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Electronic copy available at: http://ssrn.com/abstract=1788822

 THE NIGERIAN ACADEMIC FORUM

A Multidisciplinary Journal

© National Association of the Academics (2009)

EDITOR - IN - CHIEF: Prof. Nonso Nnabuife, Faculty of Engineering, Nnarndi Azikiwe

University, Awka, Anambra State, Nigeria.

EDITORS
Dr. R. O. Seweje
University of Ado-Ekiti, Ado-Ekiti

Dr. E. N. Mordi
,.Delta State University, Abraka

Dr. Ogo Ibeneme

Nnamdi Azikiwe University, Awka.

CONSULTING EDITORS
Prof. F.C. Okafor (UNIBEN)
, Prof. M.A. Mkpa (ABSU) .
Prof. G.C. Nzelibe (DELSU)
Prof. C.C. Okam (UNIJOS)

Electronic copy available at: http://ssrn.com/abstract=1788822

 Contents

Gongronema Latifolium-X Local Hop Substitute for Beer Brewing

- Frank N. I. Morah and Patrick U. Okon 1-3

Curbing Emerging Acid Rain Created by Oil Exploration in Nigeria: Strategy

for Action, Sensitization Education - Dr. Patrick O. Ajaja 4-\ 0

Experimental Investigation on the Thermoremediation Effect of Aromatic

Contaminants on the Germination of Cowpea - C. P. Ukpaka; V. G. Nnadi
and N. Umesi 11-27

The Influence of Mentoring on the Teaching Competencies ofNYSC Teachers in

Ogidi Education Zone of Anambra State - Lawretta Adaobi Aroh 28-33

Uplifting Chemical Technology for Economic Empowerment in Nigeria

- Helen Okwuoma Nnabuenyi 34-38

The Role of Forensic Accounting in Fraud Investigation and Litigation

Support - Dr. Emma I. Okoye and Akamobi, Ndidika L 39-44

The Relationship between Natural and Non-Natural Assets in National

Accounting within the Economic Environment - Obiekwe Dike 45-50

Need for Information Technology in Enhancement of Education in Nigeria

Polytechnics in the 21st Century - Frederick Chukwuebuka Nwosu 51-56

Language and National Development: The Nigeria Perspective - Dr. Jane

A. Ec Onyeachu 57-60

An Investigation into the Impact of Science Language Usage in Teaching of

Integrated. Science in Selected Katsina State Schools - Ibrahim Usman 61-65

A Comparative Analysis of the Structure and Functions of Personnel Management

in Organizations: Public and Private Sectors - Nnamdi Franklin Agetue 66-73

Relevance of Computer Literacy in Socio-Economic Development of the

Family - Amaka Immaculetta Chijioke 74-78

Re-Orientating the Home Economics Vision to Meet the Challenges of the

Future - J. W. Umar 79-82

Evaluation of Poverty Alleviation in Nigeria - D. S. C. Amobi; Pedro Okor

and Precious B. Ehikioya 83-90
 THE ROLE OF FORENSIC ACCOUNTING IN FRAUD INVESTlGATlO A D
LITIGATION SUPPORT

Dr. Emma I. Okoye an d A/WIIIObi, Nditli/w L.

Abstract
Forensic accounting is the speciality practice area of accounting that
describes engagements that result from actual or anticipated dispute or
litigation. It provides an accounting analysis that is sustainable to the court
which will form the basis for discussion, debate and ultimately dispute
resolution. While certainly ideal for court testimony, in broad terms,
'forensic', is about fact finding and interpretation. The increase in number of
fraud and fraudulent activities in Nigeria and around the world has
emphasized the need for forensic accounting. Engagements of forensic
accountants on criminal matters typically arise as the aftermath of fraud.
Fraud examination in forensic accounting is di fferent from that of
'traditional accounting' because the forensic accountant has the intuitive
ability to analyze fraud. The aim or this paper is to identify the role of
forensic accounting in fraud investigations and litigation support and proffer
suggestions that will, hopefully, bring to public awareness the importance of
this area of accounting.

