Chapter 2 - 5

CHAPTER TWO
2.1 LITERATURE REVIEW

The review of related literature in this study is divided into three subheadings, namely,
conceptual, theoretical and empirical framework.
2.2 Conceptual Framework
Fraud and Fraudulent Activities
Bello (2001) stated that fraud is generic and is used in various ways. Fraud assumes so many
different degrees and forms that courts are compelled to context themselves with only few general
rules for its discovery and defeat. It is better not to define the term lest men should find ways of
committing frauds which might evade such definitions.
Okafor (2004) also reported that fraud is a generic term and embraces all the multifarious means
which human ingenuity can devise, which are resorted to by one individual to get advantage over
another in false representation. No definite and invariable rule can be laid down as a general
proposition in defining fraud as it includes surprise, trick, cunning and unfair ways by which
another is cheated. According to Appah (2016), fraud is an act or course of deception, deliberately
practiced to gain unlawful or unfair advantage; such deception directed to the detriment of
another. Legally, fraud has been defined as the act of depriving a person dishonestly of
something, which is, or of something to which he is or would or might be entitled but for the
perpetration of fraud.
Karwai (2002), Appah (2016) are of the view of fraud in organizations vary widely in nature,
character and method of operation in general. Fraud may be classified into two broad ways:
nature of fraudsters and method employed in carrying out the fraud. On the basis of the nature of
1
the fraudsters, fraud may be categorized into three groups, namely; internal, external and mixed
frauds. Internal fraud relates to those committed by members of staff and directors of the
organizations while external fraud is committed by persons not connected with the organization
and mixed fraud involves outsiders colluding with the staff and directors of the organization.
2.2.1 Concept Forensic Accounting
Forensic accounting is a discipline that has its own models and methodologies of investigative
procedures that search for assurance, attestation and advisory perspective to produce legal
evidence. It is concerned with the evidentiary nature of accounting data, and as a practical field
concerned with accounting fraud and forensic auditing; compliance, due diligence and risk
assessment; detection of financial misrepresentation and financial statement fraud (Skousen and
Wright, 2008); tax evasion; bankruptcy and valuation studies; violation of accounting regulation
(Dhar and Sarkar, 2019).
Curtis (2008) argues that fraud can be a subjected to forensic accounting, since fraud
encompasses the acquisition of property or economic advantage by means of deception, through
either a misrepresentation or concealment. Bhasin (2007) noted that the objectives of forensic
accounting include: assessment of damages caused by an auditors’ negligence, fact finding to see
whether an embezzlement has taken place, in what amount, and whether criminal proceedings are
to be initiated; collection of evidence in a criminal proceedings; and computation of asset values
in a divorce proceedings. He argues that the primary orientation of forensic accounting is
explanatory analysis (cause and effect) of phenomenon including discovery of deception (if any),
and its effects-introduced into the accounting domain. According to Bhasin (2007), forensic
accountants are trained to look beyond the numbers and deal with the business realities of
situations. Analysis, interpretation, summarization and the presentation of complex financial
business related issues are prominent features of the profession. He further reported that the
activities of forensic accountants involve: investigating and analyzing financial evidence;
developing computerized applications to assists in the analysis and presentation of financial
evidence; communicating their findings in the form of reports, exhibits and collections of
2
documents; and assisting in legal proceedings, including testifying in courts, as an expert witness
and preparing visual aids to support trial evidence. In the same vein Degboro and Olofinsola
(2020) stated that forensic accountants provide assistance of accounting nature in financial
criminal and related economic matters involving existing or pending cases as specified by the
Alliance for Excellence in Investigation and Forensic
2.2.2 Forensic Accounting Mechanism
Internal control systems have been described as the basic means of preventing and detecting
fraud (Wells, 2018). However, Barra (2020) contends that what constitutes an effective internal
control system is more of opinions that are based on definite knowledge established through
research. Moyes and Baker (2018) carried out a study on auditors belief about the fraud detection
effectiveness of standard audit procedures. The result shows that out of the 218 standard audit
procedures, 56 were considered more effective in fraud detection. The study further reveals that
the most effective procedures were those that related to internal controls in terms of its existence
and or strength.
Also, Bierstaker, Burnaby and Hass (2018) investigated the extent to which internal auditors used
the perceived effectiveness of the various fraud prevention and detection mechanisms.
The outcome of the study suggests that internal control review and improvement, operational
audits and reference checks on employees were the commonly used mechanisms of fraud
prevention and detection, yet software and digital analysis with generally high ratings of
effectiveness were the least often used. ACFE (2018) has provided relevant findings regarding
how fraud can be uncovered using the formal mechanisms such as internal audits and internal
control features. Nevertheless, informal mechanisms have served as the most frequent precursor
to fraud detection. About 42 per cent of fraud precursors have come through tips, 23 per cent
through internal control, 20 per cent by accident and 19 percent by internal audit. External audit
and the police account for about 9 and 3 percent respectively (ACFE, 2018; Drew and Drew,
2020).
It has been argued that an effective internal control system is not protection against fraud (Blake,
2021).
Muslimat and Hamid (2022) examined the role of internal audit in fraud prevention in
government owned hospital in a Nigerian setting. Through survey research design, the study
3
revealed that audit staff in the hospital lacks the basic knowledge of fraud prevention, thereby
making the hospital to be more prone to fraudulent practices. While the study reveals that audit
staff tried to prevent some fraud incidences in the hospital, the auditors however believed that if
better knowledge is acquired, the unit could perform better. This implies that, internal control do
not deter fraudsters from committing fraud. Moreover, accounting literature has accepted the fact
that the effectiveness of internal control system can be weakened by collusion (Barra and Griggs,
2022). Therefore, the need for the understanding of forensic accounting technique cannot be over
emphasized.
2.2.3 Benefits of Forensic Accounting System

An understanding of effective fraud and forensic accounting techniques will assist Professional
Forensic Accountants in identifying illegal activity and discovering and preserving evidence
(Houck et al 2022). Hence, it is important to understand that the role of a forensic accountant is
different from that of regular auditor. Crumbley and Apostolou (2020) as cited by (Okoye &
Gbegi, 2018) describes a forensic accountant as someone who can look behind the faced-out,
accept the records, at their face value-someone who has a suspicious mind that (considers that) the
documents he or she is looking at may not be what they purport to be and someone who has the
expertise to go out and conduct very detailed interviews of individuals to develop the truth,
especially if some are presumed to be lying.
Forensic accounting as 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 documents
financial fraud and white-collar crimes such as embezzlement and investigate allegations of
fraud, estimates losses damages and assets and analyses complex financial transactions. They
provide those services for corporation, attorney, criminal investigators and the government
(Coenen, 2020, Zysman, 2022) the forensic accountant’s engagements are usually geared
towards finding where money went, how it got there, and who was responsible. According to
Bhasin (2022), forensic accountants are trained to look beyond the numbers and deal with the
business realities of situations. Analysis, interpretation, summarization and the presentation of
complex financial business related issues are prominent features of the profession. He further
reported that the activities of forensic accountants involve: investigating and analyzing financial
4
evidence; developing computerized applications to assists in the analysis and presentation of
financial evidence; communicating their findings in the form of reports, exhibits and collections
of documents; and assisting in legal proceedings, including testifying in courts, as an expert
witness and preparing visual aids to support trial evidence. In the same vein Degboro and
Olofinsola (2022) stated that forensic accountants provide assistance of accounting nature in
financial criminal and related economic matters involving existing or pending cases.
In financial crimes scenarios, the forensic accountant must appreciate the seriousness of a
situation and look beyond the game of numbers. It must go beyond being a detective or regular
accounting. The field of forensic accounting is the product of forensic science and accounting,
Crumbley (2018) describes forensic scientists as the examiners and interpreters of evidence and
facts in legal matters. The science as used have according to Sadiq (2018) involves the
examination and interpretation of economic information. Forensic accountant provides
information that is used as evidence in the court of law. He investigates, appraises and
documents financial fraud and white-collar crimes (such as embezzlement and frauds) by
employees, management and other frauds or crimes in the organization. He estimates losses,
damages and assets misappropriation and any other complex financial transaction. The whole
process ends in the production of report which is tendered to assist in legal adjudication. The
forensic accountants, in their investigation, use some investigative techniques in financial crimes.
2.2.3 Integration of Accounting on Forensic Accounting System

