FORENSIC ACCOUNTANT: A PANACEA TO FRAUD DETECTION

FORENSIC ACCOUNTANT: A PANACEA TO FRAUD DETECTION (CASE STUDY OF SELECTED QUOTED COMPANIES IN NIGERIA)

ABSTRACT

The study examined the role of forensic accountant as a panacea to fraud detection adopting some selected quoted companies in Nigeria as my case study. The study aimed at investigating how fraud can be detected and controlled in companies as well as how the internal control system and financial reporting quality can be improved in companies through the forensic accountant. Samples were drawn from the employees of Julius Berger plc, PZ Nigeria plc and UAC foods plc in five departments of the companies using convenience non-probability sampling method. The hypotheses formulated were tested using chi-square test. From the analysis carried out, it was found out that the forensic accountant can detect fraudulent activities in companies as well as control the activities. The study thus concludes that in other for companies to reduce their rate of financial irregularities and be financially efficient, the need for a forensic accountant is important.

CHAPTER ONE

INTRODUCTION

1.1 Background of the study

Financial irregularity is a big problem globally and it is of a great concern to the developing nations. Financial irregularities are so common and serious that fraud and corruptions is gradually becoming a way of life and almost every individual cannot be free or clean of it. Individuals get involved in fraud and corrupt practices according to their capacity of office. No money is entirely free as every naira and kobo has it legal use which consequently means that any form of misuse will negatively have an effect on where it ought to be used. This effect can be direct or indirect on companies or the nation at large. Individuals and companies affected negatively by the fraudulent and corrupt act will want to seek redress by using different institutions such as the police and the law court. Hence whatsoever an investigator wishes to do will not be complete if the extent to which the affected companies are not quantified. This and other pecuniary areas are where the service of the expert “forensic accountant” is being engaged in for a long time worldwide and recently in Nigeria.

Forensic accounting evolved as a result of certain emerging fraud related cases. Forensic accounting encapsulates all other investigation related areas in uncovering financial fraud. It is referred to as the tripartite practice of utilizing auditing, accounting and investigative skill to assist in legal matters. Modugu & Anyaduba (2013). According to Okoye & Gbegi( 2013), forensic accounting is an engagement that results from actual or anticipated dispute or litigation.

It is an investigative style of accounting used to determine whether an individual or a company has engaged in any illegal financial activity. Forensic accounting can therefore be seen as an aspect of accounting that is suitable for legal review and offering the highest level of assurance. Apostolous & Weber (2000). Forensic accounting is the application of financial skills and investigative mentality to unsettled issues, conducted within the context of the rule of evidence. Arokiasamy & Cristal (2009). Forensic accounting as a discipline encompasses fraud knowledge, financial expertise, and a sound knowledge and understanding of business reality and the working of the legal system. Forensic accounting may be one of the most effective and efficient way to decrease and check accounting fraud. Forensic accounting is described as the integration of an individual's accounting and auditing knowledge with investigative skills that have been gained from years of practical experience. It is the means by which the forensic accountant carefully examine instructions given by a client, usually through a solicitor, thoroughly investigate those instructions and the underlying circumstances, examine the financial information and any relevant contracts and other agreements, obtain appropriate evidence, prepare any appropriate calculations, form a conclusion and publish the whole in the form of a report suitable for presentation to the court. Forensic accounting consist of two major component which are litigation service that recognizes the accountant as an expert consultant and the investigative services that uses the forensic accountant skill and require court room testimony. The increasing sophistication of financial fraud requires that forensic accounting be added to the tools necessary to bring successful investigation and prosecution of those involved in criminal activities. The focus of this study is to examine the role of forensic accountants in detection of fraud in Nigerian companies. 3

1.1.1 Historical Background of Case Study-Julius Berger Plc, PZ Nigeria Plc and UAC Nigeria Plc.

Julius Berger Plc: The foundation of Julius Berger began in 1965 when a contract to construct the Eko Bridge in lagos state was awarded to it. This was the foundation of Julius Berger commitment to Nigeria following the initial project, the company began to diversify its portfolio and it growth started to run in parallel to the development of Nigeria. In 1970, Julius Berger legal structure was changed into a limited company, later to be transferred into a public limited company listed in the Nigeria stock exchange in 1991. Throughout this time, the role in the development was so evolving, proven to be a company that consistently delivered reliable solution, Julius Berger became a pivotal partner in the building of the country‟s fledging industrial and civil infrastructure, and also a key collaborator in the development of Nigeria‟s new capital Abuja.