Introduction
Forensic accounting is the tripartite practice of utilizing accounting, auditing and investigative
skills to assist in legal matters. It is the speciality practice area of accounting that describes
engagements that result from actual or anticipated disputes or litigation. Forensic accounting is the
science that ideals with the relation and application of financial, accounting, tax and auditing
knowledge to analyze, investigate, inquire, test and examine matters in civic law, criminal law and
jurisprudence (http://www.pueleibowtz-andchickllc.col11/1 itigation .shtml). Forensic accounting 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. (htt://www.edwardspub.com/journals/JFAlstudents.html.
Forensic accounting 'is the fastest growing area of accounting today. Despite the recent
spotlight, forensic accounting is not new. Its roots have been traced as far back as the early 1800's to
Glasgow, Scotland that, notwithstanding forensic accounting as a profession remained relatively
unknown until the plethora of high-profile corporate scandals and stricter reporting and internal
control regulations which brought to light its importance to the business world
(htt://www.norcrossgroup.com/forensicacct.html). Wallace (1991), opined that forensic accounting,
until recently, was usually hidden away in the investigation department, but in recent years, it has
emerged from the closet and become a recognized and growing source of income. Forensic
accounting is more than accounting ..... more than detective work ..... it's a combination that will be in
demand for as long as human nature exists (htt://www.forensic-accounting-infon11ation.com/).
The primary orientation of Forensic accounting is explanatory analysis (cause and effect) of
phenomena-including the discovery of deception (if any), and its effects - introduced into an
accounting system domain. The primary methodology employed by forensic accountants is objective
verification. Forensic accounting is focused, therefore, upon both the evidence of economic
transaction and reporting as contained within an accounting system and the legal framework which
allows such evidence to be suitable for the purpose(s) of establishing accounting and or valuation.
Accountability, in this context implies, application of strong financial and operational controls,
respect for the rule of law and application of high ethical standards.
The increase in the number of fraud and fraudulent activities in Nigeria and around the world
has been on alarming increase, emphasizing the visibility of forensic accounting services. Frauds are
acts of dishonest, deceit, falsifications and manipulations perpetrated to gain under monetary and or
non-monetary benefits. Ojaide (2000), stated that fraudulent practices include frauds and all other
illegal means of acquiring and possessing an asset to the disadvantages of another person. In
The Nigerian Academic Forum Volume J 7 No J November, 2009 39
 Dr. Emma I. Okove and Akamobi, Ndidika L.
accounting, fraudulent activities are illegal acuvrties involving misappropriation of assets (cash,
stocks, bookdebts, fixed assets), and manipulation and falsification of accounting books and records,
etc. forensic accountants utilize an understanding of business information and financial reporting
systems, accounting and auditing standard and procedures, 'evidence gathering and investigative
techniques and litigation processes to perform their work. Some of their work include: investigating
and analyzing financial evidence, developing computerized application to assist in the analysis and
presentation of financial evidence, communicating their findings in the form of reports, exhibits, and
collection of documents, and assisting in legal proceedings, including testifying in court as an expert
witness and preparing visual aids to support trial evidence.

Forensic Accounting Distinguished from Traditional Auditing

• The forensic accountant employs a much higher degree of professional skepticism when
conducting his work. He is not apt to accept explanations and documents at face value.
• A forensic accountant burrow much deeper into the facts and issues than a tradition auditor.
• A forensic accountant is more familiar with how employees can abuse and misuse controls
and processes and with the various types of fraud, schemes and methods used to circumvent
internal controls.
• In gathering facts and evidence, a forensic accountant is more experienced in where to look,
what types of evidence to look for, how to extract it and what constitutes relevant and valid
support. For instance, in an auditor malpractice suit, a forensic accountant would be used to
explain what audit procedures, or lack thereof, may have contributed to the company's
misstatements.
• The forensic accountant is more adept at interviewing and eliciting information from
company personnel, witnesses and subjects.
• A forensic accountant is more experienced at interpreting facts and evidence as well as
presenting his/her findings in a manner that is meaningful and can be used to support the civil,
criminal, administrative and political processes. In order to combat fraud, a company would
bring in a forensic accountant, a professional with a combination of financial expertise and
investigative prowess, to determine exactly what's going on.
• A forensic accountant has a keen understanding and sixth sense for the fact and evidence that
are not, obvious, but that indirectly may verify, support or refute a given explanation,
transaction or acti vity (htt://www.norcrossgroup.com/forensictl.htl1ll).
Since all professional accountants operate within a' commercial legal environment, all
professional accountants are, in a sense, forensic accountants. What distinguishes forensic accountants
in common parlance, however, are the level of engagements. That is, when a professional accountant
accepts an engagement, where he anticipates that his findings or analysis may be subject to
adversarial or judicial scrutiny or administrative review, the professional account and seeks a level of
evidentiary 'detail and analytical precision which will be sustainable within the legal framework of
such scrutiny or review (htt://www.edwardspub.com/journals/JFA/students.html).

