
evidence in a professional and concise manner.
Shareholders and partnership dispute; that involve analysis of numerous year

financial records for valuation and qualification of the issue in dispute;

Personal injury claim; where for example economic losses from motor accident or wrongful
dismissal may need to be quantified;
Business interruption and other type of insurance claim; these assignments involve a
detailed review of the policy to investigate coverage issues and the appropriate methods of
calculating the loss.
identification and recovery, forensic intelligence gathering and due diligence review.

Matrimonial dispute; involving the tracing, locating and evaluation of asset.

Business economic losses; where contract disputed, construction claims,

expropriation, product liability claim and trade mark are the issues.

Professional negligence; to ascertain the breach and quantify the loss involved, and
Mediation and arbitration; as a form of alternative dispute resolution.

A forensic investigation is a very specialist type of engagement, which requires highly skilled team
members who have experience not only of accounting and auditing techniques, but also of the
relevant legal framework.

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There are numerous different types of fraud that a forensic accountant could be asked to
investigate. The investigation is likely to ultimately lead to legal proceedings against one or several
suspects, and members of the investigative team must be comfortable with appearing in court to
explain how the investigation was conducted, and how the evidence has been gathered. Forensic
accountants must therefore receive specialist training in such matters to ensure that their credibility
and professionalism cannot be undermined during the legal process.

2.4 THE NATURE OF CORRUPTION

“The crime of corruption has always been viewed with particular distaste. It is no coincidence that
the word itself is also used in the phrase ‘corruption of the flesh’, to indicate decay, death and
malodor. It is often coined alongside the word bribery, the means by which the politician or official
is induced to become corrupt,” wrote Peter Johnston, former Chief Executive of the Scottish
Institute of Chartered Accountants.

In Nigeria, Corruption, Money Laundering, Tax evasion, Oil bunkering, Crude oil theft, Internet
Fraud and other related crimes have assumed alarming proportions. Pervasive mismanagement of
resources has become the order of the day both in the public and private organizations. Corruption
is so rife in the private sector in Nigeria that most foreign companies find it difficult to appoint
Nigerians as helmsmen to run their Nigerian offices.

Lever Brothers Nigeria suffered a similar setback a few years back when it suddenly removed
Chief Rufus Giwa after a careful review of its finances discovered abuses and irreconcilable
figures.

According to Okolo (2007), financial crime has become really pervasive and the likelihood of
corporate fraud occurring has also become more severe.

This is truly not far-fetched as is evident today. We have heard series of fraud cases ranging from
embezzlement of the police pension funds, the diversion of client’s money into private use by
managing directors of banks, and high ranking public office holders who are currently being tried
in court for one financial wrong doing or the other. This includes but not limited to the following;

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 The former speaker of the House of Representatives Rt. Hon. Dimeji Bankole; alleged to
have mismanaged monies to the tune of 200million Naira, contract inflation, purchase of
items without due recourse to the law;
The former Governor of Ogun State Chief Gbenga Daniel; currently being tried in the

Federal High Court in Ogun State. Charges against him include not remitting contributory
pensions of the state workers to their various pension fund administrators and embezzling state
money,

Ad-hoc Chairman House committee on Petroleum subsidy, Hon. Farouk Lawan (with all
his perceived integrity), is currently facing trial for collecting bribe to the tune of $620,000
from the chairman of Zenon Oil and Gas, Chief Femi Otedola,
Former Inspector General of Police, Sunday Ehindero (CFR), and his former commissioner
of police in charge of budget, John Obaniyi, was both on 21st of September 2012, remanded
in Kuje prison Abuja, for stealing money to the tune of 558million Naira while both were
at the elms of affairs at the force headquarters. This money was donated for the purchase
of arms and ammunitions for the police and the duo kept 300million naira and 200 million
naira of the monies in fixed deposit accounts in Wema and Intercontinental banks
respectively where it yielded interest for them, (source; Saturday Tribune, September, 22
2012);

Petroleum companies defrauding the nation of trillions of Naira in fuel subsidy money,
including the sons of respected big wigs in the country are currently facing the music before
the Judiciary. The list is endless.
Corruption and power are closely intertwined and their links had long been recognized. Corruption
is a term with many meanings, but generally it entails misusing one’s office for a private gain or
unofficial end. It involves both a monetary and non-monetary benefit. Bribery, extortion, influence
peddling, nepotism, scams, fraud, ‘grease money’, and opportunism readily spring to mind.

Transparency International (TI) defines corruption as the abuse of entrusted power for private gain.
This definition encompasses corrupt practices in both the public and private sectors. Corruption is
now a global problem common in both developed and developing countries, and reaching epidemic
proportions across borders. In democratic nations, where checks and balances deter corrupt and

14
other unethical practices, corruption is still prevalent. For instance, in Belgium and the United
Kingdom, Japan and Italy, Russia and Spain and other countries, allegations of corruption play a
more central role than at any time in recent memory. In 1993, serious allegations of corruption
involving varying levels of government surfaced in both developed and developing countries that
include Australia, Bolivia, Brazil, Bulgaria, France, Haiti, India, Italy, Japan, Malaysia, Paraguay,
South Africa, Spain and the USA. In recent times the volume of allegations of corruption springing
out of Nigeria have reached alarming dimension which elicited public outcries and protests from
various groups in the country to demand for good governance and for effective tackling of
corruption by the government. According to the Chairman of Transparency International, (the
global civil society organization leading the fight against corruption) Huguette Labelle, "The
continuing high levels of corruption and poverty plaguing many of the world’s societies amount
to an ongoing humanitarian disaster and cannot be tolerated". According to him, Public outcry at
corruption, impunity and economic instability sent shockwaves around the world in 2011. Protests
in many countries quickly spread to unite people from all parts of society. Their backgrounds may
be diverse, but their message is the same: more transparency and accountability is needed from
our leaders.

Transparency International since its founding in 1993 has played a lead role in improving the lives
of millions around the world by building momentum for the anti-corruption movement. This it
does by issuing a yearly Corruption Perception Index (CPI). It has become the world’s most
famous corruption ranking fiesta. People and governments all over the world expect the annual
CPI the way they expect the announcement of the Nobel Prizes. Some 200 countries of the world
are ranked from the least corrupt to the most corrupt. The Corruption Perceptions Index ranks
countries and territories according to their perceived levels of public sector corruption. It is an
aggregate indicator that combines different sources of information about corruption, making it
possible to compare countries. Broadly speaking, the surveys and assessments used to compile the
index include questions relating to bribery of public officials, kickbacks in public procurement,
embezzlement of public funds, and questions that probe the strength and effectiveness of public
sector anti-corruption efforts.

