CHAPTER ONE

INTRODUCTION

1.1 Background to the Study

Corporate organizations like banks are essentially social-technical devices made

up of people and physical actors who process inputs and at the same time execute

some functions and / or tasks that lead to the accomplishment of certain goals and

these stakeholders who are probably within and / or outside the organizations may

for various reasons have engaged in fraudulent financial activities (Akenbor and

Oghoghomeh, 2013). The Nigerian banking sector is one of the most controlled

and regulated sectors. In spite of this, financial fraud has continued to rear its ugly

head in the sector. Fraudulent financial activities are illicit activities committed

with the purpose of acquiring riches either individually, in group or organized

manner thereby violating existing legislation or accounting policies governing the

economic activities and administration of the organization (Yio and Cheng, 2014).

The occurrence of financial fraud in Nigerian banking sector is becoming rampant

and this can be in form theft of funds or assets, corruption, embezzlement, money

laundering, racketeering, fraudulent financial reporting, forgery and other means

through which both financial and economic dishonesty are being perpetrated

(Ofiafoh and Otalor, 2013). The accounting profession had already undergone

radical changes as a result of the Enron and WorldCom debacles as well as other
accounting scandals (Cotton, 2010). Hence, with the spotlight on the accounting

profession, a new market with a new breed of accountants (forensic accountants)

has emerged. Today, the occurrence of financial fraud and other financial crimes

have gone sophisticated and even the advent of computerization together with the

introduction of internet facilities have enhanced the problem of financial crimes.

The detection and / or reduction of these fraudulent activities are made more

difficult and committing these crimes much easier. Hence, Onodi, Okafor and

Onyali (2015) are of the opinion that forensic accounting skills are required to

uncover and establish the occurrence of financial crimes.

The Centre for Forensic Studies (2010) states that if well applied, forensic

accounting could be utilized to reverse the leakages that cause corporate failures.

This can be attributed to the fact that proactive forensic accounting practice seeks

out errors, operational vagaries and deviant transactions before they crystallize into

fraud. This study focused on both management and employees frauds. The

management fraud include fraudulent disbursements, window dressing, creative

accounting and soon while employees fraud include asset / cash theft, teeming and

lading (roll over fraud) and soon. The problem of fraud in Nigerian banking

industry is not limited to any economy, nation, continent or an environment; it is a

general phenomenon. The origin of bank failure in Nigeria can be traced to the

1930s bank failure and crises (Owolabi, 2010). Nwankwo (1992) writes that “the
crises of confidence in Nigerian banking industry is not a new one, it has been with

us for quite a long time. In Nigeria now, the level of fraud in Deposit Money

Banks has reached an alarming peak. The Nigerian Deposit Insurance Corporation

(NDIC) annual report for the year 2014 revealed that the increase in

expected/actual loss in fraud and forgeries was mainly due to the astronomical

increase in the occurrence of web-based (online banking)/ATM and fraudulent

transfer/withdrawal of deposit frauds.

Forensic Accounting is specially practice area of accounting that describes

engagement that result from actual or anticipated dispute or litigation. According

to George (2002) Forensic accounting is any professional that is focused upon the

evidence of economic transactions and reporting as contained within an account

ting system and legal framework, which allows such evidence to be suitable for the

purpose of establishing and valuation. Anfuso (2014) believes forensic accountants

are professional that are trained to detect and interpret the evidence of normal and

abnormal phenomena, introduced into records of an accounting system

(expensively defined) and the resultant effect upon the accounts, inventory and the

presentation thereof. Forensic accounting can be traced back to 1817 court

decision, involving a bankruptcy estate. A young Scottish accountant support in

1824 and in the late 1800’s and early 1900’s articles began to appear disusing

expert witnessing evidence, arbitration and awards. Maurice (1946), a partner in

New York City accounting firm, probably first published the phrase forensic

accounting in 1946.

The risk of financial irregularities has been in existence for a very long time. In

fact it was the fear of this and the need to provide owners of wealth with a means

of safeguarding their wealth from embezzlement following the rise of the Joint

Stock Companies that gave rise to stewardship accounting and later auditing by the

Joint Stock Company Act of 1844. Financial crimes which may involve fraud are

crime against property. It involves the unlawful conversion of the ownership of

property belonging to another to one's own personal use and benefit. Financial

crimes may be carried out by individuals, corporations, or by organized crime

groups and victims may include individuals, corporations, governments, and the

entire world. During the early decades of the last century, the general believe was

that it was not the duty of the auditor to detect fraud and auditors sought to

immunize themselves from professional liability by issuing professional

pronouncements that minimized or denied professional responsibility for fraud

discovery. By the mid-point of the century, authoritative professional

pronouncements avoided even using the word “fraud,” preferring discreet

euphemisms like “irregularities” (Albrecht, Albrecht & Albrecht, 2006; 2008;

Commission on Auditors’ Responsibilities, 1978). The flight was attributed to a

litigious climate in which the most common alleged fault inter alia was the
auditor’s failure to detect a fraud (Gray and Moussalli, 2006). The unrelenting

series of embarrassing audit failures over the last 50 years has prompted a

paradigm shift in accounting. Interestingly, in the mid-20th century, when the

flight from fraud detection was at its height, a few observers predicted that in the

future there will be acceptance of the general responsibility of the auditor to

perform tests to detect material defalcations and errors if they exist (Gray and

Moussalli, 2006). These events led to the hiring of fraud detection experts called

forensic accountants. Therefore, the aim study is to examine the impact of forensic

accountants in controlling distress in Nigerian banking sector.