Competencies Requires of a Forensic Accountant

Forensic accounting requires a large repertories of skills in different situations.
The following are some of the competencies a forensic accountant must posses
• The first and most important skill is the ability to think, otherwise known cognitive skill. This
allows forensic accountants to exercise skills like innovation, creativity and ingenuity in the
performance of their work. This underscores the point that a forensic accountant must be
versatile in knowledge. He must have an in-dept knowledge of accountancy, auditing and
business operations. He must posses a good communication skills and intellectual skills and
that would make him to be proficient in the practice of the profession.
• A forensic accountant must posses detective (investigative) and financial management skills.
He should be able to identify unusual financial transaction. He should be familiar with
business records and book -keeping practices beyond those used to satisfy financial
. requirements. In the context of legal dispute, the knowledge, skills and experience of a good
forensic accountant are extremely useful as a consultant to litigation counselor judges.
40
 Tlte Role of Forensic ACCOUlltillg ill Fraud blvestigatioll and Litigation Support
• A forensic accountant should have the ability to operate in unstructured situations. He should
have be a good team spirit, interpersonal skills, managerial and commercial skills and public
relations capabilities. This is referred to as affective or attitudinal skills.
• A forensic accountant should be a well educated, well trained and an experienced professional
accountant. He should have legal knowledge and a good knowledge of court-room
procedures. Development of such skills required substantial amount of time, resources and
money.
A forensic accountant should posses a good theoretical and practical knowledge of the subject
matter. He should be computer literate. Theoretical skills would enable him to communicate complex
theoretical ideas in a manner which would be easily understandable. Practical (or Psychomotor) skills
would help him to compute, re-compute (if the need arises) and review a large volume of data. Such
data may range from the more usual accounting records and management information systems, to
memos, .correspondence and other less obvious financial data. The ability to manipulate and interpret
data is very vital in case of litigation. Computer literacy skills are indispensable in today's human
endeavour. Computer skills would enable the forensic accounting expert to audit through the
computer and or around the computer if he is not satisfied with the report of the auditors. His
analytical abilities and research skills will be essential to his success as his eventual financial
experience including knowledge of accounting procedure.

Approaches to Forensic Accounting Assignment

Each forensic accounting assignment is unique and has a peculiar approach. In general many
forensic accounting assignments will include the steps detailed below.