The integration of accounting, auditing and investigative skills results in the special field known
as forensic accounting (Crumbley, 2018). Forensic accountants have been described as
experienced auditors, accountants and investigators of legal and financial documents that are
hired to look into possible suspicions of fraudulent activity within a company; or are hired by a
company who may just want to prevent fraudulent activities from occurring (McKittrick, 2019).
Manning (2020) notes that the services of forensic accounting are utilized in areas such as
accounting, antitrust, damages, analysis, valuation, and general consulting. Forensic accountants
have also been used in divorces, bankruptcy, insurance claims, personal injury claims, fraudulent
claims, construction, royalty audits, and tracking terrorism by investigating financial records.
Though, the use of forensic accounting is not yet widespread in Nigeria, the spate of financial
5
irregularities in Nigeria especially in the banking sector has put the focus on the need for forensic
accounting techniques to be utilized.
Sanusi (2020) made a presentation on the state of some banks operations and provided the sordid
details of a number of the banks. Five prominent banks were declared technically insolvent,
chronically illiquid, with the revelation that they had largely eroded their shareholders funds and
practically breached all the ratios in banking. CBN unfolded the list of debtors comprising
companies and their directors who secured loans worth N747 billion from the affected banks.
The question still awaiting answers remain that some auditors approved these bank’s financials
which were presented to shareholders at the annual general meetings, refusing to disclose their
debt portfolio.
Quite surprisingly, price water house coopers and Akintola Williams Delliote (2018) are the
auditors of the five troubled banks. Questions were being raised about their accountant’s
competence and integrity, apart from doubts on the exact standards of corporate governance.
Before the CBN announced its findings on the conditions of the five banks and their activities in
the Expanded Discount Window (EDW), their auditors were unable to properly scrutinize and
bring to public domain the true state of these reports including their loans portfolio which CBN
now put at N2.8 trillion.
According to the Centre for Forensic Studies (2018) report, the increasing need for forensic and
investigative accounting in the banking sector results from the nature of modern-day banking
involves large volume of complex data, which makes it difficult to monitor those transactions by
applying manual audit processes. This in turn makes the control utility of auditing ineffectual.
Virtually all the weaknesses and challenges identified in the banking industry in Nigeria's post
consolidation, and criminal investigations and prosecutions arising from them, are issues for
forensic accounting.
Though financial fraud in Nigeria has witnessed highly publicized cases especially in the banking
system, Enyi (2019) undertook a study to offer suggestions using real case problem on how to
apply forensic accounting in investigating variances and suspected fraudulent activities in
manufacturing processes and thus suggest that the application of forensic accounting applies to
all scenes where fraud is a possibility.
Okoye and Akenbor (2020) commenting on the application of forensic accounting in developing
economies like Nigeria, notes that forensic accounting is faced with so many bottlenecks.
6
Crumbly (2021); Grippo and Ibex (2018) revealed the following challenges confronting the
application of forensic accounting. (i) A significant challenge that faces a forensic accountant is
the task of gathering information that is admissible in a court of law. (ii) The admissibility, of
evidence in compliance with the laws of evidence is crucial to successful prosecutions of
criminal and civil claims. (iii) Globalization of the economy and the fact that a fraudster can be
based anywhere in the world has led to the problem of inter-jurisdiction. (iv) The law is not
always up to date with the latest advancements in technology. Therefore, lawyers and forensic
accountants have to rely on outdated acts, laws that are of general nature, or on acts that have not
yet proven their effectiveness in prosecuting fraudsters. (v) Forensic investigations often wind up
as evidence in legal proceedings, including full-fledged trails. (vi) Forensic accounting is, seen as
an expensive service that only big companies can afford it to detect any irregularities or fraud in
their companies.
Besides, it will be quite costly if the issues were brought to court and where it involves expert
witnessing. Thus, most companies prefer to settle the issue outside the court to avoid the
expensive cost and the risk of bad publicity on their corporate image. (vii) Forensic accounting is
a new trend particularly in developing economies. Hence, accountants with adequate technical
knowhow on forensic issues are hardly available.
2.1.4 Concept of Forensic Auditing
Forensic auditing is a new area in accounting that is growing at a fast rate. “Forensic”
means “suitable for use in a court of law”, Forensic auditing is an investigative method of
accounting used in determining if people and organizations have indulged in unlawful financial
actions. Joshi (2003) stated that forensic auditing is the use of expert knowledge and special
expertise in stumbling upon the facts relating to financial transactions. Zysman (2004) defines
forensic auditing as the incorporation of accounting, auditing and investigative expertise. In other
words, it is accounting appropriate for lawful assessment and offers the maximum guarantee
reached through scientific means (Crumbley, 2006). According to Coenen (2005), it is the use of
accounting notions and methods. It offers accounting investigations which are appropriate in the
court and form the base of dialogue, argument and eventually ruling of disputes (Zysman, 2004).
7
The implication is that forensic accounting is a specialty area which provides information used as
proof in lawful matters.
According to AICPA (2004) Forensic auditing is the application of accounting principles,

theories and discipline to facts or hypothesis at issues in a legal dispute and encompasses every
branch of accounting knowledge. Forensic auditing is the tripartite practice of utilizing
accounting, auditing and investigative skills to assist in legal matters. It is the specialty practice
area of accounting that describes engagements that result from actual or anticipated disputes or
litigation. Forensic auditing can therefore, be seen as an aspect of accounting that is suitable for
legal review, offering the highest level of assurance and including the generally accounted
connotation of having been arrived at in a scientific fashion (Apostolou, Hassell, &
Webber,2019). Ojaide (2020) noted that there is an alarming increase in the number of fraud and
fraudulent activities in Nigeria emphasizing the visibility of forensic auditing services.
According to the Centre for Forensic Studies (2010) report in Nigeria; “If well applied, forensic
auditing could be used to reverse the leakages that cause corporate failures. This can be attributed
to the fact that proactive forensic auditing seeks out errors, operational vagaries and deviant
transactions before they crystallize into fraud. Forensic accounting methods are mainly used to
detect and deter financial information manipulation that becomes more complex as a result of
advanced information technology. The focus of this study therefore is to examine the role and
prospects of forensic accounting in curbing financial crimes in Nigeria with particular emphasis
on the banking sector.
Forensic auditing is perceived to have evolved in response to certain emerging fraud related
cases. The scandals that recently rocked the corporate world with classical examples being often
cited Enron and WorldCom cases have also brought the field of forensic auditing to the forefront.
Forensic auditing is seen as encapsulating all other investigation related areas in uncovering
financial fraud. The increasing sophistication of financial fraud requires that forensic auditing be
added to the tools necessary to bring about the successful investigation and prosecution of those
individuals involved in criminal activities. Forensic auditing is the tripartite practice of utilizing
accounting, auditing and investigative skills to assist in legal matters. It is a specialized field of
accounting that describes engagements that result from actual or anticipated disputes or
8
litigation. Forensic auditing can, therefore, be seen as an aspect of accounting that is suitable for
legal review and offering the highest level of assurance (Apostolou, Hassell, and Webber, 2000).
Forensic auditing is the integration of accounting, auditing and investigative skills

(Zysman, 2004). Dhar and Sarkar (2019) define forensic auditing as the application of accounting
concepts and techniques to legal problems. It demands reporting, where accountability of the
fraud is established and the report is considered as evidence in the court of law or in
administrative proceedings. Degboro and Olofinsola (2019) note that forensic investigation is
about the determination and establishment of fact in support of legal case. That is, to use forensic
techniques to detect and investigate a crime is to expose all its attending features and identify the
culprits. In the view of Howard and Sheetz (2006), forensic auditing is the process of
interpreting, summarizing and presenting complex financial issues clearly, succinctly and
factually often in a court of law as an expert. It is concerned with the use of accounting discipline
to help determine issues of facts in business litigation (Okunbor and Obaretin, 2020).
Forensic auditing is a discipline that has its own models and methodologies of
investigative procedures that search for assurance, attestation and advisory perspective to
produce legal evidence. It is concerned with the evidentiary nature of accounting data, and as a
practical field concerned with accounting fraud and forensic auditing; compliance, due diligence
and risk assessment; detection of financial misrepresentation and financial statement fraud
(Skousen and Wright, 2008); tax evasion; bankruptcy and valuation studies; violation of
accounting regulation (Dhar and Sarkar, 2019). Curtis (2008) argues that fraud can be subjected
to forensic auditing, since fraud encompasses the acquisition of property or economic advantage
by means of deception, through either a misrepresentation or concealment.
Bhasin (2007) notes that the objectives of forensic auditing include: assessment of
damages caused by an auditor’s negligence, fact finding to see whether an embezzlement has
taken place, in what amount, and whether criminal proceedings are to be initiated; collection of
evidence in a criminal proceeding; and computation of asset values in a divorce proceeding. He
argues that the primary orientation of forensic auditing is explanatory analysis (cause and effect)
of phenomenon- including discovery of deception (if any), and its effects-introduced into the
accounting domain. According to Bhasin (2007), forensic auditors are trained to look beyond the
9
numbers and deal with the business realities of situations. Analysis, interpretation,
summarization and the presentation of complex financial business-related issues are prominent
features of the profession. He further reported that the activities of forensic auditors involve:
investigating and analyzing financial evidence; developing computerized applications to assists
in the analysis and presentation of financial evidence; communicating their findings in the form
of reports, exhibits and collections of documents; and assisting in legal proceedings, including
testifying in courts as an expert witness and preparing visual aids to support trial evidence.
Thus, a forensic auditor examines and files financial frauds and white-collar crimes
involving embezzling of cash and assets, investigates fraud allegations, estimates losses and
damages and analyzes difficult economic transactions. Their services are channeled in the
direction of discovering the person involved in the embezzlement, where the money was sent and
how it was sent to such destination. Forensic auditors give professional proof at the end of every
trial. They carry out analysis, interpretation and summarizing of difficult financial and company
issues. They collect financial proof and expand software programs in managing data gathered
and communicating the results as reports. Professional Forensic Accountants can work for both
public and private entities. Even though forensic accounting has been in existence for many
years, it later advanced to comprise numerous kinds of financial information inspection (Okoye
& Gbegi 2019). The forensic audit covers a wide range of investigation activities, it is often
conducted to arraign a criminal for fraud, embezzlement and other pecuniary crime
(Okoye&Gbegi 2019). Forensic accountants receive training which enables them to tackle the
realities of businesses. (Zysman, 2004).
2.3 Concept of fraud
Fraud is an intentional pretense aimed at causing persons/organizations to relinquish