TI as fondly called expressed worry over the scope and speed of corruption in Nigeria this year,
saying it is beyond what it has ever dealt with. This is contained in an open letter to President

15
Goodluck Jonathan by Fitch and Associates in The Hague, The Netherlands, on behalf of
Transparency International; a copy of which was curled from

www.Africanspotlight.com.

Here is an extract of Ten Paragraph letter written to the President on April 30, 2012.

Dear President Goodluck Ebele Jonathan,

We are lawyers representing Transparency International, a global civil society group leading the
fight against corruption. Your Excellency, “To gather corruption data every year on two hundred
countries is arduous work. Our client’s thorough methodology is constantly reviewed and updated
by the best experts in the world. This methodology revolves around a national integrity system
assessment that is applied by a team of country specialists. Transparency International allots three
specialists to each of the 200 countries under assessment. Six hundred specialists work round the
clock to help our client draw up the CPI which is released on the last month of every year.
Transparency International has retained the services of our firm because they believe that Nigeria
is about to jeopardize their work for the year 2012. The problem, Your Excellency, has to do with
the rate and scale of scams and corruption probes coming out of Nigeria in 2012. The scope and
speed of corruption in your country this year is beyond anything our client has ever dealt with.
When the pension fund scam broke out, the three specialists working on Nigeria complained about
overwork and threatened a lawsuit against Transparency International because they had to work
23 hours a day from Monday to Sunday just to cope with the figures coming out of that scam. Our
client had to pull country specialists away from zero or low corruption countries such as New
Zealand, Denmark, Finland, Sweden, Singapore, Norway, Netherlands, Australia, Switzerland,
and Canada. The specialists working on all these countries were transferred to the Nigeria desk.
While the reinforced Nigeria desk was coping with the pension fund scam, the fuel subsidy scam
and the SEC scam also broke out in your country and the figures involved have been so vertiginous
that Transparency International has had no choice but to transfer all six hundred country
specialists working on two hundred countries to the Nigeria desk. With our client’s six hundred
experts now struggling to cope with corruption data emanating from just one country, the integrity
of the CPI process for 2012 has been compromised. TI has no staff to work on the remaining one
hundred and ninety-nine countries.

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Your Excellency, we are hoping that you would be willing to discuss a negotiated settlement.
Transparency International is seeking compensation from Nigeria for the unprecedented
disruption of her work occasioned by your gargantuan corruption scams this year – which has
made it impossible to focus on any other country. If you are unwilling to negotiate, we have been
instructed to institute legal action against your country, for conspiracy to derail the work of a
credible international organization by overwhelming her with corruption data and stretching her
resources beyond tolerable human limit”.
“In 2011 we saw corruption on protestors’ banners be they rich or poor. Whether in a Europe hit
by debt crisis or an Arab world starting a new political era, leaders must heed the demands for
better government,” said Huguette Labelle. Nigeria is equally not left out of the barrage of protests
and public outcry for good governance and the tackling of corruption.
Public sector governance that puts the interests of its citizens first is a responsibility that transcends
borders. Governments must act accordingly. For their part, citizens need to continue demanding
better performance from their leaders, says Huguette Labelle.

THE NEED FOR FORENSIC ACCOUNTING

According to Owojori, A.A and T. O. Asaolu in their work, “The Role of Forensic

Accountant in Solving Vexed Problems in Corporate World”, published and posted in

European Journal of Scientific Research Vol.29 No.2 (2009), pp.183-187, the need for forensic
accountant arose because of the failure of audit system in the organization as the organizational
internal and external audit failed to figure certain errors in the managerial system.

According to the publication, experts in the field pointed out that the intense economic pressure,
with more companies facing bankruptcy, jobs and careers are at risk and employee feel pressured
to maintain and support performance levels, forcing many to commit corruption and whatever the
reasoning may be, more and more forensic accountants are been called up to meticulously search
through documents, discover new information and help in putting together the irregular pieces of
company’s financial puzzle to solve the vexing problems of high level corruption and financial
mismanagement and recklessness both in the private and public sectors of the economy.

17
They listed the following as the important reasons for the growth of forensic accounting, 1. Internal
audit and audit committee as a point of the management function could not throw light on the
different fact and other hidden aspects of corporate fraud.

2. Rotation of the statutory auditor touches as part of the problem while it refuses emphasis
but it adversely needs longer duration. The method of appointing the statutory auditors is not
foolproof as it breeds collusion and lobbying.
3. The certificates of the auditors are hardly scrutinized carefully especially when the reports
are unclean and qualified.
4. The internal auditors can surely detect what was happening but they are hardly in a position
to initiate proper action in proper time.

2.6 BECOMING A FORENSIC ACCOUNTANT

Unfortunately the glamorous job of a fraud accountant or forensic accountant as is popularly called
starts with the boring necessity to be a good ordinary accountant! To become a forensic accountant
you must first become an ordinary accountant.

An old saying by the Chinese philosopher Confucius goes as follows:

"Choose a job that you enjoy and you will never need to work a day"

Accountancy training can commence with an academic qualification such as a University degree
or it can begin with professional qualifications and on the job training. Whichever route you take
will involve moving on to both professional and on the job training so if you have a subject that
you would like to study and would enjoy at university or college, such as engineering or zoology,
you will not be at a disadvantage if you pursue this prior to commencing your accountancy training.
In fact this would help you with your experience and potentially give you a broader understanding
of a number of business and other areas that you will encounter in your working career. As a matter
of fact, the Institute of Chartered

Accountant of Nigeria, the foremost accountancy body, approved by Decree and Act of the Federal
Republic of Nigeria, accepts students with a first degree different from accountancy to obtain its
professional qualification as a Chartered or Registered Accountant.

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In an improved effort to increase the awareness and need for forensic accountants and forensic
accounting education in Nigeria, the Institute has started training its members on

Forensic Accounting and equally established the faculty of Audit Investigation and Forensic

Accounting in February 2009. The institute has so far produced 90 Certified Forensic Accountant.
Also in May, 2009, the Institute conducted induction for 125 Chartered Accountants as Forensic
Accountants.

