Forensic Accounting And Corporate Performance Of Firms Listed On The Nigerian Stock Exchange

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)