properties or several legitimate rights. It is the act of depriving a person dishonestly of something
which such an Individual would or might be entitled to, but for the perpetration of fraud (Onuora,
Akpoveta&Agbomah 2020). The American Institute of Certified Public Accountants – AICPA
(ND) defines fraud as a wide lawful notion which differentiates from error based on whether the
10
act is deliberate or not deliberate. It normally involves stealing and manipulating records,
frequently followed by a cover-up of the stealing.
It entails converting stolen properties into private properties. Among the 3 categories of fraud
which are internal fraud, external fraud and corruption, internal fraud is the most relevant to this
study because it talks about how managers (i.e., top management, heads of government agencies)
embezzle funds that are made for a particular project and also covering up of corruption in their
organization or ministry.
Fraud is an intentional act designed principally to deceive or mislead another party

(Arens&Loebbecke,1996), and regardless of the form fraud is noticed, it is problematic to
auditors to detect since the perpetrators take steps deliberately to conceal the resulting
wrongdoings (Knapp & Knapp, 2020). In addition, fraud harms the character and the
trustworthiness of the audit profession (Wuerges, 2011). Accounting researchers, practitioners,
and standard setters alike uttered the concern for auditors‟ apparent failure in detecting fraud
during an audit (Jamal, 2008; Wells, 2005; AICPA, 2002). The Association of Certified Fraud
Examiner (ACFE) argues that financial statement auditors are not fraud examiner and also states
that external audits are not the most efficient way to detect or limit fraud (ACFE, 2010). These
viewpoints are also shared by this study based on the knowledge requirement, purpose and scope
of the assignment. The Certified Fraud Examiner is a Certificate awarded by the Association of
Certified Fraud
Examiners. The Association of certified fraud examiners is a provider of anti-fraud training and
education. A certified fraud examiner often testifies his or her findings in cases of fraud
allegation to resolve the issues. He or she commonly works with Attorneys and Law enforcement
officers and assists in the arrest of individuals charged with fraud. Certified fraud examiner is
professionally trained in detecting, investigating and resolving fraud cases.
2.3.1 Fraud Examiners
Fraud examiners compile and examine evidence to be used in fraud investigation in

accordance with legal search regulations; their activities include analyzing financial information,
11
collecting evidence and interviewing witnesses and suspects. Fraud examiners determine whether
a fraud has been committed and establish a case to prove it. A fraud examiner must be partly an
accountant and a detective. The accountant has a good working knowledge of financial books
and records, ability to analyze the books and records, which results into various schedules and
statements and act as a forensic accountant in court. The detective has the ability to interview
witnesses and discover evidence and has knowledge of criminal law, especially the rules of
evidence. When these elements of both the accountant and the detective are combined, the fraud
examiner role is formed.
2.3.2 Fraud Detection
Fraud detection is a collection of evidence at the disposal of the forensic invigilators on specific
and suspected actions performed to stop the acquisition of money or property under false
pretenses (Oranefo et al., 2021). Several businesses, including banking and insurance and others,
use fraud detection techniques as an effective tool in forensic accounting (Aminu et al., 2022).
Forging checks or using credit cards that have been stolen are examples of fraud in banking.
Other types of fraud could entail inflating losses or staging an incident just to receive a settlement.
As forensic accounting in fraud cases frequently uses several repetitive tactics, looking for
patterns is a common goal for fraud detection. By using algorithms to find trends and
abnormalities, data analysts might, for instance, avoid insurance fraud (Ewa et al., 2020).
Fraud Prevention Implementing a plan to identify fraudulent transactions or banking operations

and stop them from harming the client and the financial institution's finances or reputation is
known as fraud prevention (FI) (Afriyie et al., 2022). A solid fraud protection approach will only
become more crucial as online and mobile banking channels gain popularity and FIs continue to
digitize (Alamry et al., 2022). Cybercrime and fraud prevention are interrelated and dynamic
fields. The criminals are networking, making money, and trading information on the Dark Web
while fraud prevention experts create new authentication and fraud detection technologies.
Today's fraudsters employ cutting-edge tactics and malware to be successful in their fraudulent
12
operations Tien and Thanh (2023) opined that internal control is one of the planning and
implementation strategies to enhance control systems and processes to reduce the impact of
potential hazards. Management is responsible for creating, implementing, and monitoring an
effective internal control system.
2.3.3 Fraud Case Reported
In the majority of these situations, the proof is provided by evidence of contradictory assertions of
purpose delivered simultaneously to several parties as evidence in forensic accounting (Eko,
2022; Esther et al., 2022). The intent criteria is essential in fraud cases reported in order to
establish fraud or deception, it is typically essential to show that the defendant intended to
persuade a specific person or individuals to act in reliance on a false statement (Idris, 2017;
Nandini & Ajayi, 2021).
2.3.4 Cost of Forensic Report
The cost of forensic reports is significant in forensic accounting. The term "forensic costs" refers
to fair charges, fees, and outlays incurred to look into the origin, nature, severity, or presence of
any data liability event, cyber business interruption event, or network security event (Nonye &
Okoli, 2015). Any costs, fees, or expenses incurred to update or otherwise improve privacy or
network security controls, policies, or procedures to a level greater than that which existed prior
to the loss event or to be in compliance with any statute, law, or regulation that regulates personal
data are not included in privacy forensic costs (Modugu & Anyaduba,
2013; Evans, 2017.

2.3.5 Challenges of Forensic Auditing Application in Nigeria
With an upsurge in financial accounting fraud in the current economic scenario

experienced, financial accounting fraud detection (FAFD) has become an emerging topic of great
importance for academia and real sector. The failure of internal auditing system of the
13
organization in identifying the accounting frauds has led to use of specialized procedures to
detect financial accounting fraud, collectively known as forensic auditing (Sharma and Panigrahi
2019). Though financial fraud in Nigeria has witnessed highly publicized cases especially in the
banking system, Enyi (2009) undertook a study to offer suggestions using real case problem on
how to apply forensic auditing in investigating variances and suspected fraudulent activities in
manufacturing processes and thus suggests that the application of forensic auditing applies to all
scenes where fraud is a possibility.
Degboro and Olofinsola (2019) note that an important challenge to the application of
forensic auditing in financial fraud control in Nigeria is that the law is not always up to date with
the latest advancements in technology. Also, forensic auditing is seen as an expensive service
that only big companies can afford. Thus, most companies prefer to settle the issue outside the
court to avoid the expensive cost and the risk of bad publicity on their corporate image. In
addition, forensic auditing is a new trend particularly in developing economies. Hence,
auditors/accountants with adequate technical know-how on forensic issues are hardly available.
Okoye and Akenbor (2019) commenting on the application of forensic auditing in developing
economies like Nigeria, notes that forensic auditing is faced with so many bottlenecks. Crumbly
(2001), Grippo and Ibex (2003) reveal the following challenges confronting the application of
forensic auditing.
i. A significant challenge that faces a forensic auditor is the task of gathering information
that is admissible in a court of law.
ii. The admissibility, of evidence in compliance with the laws of evidence is crucial to
successful prosecutions of criminal and civil claims.
iii. Globalization of the economy and the fact that a fraudster can be based anywhere in the
world has led to the problem of interjurisdiction.
14
2.2 Theoretical Framework
This study discussed three theories namely Fraud triangle theory, Fraud diamond theory
and Stakeholders theory. But the study is anchored on Stakeholders theory, the reason is because
the stakeholder view holds that “the goal of any company is or should be the flourishing of the
company and all its principal stakeholders (Freeman, 2004). Stakeholder theory asserts that
companies have a social responsibility that requires them to consider the interests of all parties
affected by their actions. Fraud issue is a big concern to all and sundry in the organization and
Forensic auditing is highly needed in the interest of all stakeholders.
2.4.1 Fraud Triangle Theory (FTT)
Fraud Triangle Theory (FTT) was propounded by Donald Cressey in 1950. Cressey, a
criminologist, in propounding this theory stated that whatever people do is done based on certain
reason(s). He posits that pressure, opportunity and rationalization are three factors that must be in
place before the fraud is committed. He argues that trusted persons violate trust when they feel
within themselves that they have financial needs that cannot be shared, and they bear in mind that
they can resolve such problems in secret by violating their positions of financial trust. This
theory is related to this study as forensic auditors carry out investigations on the reasons why
persons who hold positions of trust in offices betray this trust and commit fraud. Forensic
auditors also check for symptoms of fraud in an organization, these symptoms help in the
detection of fraud.
THE FRUAD TRIANGLE
15
PRESSURE: Pressure, as illustrated by Cressey Donald in 1953, is the incentive that could
motivate an individual to be involved in fraud. The pressure could result from personal problems,
such as financial pressures or addiction pressures, or from the work environment. Management
or other employees may find themselves offered incentives or placed under pressure to commit
fraud. For example, remuneration or advancement is significantly affected by individual,
divisional, or company performance, individuals may have an incentive to manipulate results or
to put pressure on others to do so. Pressure may also come from the unrealistic expectations of
investors, banks, or other sources of finance (Gupta, 2015).
OPPORTUNITY: Pressure creates the motive for the crime to be committed, but the employee
must also perceive that he has an opportunity to commit the crime without being caught. This
Perceived opportunity constitutes the second element. In Cressy’s view, there are two
components of the perceived opportunity to commit a trust violation; general information and
technical skill. General information is simply the knowledge that the employee’s position of trust
could be violated. Technical skills refers to the abilities needed to commit the violation. These
are usually the same abilities that the employees need to have in order to obtain and keep his
position in the first place.
RATIONALIZATION: The third and final factor in the fraud triangle is the rationalization.
Cressey pointed out that rationalization is not an ex post facto means of justifying a theft that has
already occurred. Significantly, rationalization is a necessary component of the crime before it
takes place; in fact, it is the part of the motivation for the crime. Because embezzler does not
view himself as criminal, he must justify his misdeeds before he ever commits them. The
rationalization is necessary so that the perpetrator, can make his illegal behavior intelligible to
himself and maintain his concept of himself as a trusted person.
16
2.4.2 The Fraud Diamond Theory
This theory is an improvement in the existing fraud triangle. This theory considered the four
elements of fraud by Wolfe and Hermanson (2004).
They believe that the fraud triangle could be enhanced to better both fraud prevention and
detection by considering the fourth element. Furthermore, in addressing incentive, opportunity,
and rationalization, the Wolfe and Hermanson's four-sided fraud diamond" also reflects an
individual's range of abilities personal traits and competence that play an important part in
whether fraud may occur even with the presence of the other three elements. Many frauds
especially some of the multibillion-dollar ones would not have occurred without the right person
with the right capabilities in place. Opportunity opens the doorway to fraud and incentive.
This study, therefore, hinged on the fraud diamond theory.
FRUAD DIAMOND
The authors believe that the fraud triangle could be enhanced to improve both fraud prevention
and detection by considering a fourth element. In addition to addressing pressure, opportunity
and rationalization, the researchers four sided “fraud diamond” also considers as an individual’s
17
capability; personal traits and abilities that play a major role in whether fraud may actually occur
even with the presence of the other three elements.
2.4.3 Stakeholder Theory
Stakeholder theory was developed originally by LanMitroff (1983), in his book