• Meet with the Client

It is very important to meet the client in order to have a clear understanding of the important
facts, players and issues at hand.
• Perform Conflict Check
A conflict check should be carried out as soon as the relevant parties are established.
• Perform Initial Investigation
Preliminary investigation should be carried out prior to the development of a detailed plan of
action. This will allow subsequent plans to be based upon a more complete understanding of
the issue.
• Develop an Action Plan
This plan will take into account the knowledge gained by meeting with the client in carrying
out the initial investigation and will set out the objectives to be achieved and the methodology
to be utilized to accomplish them.
• Obtain the Relevant Evidence
.Depending on the nature of the case this may involve locating documents, economic
information, asset, a person of company, another expert or proof of the occurrence of an
event.
• Perform the Analysis
The actual analysis performed will be dependent upon the nature of the assignment and may
involve.
Calculating economic damages
Summarizing a large number of transaction
Performing a tracing of assets
Performing a present value calculations by utilizing appropriate discount rates
Performing a regression or sensitivity analysis
Utilizing a computerized application such as a spread sheet, data base or computer model and
Utilizing charts and graphics to explain the analysis
Prepare the report.
Often a report will be prepared which may include sections on the nature of the assignment,
scope of the investigation, approach utilized, and limitations of scope and findings and' / or opinions.
The report will include schedules and graphics necessary to properly support and explain the findings.
41
 Dr. Emma f. Okove and Akamobi, Ndidika L.
The Role of Forensic Accounting ill Federal Investigations
Forensic investigation is the utilization of specialized investigative skills in carrying out an
inquiry conducted in such a manner that the outcome will have application to a court of law.
Investigation is the act of determining whether criminal matters such as employee theft, security fraud
(including falsification of financial statements) identify theft and insurances fraud have occurred.
(htt:l/www.forensic.accounting-information.com/). As part of forensic accountant's work, he must
recommend actions that can be taken to minimize future risk or loss.
Fraud examination in forensic accounting differs significantly from that of a traditional
auditor or accountant. Fraud analysis in forensic accounting include a critical element-the intuitive
ability to investigate Fraud. While a traditional accountant may have experience in a particular
industry, they do not necessari Iy have the experiences to perform a competent investigation
(htt://www.sequence-Inc.com/accountinglfraudindex.htm). .
Engagement of Forensic accountants on criminal matters typically arise as the aftermath of
fraud. Employee fraud investigation often involves procedures to determine the existence, nature and
extent of fraud and may concern the identification of a perpetrator. These investigations often entail
interviews of personnel who had access to the funds and a detailed review of the documentary
evidence. Forensic accountants arc often engaged to assist in investigations of the theft and
defalcation of corporations and individual assets using their education and experience to ascertain the
level of theft or misappropriation. They are also called upon to review business accounting systems
and based on their experience make recommendations as to how the system of internal control an
internal check can be improved to prevent theft and fraud. They may be involved in recovering
proceeds of crime and relation to confiscation proceedings concerning actual or assumed proceeds of
crime or money laundering (http://en. Wikipedia.org/wiki/forensic accounting).
Fraud investigation is often associated with investigations of criminal matters. A typical
investigative assignment would be an investigation of employee theft. Other examples include
securities fraud, insurance Fraud, kickbacks and proceeds of crime investigations. As businesses and
society become more enlightened and complex, methods of perpetrating frauds become more
sophisticated. A forensic accountant can be of assistance in investigative accounting in the following
ways:
Review of the factual situation and provision of suggestions regarding the possible courses of
action
Assistance with the protection and recovery of assets;
Co-ordination of other experts, including:
• Private investigations
• Forensic document examiners;
• Consulting engineers
Assistance with the recovery of assets by way of civil action or criminal prosecution.
It should be noted that Forensic accountants arc not legal practitioners. They do not win or
lose cases, rather, they seek only the truth in conducting their evaluations, examinations and inquiries,
reporting the true results of their findings in an unbiased and objective manner
(htt.//www.Pueleibowitzandchickllc.com/1 itigation .shtrnl).

The Role of Forensic Accounting in Litigation Support

Forensic accounting provides accounting analysis that is suitable to the court, which will form
the basis for discussion, debate and ultimately dispute resolution. In the context of legal dispute, the
knowledge, skills and experience of a good forensic accountant are extremely useful as a consultant to
litigation counselor judges. Litigation often involves complex accounting, tax and financial matters
requiring the specialized knowledge and expertise of highly trained accounting, finance and tax
professionals
(htt' //www.Pueleibowitzandchickic.com/1 itigation.shtml).
Litigation support represents the Factual presentation of economic issues relating to existing or
pending litigation. It provides assistance of an accounting nature in a matter involving existing or
pending litigation. A typical litigation support assignment would be calculating the economic loss
resulting from breach of contract. In this capacity, the forensic accounting professional quantifies