However information obtained from the website (www.ifa.org) of Institute of Forensic

Accountant of Nigeria (IFA) established under Decree No.1 of 1990 as a professional Institute for
provision of bona fide qualifications for Forensic Accountants through the administration
Professional Examinations; lists the following guidelines,

MEMBERSHIP

The Membership of the Institute consistof two Categories:

1. The First Category is the Associate Member with designation of CFA.

2. The Second and being the Highest Category is the Fellow Member with designation of

FFA, and members admitted to membership in such grades shall be entitled to use the initials

CFA or FFA after his or her name as the case may be.

3. a) A member of the Institute who is an Associate is entitled to use the Professional designation
of “Certified Forensic Accountant” and use after his or her names,
the initials CFA (Certified Forensic Accountant).

b. A Fellow member of the Institute is entitled to use the designation of “Fellow of Forensic

Accountant” and use the initials FFA after his or her names.

4. No person shall be eligible for admission into direct membership of the institute unless; a. He
is a member of Professional Accountancy Bodies as may from time to time be approved by the

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Institute’s Council or a Graduate in Accountancy of any Polytechnics or Universities as may be
approved by the Institute’s Council with a minimum of three years post

Qualification experience.

And at that date of Application he is in self-employment as practicing Accountant, or he/she is

holding a position as an Accountant, or Auditor in the public service of the Federation or

Statutory Corporation or reputable Industrial and Commercial Organization and must be a fit and
proper person to be so elected.

b. Any Nigerian citizen that was immediately before the incorporation of the Institute was an

Accountant General or Auditor General or Director of Finance, Chief Accountants in the

Public Services, Statutory Corporation or Finance Commissioners of Federal or State Inland

Revenue Department, provided he possesses a Bachelor Decree in Accountancy or

equivalent, with three years working experience.

5. Other classes of membership may be set from time to time by the Institute’s Council. The
Institute’s Council shall also have power at its discretion to discontinue Admissions to any class
of Membership not being Corporate Members or to close down any such class or classes of
Membership. Particulars of persons admitted to the classes not being classes or Corporate
Members will not be entered in the Register of Members kept pursuant to Section 83.

CONDUCTING A FORENSIC INVESTIGATION

The process of conducting a forensic investigation is, in many ways, similar to the process of
conducting an audit, but with some additional considerations. The various stages are briefly
described below.
Accepting the investigation

The forensic accountant must initially consider whether their firm has the necessary skills and
experience to accept the work. Forensic investigations are specialist in nature, and the work

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requires detailed knowledge of fraud investigation techniques and the legal framework.
Investigators must also have received training in interview and interrogation techniques, and in
how to maintain the safe custody of evidence gathered.

Additional considerations include whether or not the investigation is being requested by an audit
client. If it is, this poses extra ethical questions, as the investigating firm would be potentially
exposed to self-review, advocacy and management threats to objectivity. Unless robust safeguards
are put in place, the firm should not provide audit and forensic investigation services to the same
client. Commercial considerations are also important, and a high fee level should be negotiated to
compensate for the specialist nature of the work, and the likely involvement of senior and
experienced members of the firm in the investigation.
Planning the investigation

The investigating team must carefully consider what they have been asked to achieve and plan
their work accordingly. The objectives of the investigation will include: identifying the type of
fraud that has been operating, how long it has been operating for, and how the fraud has been
concealed, identifying the fraudster(s) involved, quantifying the financial loss suffered by the
client, gathering evidence to be used in court proceedings, providing advice to prevent the
reoccurrence of the fraud.

The investigators should also consider the best way to gather evidence – the use of computer
assisted audit techniques, for example, is very common in fraud investigations.
Gathering evidence

In order to gather detailed evidence, the investigator must understand the specific type of fraud
that has been carried out, and how the fraud has been committed. The evidence should be sufficient
to ultimately prove the identity of the fraudster(s), the mechanics of the fraud scheme, technical
and the amount of financial loss suffered. It is important that the investigating team is skilled in
collecting evidence that can be used in a court case, and in keeping a clear chain of custody until
the evidence is presented in court. If any evidence is inconclusive or there are gaps in the chain of
custody, then the evidence may be challenged in court, or even become inadmissible. Investigators
must be alert to documents being falsified, damaged or destroyed by the suspect(s).

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Evidence can be gathered using various techniques, such as: testing controls to gather evidence
which identifies the weaknesses which allowed the fraud to be perpetrated, using analytical
procedures to compare trends over time or to provide comparatives between different segments of
the business applying computer assisted audit techniques, for example to identify the timing and
location of relevant details being altered in the computer system discussions and interviews with
employees substantive techniques such as reconciliations, cash counts and reviews of
documentation. The ultimate goal of the forensic investigation team is to obtain a confession by
the fraudster, if a fraud did actually occur. For this reason, the investigators are likely to avoid
deliberately confronting the alleged fraudster(s) until they have gathered sufficient evidence to
extract a confession. The interview with the suspect is a crucial part of evidence gathered during
the investigation.
Reporting

The client will expect a report containing the findings of the investigation, including a summary
of evidence and a conclusion as to the amount of loss suffered as a result of the fraud. The report
will also discuss how the fraudster set up the fraud scheme, and which controls, if any, were
circumvented. It is also likely that the investigative team will recommend improvements to
controls within the organisation to prevent any similar frauds occurring in the future.
Court proceedings

The investigation is likely to lead to legal proceedings against the suspect, and members of the
investigative team will probably be involved in any resultant court case. The evidence gathered
during the investigation will be presented at court, and team members may be called to court to
describe the evidence they have gathered and to explain how the suspect was identified. It is
imperative that the members of the investigative team called to court can present their evidence
clearly and professionally, as they may have to simplify complex accounting issues so that non-
accountants involved in the court case can understand the evidence and its implications.

