The Forensic Accounting And Corporate Performance Of Firms Listed On The Nigerian Stock Exchange Complete Project Material (PDF/DOC)
This study examines forensic accounting and corporate performance of firms listed on the Nigerian stock exchange. Its main objective is to examine if there is any relationship between forensic accounting and corporate performance in Nigeria. The primary source of data collection was used in gathering data from respondents. A structure questionnaire was designed by the researcher and validity by two experts from the statistics department was used to obtain data Chi-Square (X2) was used to test hypotheses formulated. It was discovered that most quoted companies in Nigeria do not engage the services of forensic accountants. The study concludes that there is a great need for forensic accounting to ensure efficient and effective corporate performance in Nigeria and it was recommended among others that forensic accounting should be equipped with necessary skills and knowledge in fighting computer related fraud/e-crimes.
Introduction
1.1 Background to the Study
Historically, Forensic Accounting is certainly not a new field, research findings have shown that the profession has been in existence a long-time ago. For example, in ancient Egypt, the officers in charge of Pharaoh’s grains, gold and other asset were called the “eyes, and ears’ of pharaohs’.
Criminally, in Nigeria, ‘corruption and other financial and economic crimes is the base of Nigerian development efforts. Corruption bestrides the lives of the citizen. The judgment of transparency international is a reflection of what the nation has given to the world 419, money laundering, illegal oil bunkering etc. Ribadu (2004) stated that all these crime continued in Nigeria system in spite of government landscape steps to address them, because many people in power want the old dispensation to continue. He reiterated that there are those even though they are paid to check the activities of the culprits, yet are willing to share in the proceeds with the event that they themselves become culprits. These economic and financial crimes are the greatest threat to Nigeria economic and developmental growth as the nation has nothing to show for its huge earnings from oil.
Also, Waziri (2009) stated that corruption afflicts virtually all parts of the Nigeria society. In its 2004 report on worldwide corrupt practices transparency international survey which covered 146 countries in the world, which rated Nigeria as the third most corrupt country in the world. The focus of the transparency international 2004 report was more on oil sector as a revenue source for most oil producing countries.
According to Owolabi (2007), chairman of Transparency International Board of directors observed in 2004 that in oil producing countries, public contracting in the oil sector is plaque by revenue vanishing into the pockets of western oil executives, middlemen and local officials. He suggested that oil companies could help fight corruption by making public details of payment made to government and state-controlled oil firms. More also, the growth of public limited liability companies and large increase in the number of investors, and the divorce of ownership from control of companies has called for regular forensic accounting work of corporate financial reports in Nigeria.
Several instances of corporate scandal and failure in resent past have put professional accounting bodies into a new perception that goes beyond statutory audit and the trend of corporate governance or performance.
Furthermore, modern organized corporate frauds are widely spread and well resources by manager, entrepreneur and politicians. Therefore, there is need to respond to this changing criminal threat by the Accountant and legal experts also needed to combat the corporate challenge, this has arouse the call for forensic accountant in enabling corporate performance in Nigerian companies.
1.2 Statement of Problem
This project is to address some of the deficiencies by looking towards a forensic accountant as the best antidote to curbing financial and economic crimes, and also to prevent and reduce misappropriation of corporate funds. Also, the failure of statutory audit to prevent and reduce this misappropriation of corporate funds and increase in corporate crimes has put pressure on professional accountant and legal practitioners is to find a better way of exploring fame in business world. A nation-wide study conducted by Kessler international showed that 39% of organizations have considered the need for a forensic accountant.
1.3 Objectives of the Study
To examine if there is any relationship between forensic accounting and corporate performance in Nigeria.
To evaluate how the practices of forensic accounting could play an important role in solving the vexed problems of a company’s corporate performance.
To evaluate how forensic accounting and corporate performance can provide professional investigative and litigation support services in Nigeria.
To ascertain the level of awareness of forensic accounting practices in Nigeria.
To determine the extent at which forensic accounting practices detect and minimize computer related fraud or e-crimes in Nigeria companies.
To determine whether the application of forensic accounting services in Nigeria quoted companies can detect fraudulent activities.
To ascertain whether audited financial statement in quoted Nigeria companies are being undermined.
1.4 Research Questions
The following research questions are raised in order to achieve the objectives of this study.
Is there any relationship between forensic accounting and corporate performance in Nigeria?
How can the practices of forensic accounting play an important role in solving the vexed problems in a company’s corporate performance?
To what extent can public confidence and trust be restored through the practices of forensic accounting and corporate governance in Nigeria?
To what extent is the level of awareness of forensic accounting practices in Nigeria?
1.5 Statement of Hypotheses
The following null and alternative hypotheses have been formulated to serve as a base for this research.
Hypothesis One
Ho: There is no significant relationship between forensic accounting and good corporate performance.
HI: There is significant relationship between forensic accounting and good corporate performance.
Hypothesis Two
Ho: Litigation support services by forensic accounting cannot lead to appropriate judgment for economic and financial crime eradication in Nigeria.
HI: Litigation support service by forensic accounting can lead to appropriate judgment for economic and financial crime eradication in Nigeria.