Today, Julius Berger maintained it role as an integral part in Nigeria‟s construction industry, laying the foundation of the country economic progress and development. Julius Berger head office is located in Abuja FCT with additional permanent locations in Lagos and Uyo. The company is also represented across the nation in structural engineering and infrastructure works and in southern Nigeria through oil and gas industry project. Currently, Julius Berger board of director is comprised of thirteen members, nine non-executive directors one of whom is an independent director and four executive directors. Developing of complex infrastructure is a key element in Julius Berger core competence. Countless bridges, road system, traffic network and airport among others are been constructed by them.

PZ Nigeria Plc: PZ Nigeria plc was founded by Paterson Zochonis (PZ), in 1899 PZ is basically a company that engages in the manufacturing of a lot of product ranging from beverages to household cleaning agent and a whole lot of product. The company‟s brand portfolio includes some of the following Nunu milk, Imperial leather soap, Olympic milk, Coast milk. In 1948, PZ acquired its first soap factory and alongside entered into detergent making and the refrigerator market. In 1975, the company acquired the Cussons group ltd and then changed the name to PZ Cussons Ltd in 2002. PZ Cussons Nigeria plc is the largest subsidiary of the PZ Cussons global group. The company has enjoyed tremendous business success in Nigeria for over a century. This company has twelve members as board of directors of which six are executives and they include Mr. Christos Giannopoulos, Mrs. Yomi Ifaturoti, Mr. Adewale Raji, Mr David Petzer, Mr Alex Goma, and Ms Joyce Coker. And the non-executive directors include Professor Emmanuel Edarien, Mr. Tunde Oyelola, Mr. Muhammed Hayatu, Mr. Lawal Bartagarama and Mrs. Elizabeth Ebi. PZ manufactures the following product among others; Carex soap, Joy soap, Robb, Morning fresh, Robert antiseptic, and many others.

UAC Nigeria Plc: United African Company (UAC) of Nigeria plc is a leading diversified company, operating in foods and beverage, real estate, paints and logistics sectors of the economy. UAC has remained a foremost and active participant in Nigeria‟s economic landscape since 1879. The company‟s brand portfolios includes leading brands such as gala sausage roll, Mr. Biggs, snaps, fun time coconut chips, supreme ice-cream, Delite fruit juice, swam natural spring water, gossy warm spring water, Dulux, grand soya oil and grand coconut oil, vital feeds, livestock feed band sandtex. UAC has evolved into a holding company with strong regional and international partnership in a bid to enhance sustainable growth. The partnership are: UAC food limited, a business partnership between brands limited holding 49% of the equity and UAC controlling 51%: MDS logistics ltd, a joint venture with imperial logistic, which holds 49% equity with UAC holdings the majority stake of 51%: UAC restaurant ltd, where famous brands holds 49% of the equity, while UAC holds the remaining 51%. UAC also operate successful joint venture in the real estate business and technical collaboration in its paint business.

1.2. Statement of the problem

In recent times, various frauds have been committed in different companies, corporate organization in private sector as well as the public sector economy. Okoye & Akamobi (2009), Owojori & Asaolu(2009), Izedonmi & Mgbame (2011), Kasum(2009) as cited by Modugu & Anyaduba (2013) have all acknowledged in their separate works that there is an increasing rate of fraud and fraudulent practices in Nigeria and financial irregularities have become the order of the day in Nigeria. The independence of the internal auditor is of no guarantee because the auditor works as an employee of the company while the independence of most external auditors has already been impaired and does not sufficiently provide a guarantee any more. Irrespective of the presence of both internal and external auditors in companies, fraud is still being perpetuated on a daily basis. As there are more and more development in the information communication technology (ICT) world and other field, so fraudsters continue to groom their tactics towards fraudulent practices. It is now important that forensic accounting is introduced and practiced since external auditors do not or may not have the required training to be able to tackle modern day fraud like white collar crime such as security fraud, embezzlement, bankruptcies, contract dispute and criminal financial transaction; including money laundry by organized criminals. These areas have become a complex area of concern for the accounting profession. Although, there is a general expectation that the forensic accountant can be able to curtail financial irregularities experienced in several companies. However, there has not been any emphasis on a specific way on how the forensic accountant can totally curb financial crime. Thus, the study seeks to fill this gap by providing answers to the following research questions.

1.3. Objectives of the study

The broad objective of the study is to evaluate the role of forensic accountant on detecting financial fraud in Nigerian quoted companies

The specific objectives of the study are to:

i. Examine the possibility of detecting the occurrence of financial fraud through forensic accounting

ii. Evaluate the effectiveness of forensic accounting in financial fraud control.

iii. Identify the predisposing factors that ensure the improvement in financial reporting quality.

iv. Investigate the adequacy of internal control system of selected companies.

v. Ascertain the difference between forensic accountant and external auditors

TOPIC: FORENSIC ACCOUNTANT: A PANACEA TO FRAUD DETECTION

Format: MS Word

Chapters: 1 - 5
Delivery: Email

Number of Pages: 90

Price: 3000 NGN

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