Source: www2.accaglobal.com/documents/forensic_auditing.pdf

22
DISTINCTION BETWEEN STATUTORY AUDIT AND FORENSIC AUDIT

S.No. Particulars Statutory audit Forensic Audit

1. Objective Express opinion as to Determine

‘true & fair’ correctness of

the presentation of accounts or
whether accounts. any fraud
has actually taken place.
2. Technique ‘Substantive’ and Analysis of past trend

‘Compliance’ and substantive or ‘in procedures.

depth’ checking of selected transactions.
3. Period Normally all No such limitations. transactions for the
Accounts may be particular accounting examined in detail period. from
the beginning. 4. Verification of stock, Relies on
the Independent estimation of realizable value management
verification of of current assets,
certificate/representation suspected/selected provisions/Liability of
management. items carried out. estimation, etc.
5. Off balance-sheet items (like Used to vouch the Regularity and
contracts etc.) arithmetic accuracy & propriety of these compliance with
transactions/contracts procedures. are examined.
6. Adverse findings, if any Negative opinion or Legal determination qualified
opinion of fraud and naming expressed, with/without persons behind such
quantification. frauds.

ADVANTAGES OF FORENSIC AUDIT

• Forensic auditing can play an important role for companies under review by regulatory
authorities and can also be invaluable to ensure regulatory compliance. For example,

23
 forensic auditing can be useful in helping companies to ensure that their anti-money
laundering procedures are both effective and robust.

• Forensic auditing can help protect organizations from the long-term damage to reputation
caused by the publicity associated with insider crimes. A
forensic audit also provides a sound base of factual information that can be used to help resolve
disputes, and can be used in court should the victim seek legal redress.
• Forensic auditing can improve efficiency by identifying areas of waste

• Forensic auditing can help with the detection and recording of potential conflicts of interest
for executives by improving transparency and probity in the way resources are used, in
both private and public entities.
2.9.1 DISADVANTAGES OF FORENSIC AUDIT

• A poorly managed forensic audit could consume excessive amounts of management time
and could become an unwelcome
distraction for the business

• Forensic audits can have wide-ranging scope across the business.

Under certain circumstances, the scope of the audit may need to be extended, with a corresponding
increase in the budget.
• Some employees can interpret a proactive forensic audit as a slight on their integrity, rather
than as a means to improve control procedures for
the benefit of the business

Source: http://www.scribd.com/doc/53009045/MSc-Accounting-SEMINAR-PAPER-on-

FORENSIC-AUDIT

24
2.10 SKILLS REQUIRED FOR A FORENSIC ACCOUNTANT

• Basic accounting skills – Accounting is widely regarded as the “language of business”

and it seems obvious that a forensic accountant should have strong basic accounting skills.
• Written communication skills – Forensic accountants need to document their work. A
well-written report by a forensic accountant can be a vital tool in litigation, and may help
to impress the judge/jury (Crumbley et al., 2007).
• Verbal communication skills – Part of the job of the forensic accountant is to go into the
field and speak to company personnel who may or may not be involved with the suspected
fraud (Crumbley et al., 2007). In addition, forensic accountants are often called to be expert
witnesses and testify during litigation, presenting often complex evidence to the jury in an
understandable manner (Sanchez and Trewin, 2004).
• Analytical skills – Analytics can be of use to forensic accountants because they often
reveal unusual relationships that need to be examined. Some forensic accounting experts
feel that if the auditors of HealthSouth had properly applied analytical procedures, they
may have uncovered the over $1 billion fraud that they failed to find for 17 years
(Crumbley et al., 2007).
• Prior audit experience - Some fraud professionals recommend at least two years of
auditing experience, followed by a position in a law enforcement agency working on fraud
related cases to gain a competitive edge in the profession (Wells, 2003).
• Personality traits - There is anecdotal evidence that good people skills and an

aggressive personality are useful traits for forensic accountants (Wells, 2003).

• Computer forensics skills - Today, almost every fraud involves the use of computers and
digital documents (Smith, 2005).
• Data mining skills – Data mining, which uses mathematical algorithms to seek hidden
patterns in data, can be used by forensic accountants to review controls and discover fraud,
abuse, and corruption (Crumbley et al., 2007).
• Background in criminal justice/law enforcement - Since September 11, 2001, detecting
and preventing terrorist attacks is a huge concern for the U.S. government, and forensic
accountants have been playing a major role in tracing terrorists around the world (Florida

25
 Atlantic University, 2008). Terrorists are thought to obtain some of their funds by
exploiting U.S. programs such as workers compensation, unemployment, welfare and
health programs, food stamps, and other programs (Brooks et al., 2005).
• Interviewing skills – A forensic accountant often must interview executives who may or
may not be suspects. They need to be alert to both verbal and nonverbal cues to determine
whether the individual is being deceptive (Crumbley et al., 2007).
• Experience with Benford’s Law - Benford’s law, which states that the distribution of
digits in natural numbers follows a predictable pattern, has been touted as a simple and
effective tool for helping the auditor uncover fraud (Durtschi et al., 2004).
• Professional designations - Some accounting firms will hire individuals for forensic
accounting positions only if they have earned the Certified Fraud Examiner credential
(CFE), or its equivalent as the case may be in other countries, some firms will hire
individuals without that credential (Wells, 2003). A recent study indicates that CFEs earn,
on average, twenty-two percent more than their non-certified colleagues (Business and
Finance Week,

26
DATA ANALYSIS
AND
INTERPRETATION
OF RESULTS

27
The chapter is concerned with the presentation, analysis and interpretation of results collected from
the various respondents through the use of interviews and questionnaire. The interviews as
conducted are transcribed and presented by the researcher in tables, in the basis of which
conclusion was reached. Responses were elicited from them based on the interview guide. The
data collected from the administration of questionnaires were equally analysed using tables and
percentages from which conclusions are finally drawn.

4.1 RESULTS AND DISCUSSIONS

The discussion of the interview results is divided into three sections:

1. Demographics of respondents
2. Highlighting some of the most relevant enhanced skills which forensic accountants

must possess.

3. Bringing to the fore specific challenges facing the growth of forensic accounting

practice in Nigeria.

4. Gathering information on where forensic accountants are needed.

4.1.1 DEMOGRAPHICS OF RESPONDENTS

Variable Frequency counts Percentage ( % )
Gender
Male 14 70
Female 6 30
Total 20 100
Age
Below 20 0 0
21-30 12 60
31-40 8 40
41-50 0 0

28
The table above shows the distributions of the respondents whom the questionnaires were
administered to and it indicates that there were 14(70%) males while 6(30%) was female. It also
revealed that 12(60%) were between the ages 21 and 30, and 8 fell within age 31 and 40(40%). In

29
addition it indicates 9(45%) of the respondents had only B.Sc. / HND while the remaining 11(55%)
had B.Sc. and Masters/its equivalent.