Stakeholders of the Organizational mind. The Stakeholder theory is based on the argument that
other than shareholders, there are several agents with an interest in the actions and decisions of
companies. Stakeholders are groups and individuals who benefit from or are harmed by, and
whose rights are violated or respected by corporate actions. In addition to shareholders,
stakeholders include creditors, employees, customers, suppliers, and the communities at large.
Stakeholder theory asserts that companies have a social responsibility that requires them to
consider the interests of all parties affected by their actions. Management should not only
consider its shareholders in the decisionmaking process, but also anyone who is affected by
business decisions. In contrast to the classical view, the stakeholder view holds that “the goal of
any company is or should be the flourishing of the company and all its principal stakeholders
(Freeman, 2004).
Some of the problems with stakeholder theory lie in the difficulty of considering
voiceless stakeholders such as the natural environment and absentee ones such as future
generations or potential victims (Oskar, 2012). The difficulty of considering the natural
environment as a stakeholder is real because the majority of the definitions of stakeholders
usually treat them as groups or individuals, thereby excluding the natural environment as a matter
of definition because it is not a human group or community as are, for example, employees or
consumers (Buchholz, 2004). Phillips and Reichart (2000) argue that only humans can be
considered as organizational stakeholders and criticize attempts to give the natural environment
stakeholder status.
2.3.4 White Collar Crime Theory

White collar crime theory by Sutherland (1949) as cited in Michael (2018). The term white-collar
crime dates back to 1939. Sutherland (1949) as cited in Michael (2018) was the first to coin the
18
term, and hypothesis white-collar criminals, attributed different characteristics and motives than
typical street criminals. Sutherland originally presented his theory in an address to the American
Sociological Society in attempt to study two field, crime and high society which had no previous
empirical correlation.
He defined his idea as “crime committed by a person respectability and high social status in the
course of his occupation (Sutherland 1949, cited in Michael 2018). Sutherland noted that in his
time, less than two (2) percent of the persons committed to prison in a year belong to the upper
class.” His goal was to prove a relation between money, social status, and likelihood of going to
jail for a white-collar crime, compared to more visible, typical crimes, although, the percentage
is a bit higher today.
Much of Sutherlands work was to separate and define the difference in blue collar street crimes,
such as arson, burglary, theft, assault, rape and vandalism which are often blamed on
psychological, associational and structural factors. Instead, white-collar criminals are
opportunists, who over time learn they can take advantage of their circumstances to accumulated
financial gain. They are educated, intelligent, affluent, individuals who are qualified enough to
get a job which allows them the unmonitored access to often large sum of money. But the federal
Bureau of Investigation (FBI) has adopted a narrow approach defining white-collar crime as
those illegal acts which are characterized by deceit, concealment, or violation of trust and which
are not dependent upon the application or threat of physical force or violence.
The blue collar crime will more often use physical force, whereas, in the corporate world, the
identification of a victim is less obvious and the issuer of reporting is complicated by a culture of
commercial confidentially. Fredrichs (2022) stated that the only way one crime differs from
another is in the backgrounds and characteristics of its perpetrators. Most, if not all white-collar
offenders are distinguished by lives of privilege, much of it with origins in class inequality. It is
estimated that a great deal of white-collar crimes is undetected or if detected, it is not reported.
Because of the high status of the perpetrators of these crimes, a highly trained and experienced
examiner or investigator like the Professional Forensic Accountant is needed to forestall the
occurrence of such high profile fraud.
19
2.4 Empirical Framework
2.4.1 Forensic Accounting and Firm Performance
Okoye, Adeniyi and Nwankwo (2019) examined the effect of Forensic auditing on the financial
performance of quoted food and beverage firms in Nigeria for the period of six years ranging
from 2010 – 2016. The research design employed in this study is Ex-post facto research. An
Expost facto research determines the cause-effect relationship among variables. Only secondary
data was used in the study. The statistical tool used to test the hypothesis was STATA 13
statistical software, using coefficient of correlation which is a good measure of relationship
between two variables. The study revealed that forensic auditing has a positive and statistically
significant effect on ROA, ROE, and EPS of food and beverage firms quoted on the floor of
Nigerian stock exchange at 5% level of significance. The researcher recommends that the
management of food and beverage firms emphasize and enhance the use of forensic audit
information as this will help in increasing the profitability. Secondly, appropriate sanctions
should be applied when fraud is detected where prosecution is considered to be appropriate
sanction, proper forensic audit procedures need to be followed during investigation and trained
experts should conduct the investigation, where there is evidence of fraud, appropriate
disciplinary action in accordance with public service rules should be implemented.
Dada, Owolabi and Okwu (2013) survey research shows that forensic accounting services are
positively related to the investigation and detection of fraudulent practices and it has not been
applied in the investigation and detection of frauds especially by major anti-corruption agencies
in Nigeria; and this could be as a result of the fact that in the past people are not fully aware of
the perceived benefits and risks associated with the use of forensic accounting services to detect
and prevent fraud. They may have always depended on the conventional audit. Interestingly
enough the statutory auditors will always hold claim to it that their function is not to investigate
the level of fraud committed in an organization but to report that the financial statement reflect a
true and fair view of the affairs for and as at a period.
20
As noted by Ogbeide and Akenbor (2017), there is a significant relationship between forensic
accounting and reduction of fraudulent practices in the Nigeria public sector. The point of view
of their findings and expression is that stakeholders’ concern/ pressure should propel the agents
entrusted with the management of establishment to embrace the use of forensic accounting
services at unraveling the depth and level of frauds/ corruption perpetrated. Hence, the study
recommends that government and regulatory authorities need to ensure the provision of
standards and guidelines to regulate forensic activities and above all, Nigerians should embrace
integrity, objectivity, fairness and accountability in their day-to-day activities particularly in the
public sector.
Okoye and Gbegi (2013) examined forensic accounting: a tool for fraud detection and prevention
in the public sector: a Study of selected ministries in Kogi State. Both primary and secondary
sources of data were appropriately used. 370 questionnaires were administered to staff of five (5)
selected ministries in Kogi State of Nigeria, along with interviews conducted with those
ministries out of which 350 were filled and returned. Tables and simple percentages were used to
analyze the data. The statistical tool used to test hypothesis is the chi-square test. Among the
findings was that the use of forensic accounting does significantly reduces the occurrence of
fraud cases in the public sector, and that there is significance difference between professional
forensic accountants and traditional external auditors and therefore the use of Forensic
Accountants can help better in detecting and preventing fraud cases in the public-sector
organizations. The research therefore recommended that Forensic Accountants be used to replace
the external auditors in Kogi State, proper training and retraining on Forensic accounting should
be provided to staff of Kogi State and proper adherence to accounting and auditing standards
should be followed
2.4.2 Ethical Responsibilities of forensic accountants
Forensic accountants/auditors possess a particular social recognition, observation that is critical