Hypothesis Three
Ho: Forensic accounting practices cannot assist in the detection or minimization of computer fraud or electronic related fraud.
HI: Forensic accounting practices can help eradicate computer fraud or e-crimes in Nigeria quoted companies.
1.6 Significance of the Study
The significance of this study is to corporate companies, investors, Nigeria government, and the general public. The study will educate these groups on the importance of a forensic accountant and corporate performances among them thereby help to restore the lost confidence by the public and the government as regard forensic accountant and corporate performance in Nigeria.
The study will also be beneficial to academicians and other future researchers/users in similar subject matter.
1.7 Scope and Limitations of the Study
The area of coverage is restricted to Nigeria situation by the use of questionnaire and direct interview. Also covers a survey of quality corporate management and control in forensic accounting services in Nigeria. This study is undertaken to evaluate the impact of forensic accountant and corporate governance within Nigeria geographical states. The study limit itself to some quoted firms in the Nigeria stock exchange (NSE), with special emphasis on the impact it can have on restoring the credibility of audited financial statements of companies, as well as fight against corruption and computer related frauds in Nigeria and it is between the period of 2010-2013.
1.8 Organization of the Study
The study is divided into five chapters. Chapter one deals with the study’s introduction and gives a background to the study. Chapter two reviews related and relevant literature. The chapter three gives the research methodology while the chapter four gives the study’s analysis and interpretation of data. The study concludes with chapter five which deals on the summary, conclusion and recommendation.
1.9 Definition of Terms
Investigation:
The use of specialized investigative skills in carrying out an inquiry conducted in such a way that the outcome will have application of the law.
Forensic Accounting:
Is defined as the practice of vigorous data collection and analysis in the area -of litigation support consulting, expert witnessing, and fraud examination.
Forensic Audit:
This refers to the examination of all evidence regarding an assertion to ascertain its correspondence to establish criteria carried out, in a manner suitable to a law court.
Litigation:
This simply means the judicial process of, carrying out legal context.
Electronic Crimes:
Are crimes committed through the use of information technology (I.T)
Summary, Conclusion and Recommendation
5.1 Introduction
It is important to reiterate that the objective of this study was to assess the relationship between forensic accounting and corporate performance of firms listed in Nigeria stock exchange.
In the preceding chapter, the relevant data collected for this study were presented, critically analyzed and appropriate interpretation given. In this chapter, certain recommendations made which in the opinion of the researcher will forensic accounting as a tool for enhancing corporate governance.
5.2 Summary
The recent wave of corporate fraudulent financial reporting has prompted global actions for reforms in CP and financial reporting, by governments and accounting and auditing standard-setting bodies in the U.S. and internationally. The enactment of Sarbanes-Oxley Act of 2002 was the U.S. government’s response to the wave of fraudulent corporate financial reporting experienced during the 1980s and early 2000s, and represented a significant step in regaining investors’ confidence in the global financial reporting process. The SOA created new and stricter statutes to avoid a repeat of previous corporate financial disasters. The Act not only applies to U.S. entities but also covers primarily large non-U.S. companies whose securities are listed or traded on U.S. stock exchanges, as well as their own non-U.S. external auditors, regardless of their nationality or place of business. Foreign entities have to comply with the SOA by June 2005.
This study has examined the large role forensic accounting plays in enhancing organizational or corporate governance. The study has defined clearly its objectives in the first chapter; a review of relevant literature was greatly explored to help bring to light the importance of forensic accounting. The third chapter described the methodology employed in the study; while the chapter four presents the data for analysis.
5.3 Conclusion
In the 21st century, the corporate sector, all over the world, is facing rapidly increasing levels of regulatory and reporting requirements. They are forced to spend millions of dollars annually examining their existing systems and adopting/improving their corporate performance (CP) and internal control systems to meet the standards set by the Sarbanes-Oxley Act of 2002. It is, therefore, necessary for the professionals (viz., the chartered accountants, company secretaries, auditors, legal and IT professionals) and companies to shift their focus from mere compliance approach to study and investigate the behavior of board of directors, CP practices, and financial reporting systems.
There is no doubt that a qualified, trained and mature Chartered Accountants, possessing forensic accounting (FA) skills, can prove to be a valuable asset to the corporate-sector, and gradually help to improve their CP system. Moves are afoot globally, both at the national and international levels, to promote convergence of CP practices. Let us hope, these moves could ensure in the long-term two important qualities of CP and reporting: transparency and honesty.
Several global actions have been undertaken to respond to recent series of global corporate fraudulent financial reporting incidents and violation of the CP codes/norms, mostly in the U.S., Europe and other parts of the world. Across the Atlantic, the International Federation of Accountants (IFAC), Organization for Economic Co-operation and Development (OECD) and European Commission (EC) have recognized the recent eruption of corporate scandals in Europe and affirmed the inevitable need for CP reforms and regulation of the public accounting profession worldwide. The IFAC has passed the “Code of Professional Ethics” for international accounting firms. Similarly, the OECD has passed ‘guidelines’ for improving CP. Also, the European Union has proposed a ‘code of conduct’ for independent auditors, which include a five-year auditor rotation requirement. European countries are also involved in improving their corporate laws through governance codes of practice.
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