It also depicts that in terms of professional qualifications 7(35%) had AAT, and all of them

11(55%) had only ACA/ANAN/ACCA, while 5(35%) have both CFE/CFA &
ACA/ANAN/ACCA and the remaining 4(20%) had both AAT & ACA/ANAN/ACCA.

Inclusively, 15(75%) had accountancy as their academic major, Economics 4(20%) Banking and
finance 1(5%).

In terms of working experience, 6(30%) had worked for between 1 and 5 years, 13(65%) had
worked for between 6 and 10 years while 1(5%) had worked for between 11 and 15 years. 18(90%)
works with Audit firms, while 2(10%) work with private practice. None of them works in
government establishment. It also indicate that just 1(0.05%) is in Top level management, 12(60%)
are in middle management level while the remaining 7(35%) fall within the low level management.
14(70%) are practicing forensic accountants while the remaining 6(30%) are simply auditors at
the audit firms.

BSC/HND ACA,ANAN/ACCA CFA/CFE WORKING

EXPERIENCE
KPMG Yes Yes Yes 5
DELOITTE Yes Yes No 7
CITN Yes Yes Yes 9

Table 4.1.1.2
In addition Table 4.1.1.2 above depicts the demographics of those personally interviewed by the
researcher.

ANALYSIS OF DATA BASED ON REASEARCH OBJECTIVE

Highlighting some of the most relevant enhanced skills which forensic accountants must possess
YES % NO %

Forensic accountants needs

30
 20 100 - -

basic accounting skills Forensic

accountants need

possess written 20 100 - communication

skills Analytical skills are
important to succeed in the 20 100 - field of
forensic accounting Forensic accountants need to
be conversant with criminal 20 100 - laws and
enforcement

Forensic accountants need to

20 100 - -

have prior audit experience

Source: Field survey 2013 Table 4.2.1

Table 4.2.1 above shows the responses of 20 respondents as regards forensic accountants and the
most enhanced relevant skills they must to possess. Amazingly, all the respondents were in favour
of all the characteristics examined. 20(100%) affirmed that forensic accountants need basic
accounting skills. As postulated in the previous chapters of this research that forensic accounting
is a “specialty” field of accounting. In other words, they affirmed that one cannot become a
forensic accountant without the basic knowledge and rudiments of accounting.

With respect to the interview on this, all the respondents equally could not agree otherwise that
basic accounting skills are needed to become a forensic accounting. It was gathered from them
that part of what forensic accounting does is to observe keenly the financial statement prepared by
ordinary accountants and derive whether there are evidences of fraud or criminal intentions. In
their words “looking at financial transactions with more than the ordinary eyes” Basic
understanding in accounting includes; understanding the double entry principles, accounting
concepts and conventions, treatment of various items in the accounts, calculation of depreciation,
understanding of cash and accrual basis are needful.

31
We can then conclude that we cannot separate forensic accounting from the basic accounting.
Forensic accounting takes its root from basic accounting.

Equally 20(100%) of the respondents agreed that forensic accountants must possess written
communication skills. This is because the forensic accountants are required as a trier in court to
write and present their reports in the agreed lingua franca and readable formats. Before an accused
is convicted in any criminal case, it is pertinent form the point of the law that the prosecution must
be able to convince the judge and all based on the evidences at his disposal; beyond reasonable
doubts that the accused must without gain say be punished for the alleged crime. As is the usual
believe that accountants speak in figure but rather than in words, this is not the case with forensic
accountants. The forensic accountant, representing in court must be able to speak and write beyond
figures but also in correct and sound verbal lingua franca. One of the respondents working with
KPMG said “what is the use of the evidences gathered when it cannot be succinctly communicated
at the law court to prove ones case beyond reasonable doubts”.

Furthermore, all the respondents submitted that forensic accountants need to be conversant with
criminal laws and the art of law enforcement. The courts and the laws are two basic reasons why
forensic accountants are different from ordinary accountants or even statutory auditors. Anything
“forensics” has to do with court and the legal laws. To perform at his optimum, forensic
accountants therefore need to be conversant with the criminal laws and the court system. Mr.
Adebayo Olumuyiwa from Akintola Williams (Deloitte) said “you are not a forensic accountant if
you don’t know the law and its enforcement; most especially criminal laws”. This isn’t in anyway
different from what both Mr. Seun with KPMG and Mr. Godwin at CITN’s conclusion. They both
added that forensic accountants need equip themselves with several laws and ACTS such as
Companies and Allied Matters Act (CAMA), Insurance laws, Matrimonial/customary Laws,
Money Laundering and Evidence ACT and other laws that enhance their efficiency on the job.

In addition from the survey carried out, 100% of the respondents agreed that a forensic accountant
need to have prior experiences in statutory audit works to enhance his efficiency. As equally
gathered from the personal interview, experience in statutory audit works will assist a forensic
accountant a great deal but it is not a sine qua non. Mr. Seun of KPMG gave himself as an example.
He said he entered as a chartered accountant with KPMG 5years ago without prior working
experience but was later trained and he is still undergoing on the job training. He added that most

32
times the young forensic accountants in his organization are attached to the experience once in
field work and by this, they even learn faster instead of what they just read in books. He said the
researcher was lucky to get him because he just came back from training in India.

Mr. Adebayo at Deloitte however stressed the need for forensic accountants, professional bodies
and audit firms generally to orgarnise training programmes for their forensic staff so that they may
be conversant with the recent trends in forensic accounting and accounting practice in general. He
said this will not only build their capacity, it will equally build their confidence and enhance their
performance on the job.

Table 4.2.2 above elucidates the challenges affecting the growth and practice of forensic
accounting in Nigeria. It corroborates the findings of the researcher during the interview. Majority
of the interviewee maintained that ill-structured legal system is a bane of forensic accountants’
success. They said if the forensic accountants are well equipped in terms of capacity and learning,
and there is no favourable environment for him to operate, then he is handicapped.