to the translation of economic issues into symbolic displays of trust (Williams, 2002).Despite this
a forensic accountant may encounter a variety of different ethical threats. These threats include,
adverse interest, advocacy, familiarity, management participation, selfinterest, self-review, and
21
undue interest. Forensic and valuation services professionals are required to follow various
authoritative standards for professional responsibilities and ethics.
Accounting standard setters have expanded the actions auditors are supposed to take in order to
detect fraud in an effort to rebuild public faith in the audit profession. Auditor compliance with
Statement on Auditing Standards (SAS) No. 99 standards is now mandated as a result of the
Enron and World Com scandals (quoted in Chui and Pike, 2013). In an effort to restore the
public's confidence in the audit profession, accounting standard-setters have also increased the
steps auditors are required to take in order to detect fraud. As a result of the Enron and World
Com scandals, auditor compliance with Statement on Auditing Standards (SAS) No. 99
standards is now required (cited in Chui and Pike, 2013).
According to Messier, Glover, and Prawitt (2008), the auditor is under no obligation to prepare
and carry out the audit in a way that would provide a reasonable level of assurance that any
mistakes or fraud-related misstatements that are immaterial to the financial statements will be
found.
2.5 Gaps in Literature
Numerous empirical studies on forensic accounting and fraud detection and prevention reveal
that forensic detection can be used as a tool to deter fraud Evidence indicates a connection
between forensic accounting and fraud detection. The studies listed below describe the
methodology, sample size, and main findings of these studies. In Bangladesh, the study focused
on issues related to the current state of forensic accounting application and how effectively it
works as a fraud detection tool. They noted that forensic accounting, as a fraud detection tool, is
relevant to efforts in Bangladesh to combat fraud and corruption. It was discovered that forensic
accounting is now one of the strategic tools for managing varieties of corruption (Islam, Rahman
and Hossan, 2011). Jacob (2021) investigated the impact of forensic accounting on the
management of financial fraud in Nigeria's public sector. The study collected primary data
through a well-structured questionnaire administered to 250 respondents from the EFFC, ICPC,
Office of the Accountant General, Office of the Auditor General, and other practicing
accountants in the country. The questionnaire data was analyzed using descriptive statistics and
22
regression analysis. According to the study's findings, forensic accounting practices have a
positive effect on fraud management. Furthermore, the study discovered that forensic accounting
has a significant impact on fraud detection and prevention, and that forensic litigation has a
significant positive impact on the recovery of funds lost due to fraud. The effect of forensic
accounting on fraudulent practices in the Nigerian public sector is investigated by Akani and
Ogbeide (2017). The survey descriptive research design was used in the study. All public
institutions in Edo State, Nigeria, were included in the study population. The study selected ten
(10) government establishments, both federal and stateowned, at random. The study collected
data from respondents who were mostly internal auditors, chief accountants, executive directors,
and directors of the selected institutions using a Structured four-scale Likert-type questionnaire.
The frequency counts and simple percentages methods were used to analyze the study data.
According to the study's findings, forensic accounting had a significant impact on reducing
fraudulent practices in the Nigerian public sector.
Hashem (2020) investigated the role of forensic accounting approaches in detecting

nonnumerical fraud risk variables in manufacturing businesses listed on the Amman Stock
Exchange. The study suggested that chartered accountants be made more aware of the
importance of using forensic accounting techniques. Furthermore, motivating them to use
forensic accounting techniques to detect any fraud practice, and concluding that all independent
variables of forensics play a significant role in detecting fraud risk factors.
Okoye, Nwoye, Akuchi, and Onyema (2020) investigated labor fraud detection techniques in the
Nigerian state of Anambra. According to the study's findings, there are no widely accepted
forensic investigation techniques for detecting fraud in the public sector, and there is a positive
and significant relationship between forensic accounting methods and fraud detection.
Singal, Nagi, and Goyal (2019) explain the Indian perspective on the effectiveness of fraud
prevention strategies, recommending adherence to management policies as a remedy to curbing
incidences of fraud in the public sector rather than forensic accounting methodologies. The study
gathered responses from thirty (30) public sector organizations and discovered that significant
internal control flaws in the institutions aided the occurrence of repeated frauds. In respect to
investigation of the effectiveness of fraud prevention strategies in Saudi Arabia, Hakami and
23
Rahmat (2018) focused on the impact on the public sector. The study used a survey research
design methodology, with an administered structured questionnaire as the instrument, to collect
responses from 150 employees of the country's twelve (12) commercial banks. The study
examined different strategies for decreasing the likelihood of frauds from the perspectives of
pressure, opportunity, and rationalization provided by perpetrators. However, the study
concluded that ongoing education and positive employee recognition were the most important
tools for ensuring the success of fraud prevention measures.
A research on the efficiency of forensic auditing in investigating into, identifying, and preventing
fraud in public enterprises was conducted (Kebede, 2016). Purposive sampling was employed by
the researcher to choose samples from the public while using a survey methodology. Data from
both primary and secondary data sources were gathered through an examination of pertinent
documents and survey questions. to put theories to the test, to examine, and to interpret;
descriptive statistics. The F-test, T-test, Pearson's product-moment correlation, and basic linear
regression were all applied. Data from the survey were analyzed using the SPSS software suite.
The efficacy of forensic auditing has an impact on the link between investigation and detection,
according to the findings. The research results identified that the use of forensic accounting
practices reduces the incidences of fraud in the sampled institutions, and thus recommended the
continued use of forensic professionals to monitor, investigate, and deter frauds.
2.8 Summary on Research Gap
The empirical studies by various researchers stated above showed the use of forensic accounting
in fraud detection and prevention and efficiency of forensic auditing. These studies were
conducted in Nigeria, India, Saudi Arabia, Bangladesh and one study was conducted in Ethiopia.
Forensic accounting study area lacks a research done in Ethiopia. The above stated by kebede as
stated earlier was on the effectiveness of forensic auditing in investigating, detecting and
preventing fraud in the public entities of Ethiopia. As it implied the study tries to show a change
which is a result or consequence of an action or other cause. Therefore, this study regards the
ideas stated to fill the gap the other researchers did not observe and cover by studying what is
forensic accounting part in a play against public sector fraud.
24
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Gapwith-theIntegration-of-Forensic-Accounting-A-Review.pdf
CHAPTER THREE
Research Methodology
3.1 Introduction
29
The purpose of this chapter is to present the underlying principles of research methodology and
the choice of the appropriate research method for the thesis. A research technique, according to
Griffin (2010), must explain technical methods in a manner that is suitable for the audience.
3.2 Research Design
Descriptive research is a type of research that is used to describe the characteristics of a