42
 The Role of Forensic AccouIlti1lg in Fraud Illvestigation and Litigatioll Support
damages sustained by parties involved in legal disputes and can assist in resolving dispute even before
they reach the court room. Not every forensic accounting process ends up in the court of law.
However, if a dispute reaches the court room, the forensic accountant may testify as an expect
witness. Omoniyi (2004), stated that the function of an expert witness is to assist the court reach a
conclusion on matters on which the court itsel F may not have the necessary knowledge to decide.
What a forensic accountant can contribute to litigation will depend substantially on the circumstances
and the nature of each case.
Litigation consultants are usually engaged in legal action where financial information requires
critical analysis. It typically involves the forensic accountant being engaged by a lawyer to make an
assessment of financial losses involved. Engagements relating to civil disputes may fall into several
categories. Calculating and quantifying losses and economic damages, whether suffered through tort
or breach of contact, disagreement relating to company acquisitions-perhaps earn-outs or breach of
warranties and business valuation. Forensic accountants often assist in professional negligence claims
where they are assessing and commenting on the work of other professionals
(http://en.wikipedia.org/wiki/Forensic-accounting). Messier, Jr(1997), observed that there has been an
increase in litigation against auditors ill recent years. One reason lor such lawsuit is that auditors are
perceived as having 'deep pockets' and injured parties hope to recover some or all of their auditors.
In auditor malpractice suits a forensic accountant would be used to explain what audit procedures or
lack thereof, may have contributed to the company's misstatement
(http://www.norcrossgroup.colll/[orensciaccl.ltllll )
In summary, a forensic accountant can be of assistance in litigation support in the following
ways:
Assistance in obtaining the key document which should be made available as evidence. This
is very necessary in order to support or refute a claim
Review of the relevant documents in the initial assessment of the case III order to identify
possible and probable areas of loss.
Briefing council on the financial and accounting aspects of the case during pre-trial
preparation'
Advising lawyers during trials, particularly in relation to cross examination of the opposing
~pert. ,
Review of the opposing expert's damages report and reporting on both the strengths and
weakness of the position taken
Assistance in settlement discussions and negotiations.
Giving oral evidence at trial if the case must be settled in the court of law.

Recommendations
The following recommendations are made:
• There is need for the inclusion of forensic accounting in the syllabus of all the tertiary
institutional offering accountancy in Nigeria. Professional accountancy bodies should as well
include the course in their syllabus. This will help to create awareness of its importance
• Professional accountants, both in practice, private or public sectors should be trained and
retrained on the relevance of forensic accounting in Nigeria. They must be aware that they
might be summoned by court one day to defend any opinion given in their reports.
Forensic accountants should be trained as early as possible in order to obtain maximum
benefits. They can be retrained by the following groups. Lawyers, police force, insurance
companies, government regulatory bodies and Agencies, Banks, courts and business
community. Their assistance can, if trained early in the process, be significant in reducing the
overall cost and maximization of benefits.
Lastly, there is dearth of literature and texts on forensic accounting in igeria. This may be as
result of the fact that it is new area of study. All hands must be on deck to promote this area of
accounting profession which the use world report called one of the "20 hot job tracks of the future"
(11 Up:/ I finace. monster.co m/arti c Ies/f orens icacco LI n ti ng)

43
 Dr. Emilia J. Okove ami Akamobi, Ndidika L.
Conclusion ••
Forensic accounting is the practice of utilizing accounting, auditing and investigative skills to
assist in legal matters. It is a specially practice area of accounting that describes engagements that
result from actual or anticipated disputes or litigation. It comprises litigation support, investigation
and dispute resolution. The increase in number of fraud and fraudulent activities in Nigeria and
around the world has emphasized the need for forensic accountants. The practice\al and in-depth
analysis a forensic accountant will bring to a case helps uncover trends that bring to light the relevant
issues. To this end therefore,

References
http://www:edwordpub.com/journals/JFA/students.htm I

http://www.forensic-accounting-informatioll.com/

http://www.lill<lllc.ll1ollstel·.coll1//artie les/iorcilsicaccoullt ion/

http://www.nocrossgroup.com/lorclls icaccl. h L1nl

http://www.pueleibowtzanmdchickllc.col1l/1 iti gation.sh till I

http://www.sequence-inc.com/accounting/frauduidex.htm I

http://iienn .wi kiped ia. org/wi ki forensciaccounti ng

Messier, Jr, W.F (1997). Auditing: a systematic approach New York. Mcgraw- Hill publishers

Ojaide, F. (2000). Frauds detection and prevention: the case of pension accounts ICAN NEWS
January/March. P8

Omoniyi, S.O (2004). The emerging role of forensic accounting. The Nigerian accountant April/June
pp43-44

Wallace, P (1991). The role of the forensic accountant. Accountancy. November pIO

44