Although from the table above, 15 out of 20, which represent 75% of the respondents agreed in
the affirmative that criminal laws in Nigeria affect the growth of forensic accounting and the
remaining 5 which represents 25% of the respondents said Nigerian criminal laws do not affect its
growth. When asked for reasons why criminal laws affect the growth of forensic accounting
practice, of the 15, 8(53%) spoke in the same direction. It could be implied from their reason that
the judgments handed down to offenders who are found guilty are not always commensurate with
their offense so as to serve as deterrents to intending offenders. In an earlier interview with Mr.
Godwin of the CITN, he gave an insight of a judgment which was delivered early in the year where
a man accused to have stolen N23 billion was sentenced to 2years imprisonment with an option of
fine of N500, 000.

5 of the respondents, representing 25% did not agree that there is anything wrong with Nigerian
criminal laws as it relates to forensic accounting. Mr. Seun of KPMG equally agreed with them.
He gave reasons for this. He said, the laws are there, but they are not being enforced. Mr. Seun

33
said, even though some of the laws needed to be reviewed to meet present day realities, he
concluded that more still needed to be done in terms of enforcement of the existing ones. When
asked to elaborate on why most of the laws are not being enforced, Mr. Seun said it can be traced
to the corrupt tendency of enforcement agents in the country.

Furthermore 3(20%) of those who agreed that Nigerian criminal laws affect the growth and
practice of forensic accounting alluded their reasons to be that several loopholes in the laws aid
offenders to evade justice.

It can be concluded from the foregone that for the practice of forensic accounting to grow and be
more embraced, several of the lopsided and extinct Nigerian criminal should be reviewed, updated
or totally extinguished for replacement.

Also from the table, we see that all the 19 respondents which represent 95% of the entire population
agreed that Nigerian legal and courts systems have negative impact on the growth of forensic
accounting in the country while just 1 respondent which represent 5% said it does not have any
negative impact on the growth of forensic accountants. The reason is not farfetched as we all know.
Court proceedings foot drag with unending adjournments which naturally kills the drive of the
prosecutors. Also, as Nigeria is very slow in accepting some electronic evidences as admissible
evidences in the court of law. Several cases have been lost and offenders have walked out freely
when damning evidences that should have nailed them have been turned back mainly because the
law does not permit its admittance as evidences.

Mr. Seun, Mr. Godwin and Mr. Adebayo all agreed that it is the ill manner with which the Nigerian
legal system have been structured that has rendered the efforts of law enforcement agents such as
The EFCC, and The ICPC in fighting corruption futile. They equally added that the abortive nature
with which cases are abruptly brought to an end without reasonable conclusion also leaves much
to be desired.

In addition, all of the respondents (100%) affirmed that the Educational system in Nigeria do not
support the growth, learning and practice of forensic accounting. Mr. Adebayo with Akintola
Williams (Deloitte) emphatically suggested that as it is done in the western countries where
forensic accounting is embraced, forensic accounting should be taught as a course of study to
accounting students at least from 200level so that by the time they get to the field, they will just

34
start practicing with little supervision since they would have been conversant with its rudiments in
the classroom. Mr. Godwin did not affirm less.

It can be concluded from this aspect that bedeviling the practice and growth of forensic accounting
in Nigeria are majorly the legal and court systems in the country, educational system and to some
extent the criminal laws in the country which should be reviewed. It is certain that if all these are
looked into, the country will experience rapid growth in the niche which will equally translate into
speedy dispensation of justice.

Areas where forensic accountants are needed

Here the respondents are left to state by themselves with no option being provided for them to
choose from, the several areas and activities in which forensic accountants are most commonly
engaged in.

Frequency count Percentage

Corporate fraud investigation 14 70
Criminal investigation 12 60
Litigation service 9 45
Matrimonial dispute 8 40
Partnership dispute 6 30
Business valuation 3 15
Professional negligence 3 15
Computer forensics 2 10
Personal injury claim 1 5
Employee fraud 1 5

Source: Field survey 2013. Table 4.2.3

As seen in table 4.2.3 above, commonly featured in the responses is corporate fraud investigation
with 14 representing 70% of the total respondents. We may deduce from this that forensic
accountants are mostly employed to investigate corporate fraud. From findings, most of the
corporate frauds are mostly perpetrated by the top level management in the organizations or the
owners of the business themselves in the case of privately owned businesses. A vivid example of
this is Enron and WorldCom in the United States of America.

Also the KPMG forensic review of the NNPC showed a major rot in the Multinational Company.
Among the scope of the study was to determine the accuracy and completeness of reported crude
oil and gas revenues accruing to the NNPC (both Federation and NNPC crude) during the period

35
2007 to 2009 among others. The report dated 07 September 2010 had in it the following findings
among others;

Production /Commercial Allowable volumes have been observed to consistently exceed

OPEC quota of 1,673,000 BBL/D for the six month period (April to September 2010),
NNPC is invoiced in US$ for domestic crude allocations but is expected to remit the
equivalent Naira value to the Federation Account. However we observed that exchange
rates used by NNPC were lower than the average exchange rates published by the CBN
during the review period. The implication of this is that there is significant underpayment
by the NNPC to the Federation account
We observed that crude oil sales and collections are not promptly captured on the
accounting system. Typically, these transactions are captured in the accounting system
after the transaction have been approved at FAAC meeting which is typically two (2)
months in arrears. This implies inaccurate sales and collection information on the financial
system and multiple data sources as data are predominantly managed outside the system
The process of selecting Suppliers for importation of products is documented but the
documented procedures are not adhered to. We observed that the Evaluation Committee
only recommends prices for the importation of petroleum products while actual allocation
of importation contracts (especially volumes) appear to be at Management’s discretion.
Here the risk exists that the product importation process could be prone to abuse.
KPMG observed that NNPC s subsidy claims and PPPRA s verification are based on‟ ‟
volume of petroleum products available for sale (volume of products imported and actual
production from the refineries) as against duly verified volume of products lifted out of the
depots (volume of petroleum products sold) as stipulated in the subsidy guidelines.
Source: Interim report on the Process and Forensic review of NNPC: Consolidated Detailed
Findings-v1.docx. 07 September 2010.
Closely following corporate fraud investigations is criminal investigation with 12(60%) of them
indicating it as one of the services forensic accountants engage. This is seen by the deluge of
criminal cases in the courts all over the country ranging from armed robbery, theft, militancy and
terrorism, oil bunkering, and rape to mention just a few. This has been attributed to several factors
such as unemployment, agitation for resource control, religious and ethnic indifferences among

36
other reasons. Equally the police, FBI in the United States of America, CIA and others engage the
services of forensic accountants.