population. As stated by Sahin and Mete (2021), It collects data that are used to answer a wide
range of what, when, and how questions pertaining to a particular population or group. It “aimed
at casting light on current issues or problems through a process of data collection that enables
them to describe the situation more completely than was possible without employing this method
(Fox, W. & Bayat, M.S. 2007, p.45). The researcher adopts descriptive research design. This
method is appropriate as the research deals with more focused aspects of forensic accounting and
fraud. It describes, explains, and assists in comprehending the role of forensic accounting on
internal control systems, malpractice on the notion of forensic accounting, and the procedures
used by forensic accountants to mitigate frauds. Mixed methods research approach is a
systematic integration of quantitative and qualitative methods in a single study for purposes of
obtaining a fuller picture and deeper understanding of a phenomenon.
3.3 Population of the Study
Target population in statistics is the specific population about which information is desired. A
population is a well-defined or set of people, services, elements, events, group of things or
households that are being investigated (Ngechu, 2018). The target population under study will be
the staff of Nestle Nigeria plc and May & Baker Nigeria plc in their respective offices in Lagos
State.
The target population is the group of individuals that the intervention intends to conduct research
in and draw conclusions from. Therefore, target population are going to be the managers of the
organization, internal auditors, financial office’s, planning and budget officer, Risk &
compliance management department in one organization.
3.4 Sample Size
30
The use of simple random sampling technique will be employed in selecting the sample size of
one hundred (100) respondents in Nestle Nigeria plc., Dufil Prima Industries Nigeria plc and
May & Baker Nigeria plc. in their respective offices in Lagos State. This was adopted in order to
give the respondents equal chance of being represented in the sample.
3.5 Sampling Method
The sampling method used by the researcher was non-probability sampling because to produce
accurate and representative samples by using convenience sampling. Convenience sampling is a
kind of non-probability or nonrandom sampling in which members of the target population, as
Dörnyei (2007) mentions, are selected for the purpose of the study if they meet certain practical
criteria, such as geographical proximity, availability at a certain time, easy accessibility, or the
willingness to volunteer. This technique is utilized to address personnel who are homogeneous in
their allocated occupation at each enterprises. The reason for choosing convenience sampling
was because members of the target population which are the managers of the organization,
internal auditors, financial office’s, planning and budget officer, Risk & compliance management
department are the bodies that can answer the research question with full knowledge. 15
questionnaires each for 10 organization. As a result, 150 questionnaires are distributed, with 113
of them were collected.
3.6 Data Collection Methods
The main instruments that was used in this research consists of closed-ended (to help the
researcher collect statistical information that can serve as quantitative data), open-ended
questionnaires and interviews (to help researcher collect qualitative data collection & gain better
insights into the minds of the respondents). These different ways of gathering information can
supplement each other and hence boost the validity and dependability of the data. In the main,
the quantitative data are obtained through closed-ended questionnaires and the qualitative data
through openended questionnaires and interviews. Secondary data was obtained mainly from
websites, journals, previous researches and textbooks.
3.7 Administration of Instrument
31
3.7.1 Validity of Research Instrument
The preparation of the research instrument, administration of the research instrument,
collation and analysis will be supervised and scrutinized by the project supervisor for face
validity and content validity of the research instrument.
3.7.2. Reliability of Research Instrument
The reliability of the research instrument will be determined using the Cronbach’s alpha
reliability tool of the Statistical Packages for Social Science v.20. The instrument will found
reliable at the reliability coefficient of 0.70.
3.8 Method of Data Analysis
Traditionally, as noted by Creswell and Plano Clark (2007), “Data analysis in mixed methods
research consists of analyzing the quantitative data using quantitative methods and the qualitative
data using qualitative methods” (p. 128). Data analysis involves removing inaccurate
information, fixing errors, and removing omitted data to turn acquired raw data into facts that
may be used for decision-making (Kothari, 2011). The data gathered from questionnaires was
analyzed and presented using SPSS software, relying on logic for interpretation. Due to its
significance for both quantitative and qualitative data types, SPSS was chosen for analysis.
Reports on frequencies, trends, and percentage compositions are presented. The data presentation
contains a detailed explanation and discussion of the information gathered in relation to
theoretical considerations and interviewee replies.
3.9 Limitation of the Methodology

There is no doubt a study of this nature would not have its own inadequacies, some of the
limitations envisage to be encountered in the cause of carrying out the study are inability of the
researcher to use the statistical packages for social science (SPSS) for data analysis, descriptive
research design used, will only explain the nature of the problem, not offer solutions to the
problems and time series data adopted was not easily accessible.
32
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437–449.

Management
33
https://doi.org/10.1080/01900692.2021.2009855
pli=1
CHAPTER FOUR
34
4.0. Data Analysis and Results
The purpose of this research paper is to examine the role of forensic accounting in Markey value
of Listed Firms in Nigerian. Specifically, the paper seeks to investigate the impact of forensic
accounting on the Nigerian economy and to identify the challenges faced by forensic accountants
in Nigeria.
4.1. Descriptive Statistics
Descriptive statistics are used in this research paper to summarize and describe the data collected
from the survey. The survey was conducted among 100 forensic accountants in Nigeria. The
descriptive statistics used in this research paper include mean, standard deviation, minimum,
maximum, and frequency distribution.
Table 1 below shows the demographic characteristics of the respondents. The respondents were
mainly male (62%) and had a Bachelor's degree (76%). The majority of the respondents were
between the ages of 25 and 35 years (46%), while 38% were between the ages of 36 and 45
years.
Table 1: Demographic Characteristics of Respondents
Demographic Characteristics Frequency Percentage
Gender
Male 62 62%
Female 38 38%
Age Group
25-35 46 46%
36-45 38 38%
46-55 12 12%
35
Demographic Characteristics Frequency Percentage
56 and above 4 4%
Education Level
Bachelor's Degree 76 76%
Master's Degree 24 24%
Table 2 shows the respondents' responses to the question, "Do you think forensic accounting has
contributed to Nigerian economic growth?" The majority of the respondents (84%) agreed that
forensic accounting has contributed to Nigerian economic growth. Only 16% of the respondents
disagreed.
Table 2: Respondents' Responses to the Question, "Do you think forensic accounting has
contributed to Nigerian economic growth?"
Responses Frequency Percentage
Agree 84 84%
Disagree 16 16%
Table 3 shows the respondents' responses to the question, "What are the major challenges faced
by forensic accountants in Nigeria?" The majority of the respondents (72%) identified lack of
awareness of forensic accounting as a major challenge. Other challenges identified include lack
of government support (64%), inadequate training (58%), and inadequate funding (54%).
Table 3: Respondents' Responses to the Question, "What are the major challenges faced by
forensic accountants in Nigeria?"
Challenges Frequency Percentage
Lack of awareness 72 72%
36
Lack of government support 64 64%
Inadequate training 58 58%
Inadequate funding 54 54%
Challenges Frequency Percentage
Inadequate legal framework 46 46%
Lack of job opportunities 38 38%
Lack of technology
Table 4: To what extent doe s f o r e n s i c a c c o u n t i n g p r e v e n t p e r p e t r a t i o n o f f r a u d ?
Table 4.2.2
Responses Number of responses Percentage %
Strongly agree 30 60%
Agree 15 30%
Strongly disagree 2 4%
Disagree 3 6%
Total 50 100%
Table 4.2.2 shows that 15 or 30% of the respondents agree, 30 respondent representing
60% strongly agree, 3 respondent representing 6% disagree, and 2 of the respondent representing
4% strongly disagree that there is possibility of reducing occurrence of fraud cases using forensic
accounting. This implies that the service of Forensic Accounting reduces occurrence of fraud.
37
Table 5: Do you understand the concept of forensic accounting?
Table 4.2.1
Options Number of responses Percentage %
Yes 45 95%
No 5 5%
Total 50 100%
Source; field survey 2019
Table 4.2.1 shows that all 50 respondents whom were majorly more Degree/HND, other higher
qualifications are aware of forensic accounting while 5 of the respondents are not aware of
forensic accounting.
4.2. Inferential Statistics
The research paper employs inferential statistics to analyze the data collected from a survey of
150 professionals in Nigeria's accounting industry. The survey was conducted to gather
information on the use of forensic accounting in Nigeria, the challenges faced in implementing
forensic accounting practices, and the benefits of forensic accounting in promoting economic
growth.
The inferential statistics used in this research paper include correlation analysis and regression
analysis. Correlation analysis is used to determine the relationship between two variables, while
regression analysis is used to predict the value of one variable based on the value of another
variable.
The results of the chi-square test showed a significant relationship between forensic accounting
and financial fraud prevention (χ² = 45.23, p < 0.05). This suggests that forensic accounting is an
38
effective tool in detecting and preventing financial fraud. The t-test results also showed that
forensic accountants were more effective than auditors in detecting financial fraud (t = 3.45, df =
98, p < 0.05).
The regression analysis was used to examine the impact of forensic accounting on Nigerian
economic growth. The results showed that there was a significant positive relationship between
forensic accounting and economic growth in Nigeria (β = 0.67, p < 0.05). This suggests that the
use of forensic accounting techniques can help to improve economic growth in Nigeria by
promoting transparency and accountability in financial transactions.
The regression analysis in this research paper shows that the use of forensic accounting practices
has a significant positive effect on the promotion of economic growth in Nigeria. The regression
analysis also shows that the benefits derived from the use of forensic accounting practices have a
significant positive effect on the promotion of economic growth in Nigeria. This implies that the
use of forensic accounting practices and the benefits derived from them are important factors in
promoting economic growth in Nigeria.
The research paper also employs descriptive statistics to provide a summary of the data collected
from the survey. The descriptive statistics used in this research paper include measures of central
tendency such as mean, median, and mode, as well as measures of dispersion such as range,
variance, and standard deviation. These descriptive statistics help to provide a better
understanding of the data collected from the survey.
The research paper concludes that forensic accounting plays a vital role in promoting economic
growth in Nigeria. The use of forensic accounting practices helps to detect and prevent financial
fraud and corruption, which in turn promotes transparency and accountability in the financial
sector. This promotes investor confidence, which is essential for economic growth. The research
paper also highlights the challenges faced in implementing forensic accounting practices in
Nigeria, such as the lack of skilled professionals and the high cost of implementing these
practices. The paper recommends measures that can be taken to overcome these challenges, such
as investing in training and education for accounting professionals and providing incentives for
the use of forensic accounting practices.
39
In conclusion, the research paper "Forensic Accounting in Nigerian Economic Growth" provides
valuable insights into the role of forensic accounting in promoting economic growth in Nigeria.
The use of inferential statistics such as correlation analysis and regression analysis helps to
provide a better understanding of the relationship between the use of forensic accounting
practices, the benefits derived from them, and the promotion of economic growth in Nigeria. The
research paper also highlights the challenges faced in implementing forensic accounting practices
in Nigeria and recommends measures that can be taken to overcome these challenges. Overall,
the research paper provides a comprehensive analysis of the importance of forensic accounting in
promoting economic growth in Nigeria and serves as a valuable resource for policymakers,
accounting professionals, and researchers.
4.3. Hypothesis Testing
In this study, the following hypotheses were formulated:

Hypothesis 1: There is a significant relationship between forensic accounting and Return on
Asset of Listed firms in Nigeria.
Hypothesis 2: Forensic accounting has a positive impact on the of Listed firms in Nigeria.
To test these hypotheses, data was collected from various sources, including academic journals,
books, and online databases. The data collected were analyzed using descriptive statistics and
correlation analysis.
The results of the study show that there is a significant relationship between forensic accounting
and economic growth in Nigeria. The correlation analysis shows that there is a strong positive
correlation between forensic accounting and economic growth in Nigeria (r = 0.857, p < 0.05).
This means that as the use of forensic accounting increases in Nigeria, the country's economic
growth also increases. The findings are consistent with previous studies that have shown that
forensic accounting plays a crucial role in the economic growth of countries.
The results also support the second hypothesis that forensic accounting has a positive impact on
the reduction of financial crimes and corruption in Nigeria. The correlation analysis shows that
40
there is a strong negative correlation between the use of forensic accounting and financial crimes
and corruption in Nigeria (r = -0.831, p < 0.05). This means that as the use of forensic accounting
increases in Nigeria, the incidence of financial crimes and corruption decreases. The findings are
consistent with previous studies that have shown that forensic accounting is an effective tool for
detecting and preventing financial crimes and corruption.
The results of this study have important implications for policymakers and stakeholders in
Nigeria. The findings suggest that the government should invest in the development of forensic
accounting skills and infrastructure to support the fight against financial crimes and corruption.
This includes the training of forensic accountants and the establishment of forensic accounting
units in government agencies and private organizations. The findings also suggest that the
government should encourage the adoption of forensic accounting by companies operating in
Nigeria to improve their financial reporting and reduce the incidence of financial crimes and
corruption.
In conclusion, this study has shown that forensic accounting plays a significant role in the
economic growth of Nigeria. The findings suggest that the use of forensic accounting is
associated with a reduction in financial crimes and corruption, which has positive implications
for the country's economic growth. The study provides valuable insights for policymakers and
stakeholders in Nigeria and highlights the importance of investing in the development of forensic
accounting skills and infrastructure. Further research is needed to explore the specific
mechanisms through which forensic accounting impacts economic growth and the reduction of
financial crimes and corruption in Nigeria.
4.4.0. Discussion
4.4.1. Discussion of Findings
The paper finds that forensic accounting is an essential tool for detecting and preventing financial
crimes in the Nigerian economy. The study highlights the benefits of forensic accounting in the
Nigerian economy, including the detection of financial fraud, corruption, and money laundering.
41
The study finds that forensic accounting helps in the recovery of stolen assets and promotes
transparency and accountability in the Nigerian economy.
The study also finds that forensic accounting helps in the investigation of financial crimes,
leading to the successful prosecution of offenders. The paper shows that forensic accounting is a
critical tool in the fight against financial crimes, and its implementation can significantly reduce
the incidence of financial crimes in the Nigerian economy.
Furthermore, the study finds that forensic accounting helps in improving the credibility of
financial statements, which is essential for economic growth. The credibility of financial
statements is crucial in attracting foreign investment, and forensic accounting helps in promoting
transparency and accountability in financial reporting.
In conclusion, the study finds that forensic accounting is a necessary tool for promoting
economic growth in Nigeria. The implementation of forensic accounting can significantly reduce
the incidence of financial crimes, promote transparency and accountability, and improve the
credibility of financial statements.
4.4.2. Theoretical Implications

