Corruption and other financial malpractices have retarded the rate of growth and economic development in Nigeria. These unhealthy situations harm Nigeria economy in no small measure. The objective of this paper is to examine whether Forensic Accounting do significantly reduces the occurrence of fraud cases in Nigeria especially in the private sector areas. The findings show that forensic Accounting is a veritable tool for fraud detection and prevention in Nigeria economy. Forensic accounting helps or can adequately propose unique procedures that are not proposed by auditors when the risk management fraud is high. In conclusion, forensic Accounting has helped tremendously to the better understanding of risk assessment as well as the management of such risk.
The level of fraud in the present day Nigeria has assumed an epidemic dimension. It has eaten deep into every aspect of our life to the extent that a three years old child talks about 419, the name given to the newly discovered fees fraud that is hunting us as a nation. Fraud is defined as “deceit or tricking deliberately practiced in order to gain some advantages dishonestly”. For an action to constitute fraud therefore there must be a dishonest intention and the action must be intended to benefit the perpetrator to the detriment of another person. Going by this definition, frauds in the Nigeria economy cannot be restricted to the banks alone. Although frauds cut across all sectors of the economy and that size of an enterprises usually determines the volume of frauds perpetrated, such problems as inadequate manpower, poor internal control system, inadequate incentives and unsuitable legal framework for dealing with offenders, downturn in the economy, recognition being accorded the wealthy people regardless of their sources of wealth play a major role in the perpetration of frauds.
Management fraud is the deliberate fraud committed by Management that injures investors and creditors through materially misleading financial statements (Okoye and Gbegi, 2013) citing Apostolou, et al, (2000). The ability of an auditor to make an accurate assessment of Management Fraud Risk is crucial to the initial assessment of risk in an audit engagement (Hansen and Klamm, 2004). The increasing demand of forensic accounting is a recognized feature of most companies. Forensic accounting arises from the cause and effect of fraud and technical error made by human. The issue of forensic accounting and fraud is continuingly being debated for the past few years as it concerns companies in developed countries, (Shaikh & Talha, 2003). This is still an issue to be addressed in the business sector as fraud cases have only been detected after massive funds have disappeared from the coffer. Forensic accounting may be one of the most effective and efficient way to reduce and prevent accounting fraud. Forensic accounting, forensic accountancy or financial forensics is the specialty practice area of accountancy that describes engagements that result from actual or anticipated disputes or litigation. "Forensic" means "suitable for use in a court of law", and it is to that standard and potential outcome that forensic accountants generally have to work. Forensic accountants, also referred to as forensic auditors or investigative auditors, often have to give expert evidence at the eventual trial.
All of the larger accounting firms, as well as many medium-sized and boutique firms, as well as various Police and Government agencies have specialist forensic accounting departments. Within these groups, there may be further sub-specializations: some forensic accountants may, for example, just specialize in insurance claims, personal injury claims, fraud, construction, or royalty audits.
Forensic accounting is defined as a science dealing with the application of accounting facts gathered through auditing methods and procedures to resolve legal problems. It also requires the integration of investigative, accounting, and auditing skills. These forensic accountants draw conclusions and calculate values and identify irregular patterns or suspicious transactions by critically analyzing the financial data. It provides an accounting analysis to the court for dispute resolution in certain cases and it also provides the court with explanation to the fraud that has been committed. That is why forensic accounting may play a vital role in detecting and reducing accounting frauds in the business sector.
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