When asked why forensic accountants are becoming more popular in Nigeria, Mr. Godwin, Mr.
Adebayo and Mr. Seun all insinuated that the rate of crime and fraud in the country has become
so alarming and the court are now been regarded as the settler of disputes which means a forensic
accountant must be hired to prove the case of fraud and criminalities beyond reasonable doubt.

Equally listed among the areas of engagement of forensic accountants are litigation service and
matrimonial disputes taking 9(45%) and 8(40%) respectively of the total responses. As stated
earlier, it is now a common practice to head for the court for the settlement of disputes than in the
past. Many business owners, shareholders, politicians and other interested parties now see the court
as the arbiter of truth and justice. Litigation services include assisting with the protection and
recovery of assets, obtaining documents necessary to support or refute a claim, the review of
factual situation and provide suggestions regarding possible courses of action. Also many couples
now demand the services of forensic accountants in Matrimonial disputes by employing him for
the assessment and evaluation of assets to be divided. This is evident from the divorce rate
prevalent all over the world in recent times.

Also on the list of services where forensic accountants are in high demand is in the area of
investigating the root cause of partnership dispute. 6 respondents which represent 30% of the entire
population stated this as the services engaged in by forensic accountants.

Equally on the list of clients’ demand for forensic accountants are business valuation for merger
and acquisition, investigation of professional negligence, computer forensics, personal injury
claim, and investigation of employee fraud which were written by a handful of the respondents.
The profession is really growing and there are no limits to the services that forensic accountants
can render if only they could develop and build their capacity for it.

37
FINDINGS OF THE
STUDY

38
FINDINGS ONE
forensic accountant need possess basic relevant skills to succeed in their field

From table 4.2.1, it is observed that all the respondents affirmed positively all the expected
characteristics of a forensic accountant. There is no basis for testing here. We can only conclude
in line with the result of the finding and base our decision on the outcome and agree with the
following:

1. Forensic accountants need basic accounting skills;

2. Forensic accountants must of a necessity possess written communication skills;

3. To succeed as a forensic accountant, adequate analytical skill is a sine qua non.

4. Adequate knowledge of criminal law and enforcement is important for the forensic
accountant and
5. It is a must for a forensic accountant to have a prior audit experience.

Decision: since there is no opposing motion or view, there is no need for further computation
Conclusion: we can therefore conclude that forensic accountants must possess enhanced relevant
skills to succeed and be seen as a good forensic accountant.

4.3.2 FINDINGS TWO

Ho: there are challenges facing the growth of forensic accounting in an organization

From table 4.2.2 above, there were no opposing view to the fact that;

1. Legal and court systems negatively impact the growth of forensic accounting practice;
2. Educational system does not encourage the growth of forensic accounting.
Conclusion: Based on this, we can reasonably conclude that the growth forensic accounting is
impeded by faulty legal and court systems and equally ill structured educational system and
curriculum.

39
However on the question of effect of criminal laws on the growth of forensic accounting, 15(75%)
agreed that it negatively affect its growth, while just 5(25%) spoke in the positive that criminal
laws do not hinder its growth.

Decision: if we are to put this to a vote, those who said it has negative impact will obviously carry
the day.

Conclusion: since majority of the respondents are the forensic accountants themselves and they
know the challenges they encounter in the field, suffice to say that we can reasonable conclude
that Criminal laws affect the growth of forensic accounting practice negatively to a large extent
but in some other instances where the laws exist, all that is needed is its full enforcement.

4.3.3 FINDINGS THREE

To gather information on where forensic accountants are needed

Based on findings as stated in table 4.2.3 above, the respondents listed the following as areas where
forensic accountants are needed and where they are engaged in;
• Corporate fraud investigation: 14 out of 20 respondents which represent 70% of the entire
population wrote this. This could reasonably mean that the rate of occurrence of corporate
fraud is on the very high side as highlighted in the literature of this research. Conclusion:
we can reasonable conclude that majority of the respondents are favourably disposed to the
fact that forensic accountants are mostly engaged to investigate corporate frauds.
• Criminal investigation: 12 of the respondents wrote that forensic accountants are engaged
in the investigation of crimes of various kinds, most especially financial crimes. This
represents 60% of the entire population.
Conclusion: we can reasonably conclude that forensic accountants are also mostly engaged in
the investigation of financial crimes the world over going by the percentage of respondents
that wrote in its favour.
• Litigation Services: 9 of the total respondents wrote in favour of litigation services. This
represents 45% of the entire population.
Conclusion: we can reliably conclude that litigation service is also a major area where forensic
accountants are engaged for.

40
• Matrimonial and partnership dispute: 8 and 6 of the total population wrote this representing
40% and 30% respectively of the total respondents.
Conclusion: this enables us to reasonably gather that a handful of forensic accountants are
equally engaged in matrimonial and partnership dispute investigation and settlement.
• Business valuation and professional negligence: 3 of the entire population wrote these
which represent 15% of the entire population affirm that forensic accountants are engaged
to evaluate businesses in the time of business purchase or merger. They are equally
engaged to investigate professional negligence causing injury to the third party.
Conclusion: we can conclude that at least some forensic accountants are engaged to evaluate
businesses and professional negligence.
• Equally on the list of services offered by forensic accountants are computer forensic,
personal injury claim and employee fraud investigation.

41
LIMITATIONS

OF

THE STUDY

42
The study covers all necessary aspects of forensic accounting, its historical background, the need
for forensic accountants, the various opportunities open to business organizations, the country and
readers alike by embracing the forensic accounting fields. It x-rays the daunting challenges and
bottlenecks prevalent and attributable to carrying out the task of forensic audits, both in Nigeria
and other developed countries. The study also dwell on the types of work carried out by the
forensic accountant, the procedures involved in forensic auditing, areas of usefulness of forensic
auditing and forensic accounting, the various types of crimes and fraudulent practices prevalent
now and in the past.