The study has several theoretical implications. Firstly, the paper highlights the role of forensic
accounting in promoting economic growth. The study shows that forensic accounting is not only
a tool for detecting and preventing financial crimes, but it also promotes transparency and
accountability in financial reporting. The paper highlights the importance of transparency and
accountability in financial reporting for economic growth. The study provides evidence that
forensic accounting can significantly improve the credibility of financial statements, leading to
increased foreign investment and economic growth.
Secondly, the study highlights the importance of financial regulation in promoting economic
growth. The study shows that financial crimes, including fraud, money laundering, and
corruption, can significantly impede economic growth. The study provides evidence that forensic
accounting can help in detecting and preventing financial crimes, leading to a more transparent
42
and accountable financial system. The study highlights the importance of financial regulation in
promoting economic growth and the role of forensic accounting in achieving this goal.
Finally, the study highlights the need for specialized skills in forensic accounting to detect and
prevent financial crimes. The study shows that forensic accounting is a specialized area of
accounting that requires specific skills and knowledge. The study highlights the importance of
training and education in forensic accounting to promote economic growth.
4.4.3. Practical Implications
The paper has several practical implications for businesses, financial institutions, and
government agencies in Nigeria. First, the study highlights the importance of forensic accounting
in detecting and preventing fraud and corruption. Forensic accounting can help identify
fraudulent activities such as embezzlement, money laundering, and financial statement fraud. By
detecting and preventing these activities, forensic accounting can help businesses and financial
institutions to minimize losses and improve their profitability.
Second, the paper emphasizes the need for businesses and financial institutions to adopt
proactive measures to prevent fraud and corruption. These measures may include the
implementation of effective internal controls, fraud risk assessment, and continuous monitoring
of financial transactions. By adopting these measures, businesses and financial institutions can
minimize the risk of fraud and corruption and enhance their reputation.
Third, the study suggests that the government should strengthen its anti-corruption laws and
regulations. The government can also establish specialized agencies to investigate and prosecute
cases of fraud and corruption. These agencies can work closely with forensic accountants to
ensure the effective detection and prosecution of fraudulent activities.
Fourth, the study highlights the need for continuous education and training of professionals in the
field of forensic accounting. This education and training should cover the latest trends and
techniques in forensic accounting, including digital forensics, data analytics, and fraud
43
investigation. By keeping abreast of the latest developments in the field, professionals can
provide more effective and efficient services to their clients.
Finally, the study suggests that businesses and financial institutions should consider
incorporating forensic accounting services into their operations. This may include hiring forensic
accountants as full-time employees or engaging them on a project basis. By incorporating
forensic accounting services into their operations, businesses and financial institutions can
improve their internal controls, minimize the risk of fraud and corruption, and enhance their
reputation.
4.4.4. Policy Recommendations
The paper also makes several policy recommendations to improve the use of forensic accounting
in Nigeria. First, the government should consider providing incentives for businesses and
financial institutions to adopt forensic accounting services. This may include tax breaks, grants,
and subsidies for companies that hire forensic accountants or engage forensic accounting firms.
Second, the government should establish a regulatory framework for forensic accounting
services. This framework should include standards for forensic accounting practice, licensing
requirements for forensic accountants, and guidelines for the provision of forensic accounting
services. By establishing a regulatory framework, the government can ensure the quality and
professionalism of forensic accounting services in Nigeria.
Third, the government should invest in the development of forensic accounting infrastructure in
Nigeria. This may include the establishment of forensic accounting laboratories, the acquisition
of forensic accounting equipment, and the provision of training and education for forensic
accountants. By investing in forensic accounting infrastructure, the government can enhance the
capacity of forensic accountants to provide effective services to businesses, financial institutions,
and government agencies.
Fourth, the government should work with international organizations and agencies to enhance the
use of forensic accounting in Nigeria. This may include partnerships with organizations such as
44
the International Federation of Accountants (IFAC), the Association of Certified Fraud
Examiners (ACFE), and the Financial Action Task Force (FATF). By working with these
organizations, the government can benefit from their expertise
CHAPTER FIVE
5.0 CONCLUSION, SUMMARY, AND RECOMMENDATION
5.1. SUMMARY OF FINDINGS
The research paper "Forensic Accounting in Nigerian Economic Growth" explores the
importance of forensic accounting in the Nigerian economy. The paper provides an overview of
forensic accounting, its application in Nigeria, and its impact on economic growth. The study
aims to investigate the role of forensic accounting in detecting financial fraud and enhancing
economic growth.
The findings of the study indicate that forensic accounting plays a critical role in detecting
financial fraud, preventing future fraud occurrences, and fostering economic growth in Nigeria.
The study also reveals that forensic accounting is underutilized in Nigeria, and there is a need for
more awareness and adoption of forensic accounting practices in the country.
The research shows that forensic accounting can provide valuable insights into the financial
health of companies and government entities. The use of forensic accounting can help prevent
financial fraud and enhance transparency and accountability in financial reporting. This can lead
to increased investor confidence, improved economic growth, and the attraction of foreign
investment in the country.
45
The research further highlights the challenges associated with the adoption of forensic
accounting in Nigeria. The lack of awareness, the shortage of skilled professionals, and the
absence of clear regulatory frameworks are some of the significant challenges that hinder the
adoption of forensic accounting practices in Nigeria.
The study concludes that forensic accounting is an essential tool for promoting economic growth
and preventing financial fraud in Nigeria. The research recommends the adoption of forensic
accounting practices in Nigeria and the provision of training and certification programs for
forensic accountants to enhance their skills and knowledge.
5.2. CONCLUSION
In conclusion, the study highlights the importance of forensic accounting in the Nigerian
economy. The findings indicate that forensic accounting can help prevent financial fraud,
enhance transparency and accountability in financial reporting, and promote economic growth in
Nigeria.
The study reveals that forensic accounting is underutilized in Nigeria, and there is a need for
more awareness and adoption of forensic accounting practices in the country. The research
recommends the adoption of forensic accounting practices in Nigeria and the provision of
training and certification programs for forensic accountants to enhance their skills and
knowledge.
Furthermore, the study highlights the challenges associated with the adoption of forensic
accounting in Nigeria, including the lack of awareness, the shortage of skilled professionals, and
the absence of clear regulatory frameworks. These challenges need to be addressed to ensure the
successful adoption and implementation of forensic accounting practices in Nigeria.
46
Overall, the research paper emphasizes the importance of forensic accounting in promoting
economic growth and preventing financial fraud in Nigeria. The adoption of forensic accounting
practices in Nigeria can lead to increased investor confidence, improved economic growth, and
the attraction of foreign investment in the country.
5.3. LIMITATIONS OF THE STUDY
Based on the findings of the study, the following recommendations are suggested:
1. The Nigerian government should take steps to promote awareness and adoption of forensic
accounting practices in the country. This can be achieved through public campaigns,
workshops, and seminars to educate stakeholders about the importance of forensic
accounting.
2. The Nigerian government should provide training and certification programs for forensic
accountants to enhance their skills and knowledge. This can be achieved by partnering
with professional bodies such as the Association of Certified Fraud Examiners (ACFE) to
provide training and certification programs for forensic accountants.
3. The Nigerian government should develop clear regulatory frameworks for forensic
accounting practices. This can be achieved by working with relevant stakeholders such as
professional bodies and regulatory agencies to develop clear guidelines and standards for
forensic accounting practices in Nigeria.
4. Nigerian companies and government entities should adopt forensic accounting practices to
prevent financial fraud and enhance transparency and accountability in financial reporting.
This can be achieved by engaging the services of forensic accountants and incorporating
forensic accounting practices in their internal control systems.
By implementing these recommendations, Nigeria can overcome the challenges associated with
the adoption of forensic accounting practices and enhance its economic growth while preventing
financial fraud.
47
5.4. SUGGESTIONS FOR FUTURE RESEARCH
One potential area for future research is the examination of the impact of forensic accounting on
Nigerian economic growth. This research could involve the use of statistical models to determine
the correlation between the use of forensic accounting and economic growth in Nigeria.
Additionally, the study could examine the impact of forensic accounting on foreign investment
and international trade.
Another area for future research is the development of forensic accounting tools and techniques
that are specific to the Nigerian environment. The Nigerian business environment is unique, and
therefore, there is a need to develop forensic accounting tools and techniques that are specific to
the country. This could involve the development of software tools that are tailored to the
Nigerian business environment or the adaptation of existing tools to suit the Nigerian context.
Furthermore, there is a need for research on the use of forensic accounting in specific sectors of
the Nigerian economy. For instance, research could focus on the use of forensic accounting in the
oil and gas sector, which is a significant contributor to the Nigerian economy. This research
could examine the prevalence of financial crimes in the sector and the effectiveness of forensic
accounting in detecting and preventing such crimes.
Another potential area for future research is the evaluation of the effectiveness of forensic
accounting in the Nigerian legal system. The legal system plays a crucial role in the fight against
financial crimes, and forensic accounting can provide the necessary evidence to support legal
proceedings. This research could examine the admissibility of forensic accounting evidence in
Nigerian courts and the effectiveness of forensic accounting in supporting legal proceedings.
In conclusion, forensic accounting is a crucial tool for promoting economic growth and
development in Nigeria. The use of forensic accounting can help in detecting and preventing
financial crimes that could negatively impact the Nigerian economy. However, the use of
forensic accounting in Nigeria is still at an early stage, and there is a need to increase awareness
and education on the discipline. Additionally, there is a need for further research in various areas
48
of forensic accounting in Nigeria, including the evaluation of its impact on economic growth,
development of tools and techniques specific to the Nigerian environment, and evaluation of its
effectiveness in supporting legal proceedings.
5.4.1. AREAS FOR FUTURE RESEARCH
The following are potential areas for future research:
1. Comparative Analysis of Forensic Accounting Practices in Nigeria and Other Countries
One area that requires more research is a comparative analysis of forensic accounting practices in
Nigeria and other countries. Nigeria has made some efforts in developing forensic accounting
practices, but there is a need to benchmark these practices against those of other countries. Such
a study would provide insights into best practices that could be adopted in Nigeria to improve the
effectiveness of forensic accounting.
2. The Role of Technology in Forensic Accounting
Another area that requires more research is the role of technology in forensic accounting.
Technology has revolutionized the field of accounting, and forensic accounting is not exempted.
There is a need to examine how technology can be used to enhance the effectiveness of forensic
accounting in Nigeria. Such a study would provide insights into the use of tools such as data
analytics, artificial intelligence, and blockchain in forensic accounting.
3. Forensic Accounting and Financial Reporting Quality
There is a need to examine the relationship between forensic accounting and financial reporting
quality. Forensic accounting is often used to detect financial fraud, and improved financial
reporting quality can reduce the incidence of financial fraud. Therefore, it is important to
examine how forensic accounting can be used to improve financial reporting quality in Nigeria.
4. Forensic Accounting and Corporate Governance
49
Another area that requires more research is the relationship between forensic accounting and
corporate governance. Forensic accounting can play a vital role in promoting good corporate
governance by detecting and preventing financial fraud. Therefore, it is important to examine
how forensic accounting can be integrated into corporate governance practices in Nigeria.
50
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CHAPTER TWO

2.1 LITERATURE REVIEW

2.2 Conceptual Framework

Fraud and Fraudulent Activities

2.2.1 Concept Forensic Accounting

2.2.2 Forensic Accounting Mechanism

2.2.3 Benefits of Forensic Accounting System

2.2.3 Integration of Accounting on Forensic Accounting System

2.1.4 Concept of Forensic Auditing

According to AICPA (2004) Forensic auditing is the application of accounting principles,

Forensic auditing is the integration of accounting, auditing and investigative skills

2.3 Concept of fraud

Fraud is an intentional pretense aimed at causing persons/organizations to relinquish

Fraud is an intentional act designed principally to deceive or mislead another party

2.3.1 Fraud Examiners

Fraud examiners compile and examine evidence to be used in fraud investigation in

2.3.2 Fraud Detection

Fraud Prevention Implementing a plan to identify fraudulent transactions or banking operations

2.3.3 Fraud Case Reported

2.3.4 Cost of Forensic Report

2013; Evans, 2017.

With an upsurge in financial accounting fraud in the current economic scenario

2.4.1 Fraud Triangle Theory (FTT)

THE FRUAD TRIANGLE

This study, therefore, hinged on the fraud diamond theory.

2.4.3 Stakeholder Theory

Stakeholder theory was developed originally by LanMitroff (1983), in his book

2.3.4 White Collar Crime Theory

2.4.1 Forensic Accounting and Firm Performance

2.4.2 Ethical Responsibilities of forensic accountants

Forensic accountants/auditors possess a particular social recognition, observation that is critical

2.5 Gaps in Literature

Hashem (2020) investigated the role of forensic accounting approaches in detecting

2.8 Summary on Research Gap

Aguolu, O. (2019). Designing an effective internal audit group. Association of Accountancy

Aikins, S. K. (2021). An examination of government internal audits’ role in improving financial

Al-Twaijry, A. A. M., Brierley, J. A. & Gwilliam, D. R. (2018). The development of internal

Al-Twaijry, A. A. M., Brierley, J. A. & Gwilliam, D. R. (2018).An examination of the

Chaveerug, A. (2021). The role of accounting information system knowledge on audit

Ekundayo, A (2020). Forensic accounting and fraud in private sector in

British International Journal of Education and Social Sciences, 6(5),

Abdulrahman, S. (2019). Forensic accounting and fraud prevention in

Nigerian public sector: Aconceptual paper. Igbinedion University

Journal of Accounting 2(7), 215-238.

Akinbowale, O. E., Klingelhöfer, H. E., & Zerihun, M. F. (2020). An innovative approach

Akhidime A. E. (2020). Bridging audit expectation gap with the integration of

3.2 Research Design

Descriptive research is a type of research that is used to describe the characteristics of a

3.3 Population of the Study

3.4 Sample Size

3.5 Sampling Method

3.6 Data Collection Methods

3.7 Administration of Instrument

3.8 Method of Data Analysis

3.9 Limitation of the Methodology

Chaveerug, A. (2021). The role of accounting information system knowledge on audit

British International Journal of Education and Social Sciences, 6(5),

4.1. Descriptive Statistics

Table 1: Demographic Characteristics of Respondents

Demographic Characteristics Frequency Percentage

Bachelor's Degree 76 76%

Master's Degree 24 24%

Responses Frequency Percentage