The study also highlights some organizations where forensic investigations have taken place to
sniff out hidden fraud incidences. These include Enron, WorldCom, Health South, and Cadbury
Nigeria Plc. among others. It also covers some banks technically declared insolvent by the Central
Bank of Nigeria. The study also looks into current decided court cases such as James Ibori, Cecilia
Ibru of former Oceanic Bank, Erastus Akingbola of former Intercontinental Bank and pending
court cases involving financial crimes.

Brief insight was also given into The House of Representative Committee probes. This includes
The NNPC probe panel report, SEC probe, and Fuel Subsidy probe and so on. It equally brought
to the fore recent rating of Nigeria in the Corruption Perception Index (CPI) by the Transparency
International. An index of looting in some African countries including

Nigeria in the past is also included.

During the course of the research exercise, several challenges were encountered. The most
prominent of these challenges are limited time available, limited financial resources and sourcing
of materials.

Combining other courses with writing the project coupled with the short academic semester
calendar was a great constraint. However the little time available was utilized efficiently to gather
sufficient materials necessary for the report.

Insufficient fund is another limiting factor in the course of gathering data for the project report.
These include funds to spend on internet facilities and to visit professionals engaged in forensic
accounting practice. However the available fund was managed to gather necessary materials.

43
Equally daunting challenge was encountered in gathering information from old newspapers
archive and arranging appointments with staffs of forensic departments of audit and accounting
firms.

44
 CONCLUSIONS

AND
RECOMMENDATIONS

45
This chapter presents the summary of the whole study, the conclusion drawn from it and the
recommendation made based on the findings of the study.

CONCLUSION

Based on the research findings, it can be concluded that the views of the respondents concerning
the issues raised about the practice of forensic accounting in Nigeria are somewhat similar and all
pointing to the fact that more still needed to be done by the government, students, accounting
practitioners, audit firms and professional accounting bodies to provide an enabling environment
for the practice of forensic accounting, to encourage its growth and practice in Nigeria. It can be
inferred from the study that the legal system is a bane of the success of forensic accounting.
Capacity of accountants also needs to be built to facilitate the practice and embracing of forensic
accounting in Nigeria.

RECOMMENDATIONS

Based on the findings of this study, the following recommendations were made:

1. There should be coalition amongst those involved in forensic and investigative accounting
including lawyers, accountants and other members of the public.
Balkanisation of the profession should be avoided.

2. The subject of forensic and investigative accounting should be professionalised. In this

regard, the necessary legal framework for regulating the practice of forensic accounting and
investigations should be established, and where necessary, existing laws should be amended to
address developments in this area.
3. Training of persons interested in the practice of forensic and investigating accounting, as
well as continuing education for persons already in the profession should be provided in order to
develop capacity in this area.
4. The public sector should be involved in the forensic accounting initiative in view of the
fact that the government is the biggest spender in Nigeria's economy, is victim of most of the
corrupt practices and therefore, needs forensic and investigative accounting support more than
other stakeholders

46
5. Tertiary institutions in Nigeria should engage and be encouraged at this embryonic stage
of forensic accounting and investigation to develop curricula for forensic accounting and
investigation as obtains in many universities outside the country.
6. It should be determined early enough at what point professional certification should
become a requirement for new entrants into the forensic accounting and auditing profession. In
achieving this, a harmonised approach which insists on evident demonstration of expertise in
forensic accounting and investigation and defines the required basic knowledge of law and
accounting expected of professional should be adopted.
7. A 'duty of care' should be imposed on cyber café operators. To this end, cyber café
operators should be required to register their customers so as to facilitate easy and effective
investigation of fraudulent practices perpetrated via their internet facilities. Furthermore,
technological measures should be utilised by online and internet service providers to preempt and
abort fraudulent acts and transactions perpetrated with the use of their facilities.
8. The Evidence Act should be amended such that the definition of 'document' includes
electronically generated document in order to make forensic evidence admissible in the
prosecution of banking offences.
9. There is also need to coalesce forensic and investigative accounting and auditing efforts.
Furthermore, the relevant laws should provide that where possible, membership of Audit
Committees of public companies should include a forensic accountant.
10. To guarantee the successful mitigation of economic crimes generally, and in the banking
sector specifically, the malaise of corruption should be effectively addressed. In this regard, moral
and ethical re-orientation is needed in the society in general to ensure that less value is placed on
materialism, and material success through illegal means is abhorred.
11. The Money Laundering Act should be reviewed to reflect the current nature of banking
practice in Nigeria vis-à-vis the perpetration of financial and economic crimes to ensure a more
practicable role for the banking institution in mitigating financial crimes
5.4 SUGGESTIONS FOR FURTHER STUDIES

The present research on the practice of forensic accounting in Nigeria has helped to highlight the
main difficulties facing forensic accountants which if worked upon can further increase the
awareness and success of the practice among accountants in the country.

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Further researchers will need to evaluate those areas and factors not discussed in details in this
research and other issues that could also throw more light on various issues discussed.

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BIBLIOGRAPHY

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1. American Institute of Certified Public Accountants (AICPA), Characteristics and

Skills of forensic accountants

http://www.aicpa.org/interestareas/forensicandvaluation/resources/practaidsguidance/downlo
adabledocuments/forensicaccountingresearchwhitepaper.pdf
2. Becoming a forensic accountant. www.ifa.org

3. Brigitte W. Muehlmann, Priscilla Burnaby, Martha Howe, 2012. The Use of Forensic
Accounting Experts in Tax Cases as identified in Court Opinions. Journal of forensic and
investigative accounting Vol. 4, Issue 2, 2012.
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http://www.nialsnigeria.org/round_tables/CommuniqueonForensicandInvestigativeAccou
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Economic and
6. Dorothy A. McMullen, Maria H. Sanchez, A Preliminary Investigation of the

Necessary Skills, Education Requirements, and Training Requirements for Forensic Accountants,
Journal of Forensic & Investigative Accounting Vol. 2, Issue 2

7. Eme Joel Efiong, February 2012, Forensic Accounting Education: An Exploration of Level
of Awareness in Developing Economies - Nigeria as a Case Study.
http://www.ccsenet.org/journal/index.php/ijbm/article/download/13033/10215

8. How to become a forensic accountant.

http://www.ehow.com/how_2306364_becomeforensic-accountant.html

9. ICAN STUDENTS’ JOURNAL, January/March, 2010 Vol. 14 No.1 Forensic

Accounting: Issues in Accountancy and Audit Practice

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