1.2 Statement of the Problem

Banks generally have been experiencing financial fraud since its evolution. This

affects the performance and the profitability of banks and may possibly lead to

distress. The inability to identify the immediate and remote causes of continuous

cases of bank frauds in virtually all banks in Nigeria is one of the problems brought

to bear.

Financial fraud is a major challenge to the entire banking industry; no bank is

immune to it and in all facets of life (Olorunsegun, 2010). The banking public

expects accountability, fairness, transparency in their day operation for effective

intermediation. Though there were known cases of financial fraud in the sector,

one major question still remain unanswered which is what is the nature and
different ways through which financial fraud can be perpetuated in banks. It is

asserted by Adeyemo (2012) that financial fraud in the bank is possible with

corroboration of an insider. The banks are expected to ensure that they carry out

their responsibilities with sincerity of purpose which is devoid of fraudulent

practices. This is relevant if the banking sector is to gain public trust and goodwill.

Another problem is that the government and its agencies have not put enough

effort in the prevention and control of financial fraud in Nigeria; otherwise the

level of financial fraud would have reduced to a bearable level. Agencies like

money laundering Act which helps to place surveillance on any account through

which such excess cash deposits or withdrawals are made, Nigeria Deposit

Insurance Corporation which is involved in managing bank distress, failed banks

and financial malpractices in banks Act which was vested with powers to recover

the debts of failed banks, dishonored cheques Act which affects banks in their

collection and payment of cheques on behalf of their customers and Bill of

Exchange Act which helps to collect the proceeds of trade bills of exchange and

cheques are not putting enough effort in the prevention and control of bank fraud

that is the reason why financial fraud is increasing day by day in Nigeria.

However, environmental or social factors pose a problem in the activities of

banking industry as they contribute to financial fraud in Nigeria. Environmental

factors are those that can be trace to the immediate and remote environment of the
bank these factors are manifest in the following manner; the desire to get rich

quick slow and complex legal process, poverty and the widening gap between the

rich and the poor, competition among bank staff, the desire to belong to any social

class, job insecurity, peer group pressure and societal expectations.

The need for forensic accounting is as a result of pervasive increase in deviant

behavior, resulting in higher crime rates: obtuse, irresponsive, opaque laws and

regulations with loopholes that the unscrupulous exploits, and regulations that

create monopoly of decisions in the hands of the bureaucrats (Adepate, 2010). The

get rich quick mentality has ruined commercial banks. Fraudulent financial

practices, misappropriations of assets, money laundering, and manipulation of the

figures reported in the financial statements have been the order of the day. Bribery

and corruption are regarded as norm in every sector that authorities no longer

frown at them (Okoye and Ani, 2004).

As a result of advancement in technology, fraud has become so sophisticated that it

is no longer something the independent internal and external audit can guide with

their periodic audits. The problem of this study therefore, lies in the prevalence of

financial and corporate fraud and the control methods. The perceived failure of

audit to fully alert equity and other stakeholders concerning misrepresentations in

financial position and to sufficiently report accurate operational earnings has made

investors helpless and unable to undertake rational financial decisions affecting

companies generally. In view of the above, the growing number of financial

scandals and financial frauds in recent years has placed forensic accounting

topmost in the emergent areas in accounting, a most secure career path and a

comfortably nascent domain for accountants (Okolie & Taiwo, 2013). Thus, the

researcher was interested in investigating the effect of forensic accounting methods

and financial fraud in Nigerian banks.

1.3 Objectives of the Study

The main objective of the study is to examine the impact of forensic accountants in

controlling distress in Nigerian banking sector with reference to Fidelity Bank Plc,

Enugu. The specific objectives are:

i. To examine how Forensic Accounting can be used to locate diverted funds

or assets in the Fidelity Bank Plc, Enugu.

ii. To examine how Forensic Accounting can be used to identify

misappropriated funds or assets in the Fidelity Bank Plc, Enugu.

iii. To find out how Forensic Accounting can be used to detect fraudulent

financial transactions in the Fidelity Bank Plc, Enugu.

1.4 Research Questions

This research intends to provide answers to the following questions:

i. To what extent can forensic Accounting be used to locate diverted funds or

assets in the Fidelity Bank Plc, Enugu?

 ii. To what extent can Forensic Accounting be used to identify

misappropriation of assets in the Fidelity Bank Plc, Enugu?

iii. To what extent can Forensic Accounting be used to detect fraudulent

financial transactions in the Fidelity Bank Plc, Enugu?

1.5 Significance of the Study

The initial conception of the idea to study forensic accounting was born out of the

need to enhance fraud prevention and detection in Nigerian banking industry.

Fraud and corrupt practices have slowed down the pace of the country’s

development. While most countries have been able to reduce the occurrence of

financial fraud in both the private and public sectors, the menace is rather on the

increase in Nigeria, despite the establishment of agencies to deter such

occurrences. In view of the nature of fraud and its effect on business,

organizations, government, etc., studies on how to prevent or detect fraud are of

global relevance.

Firstly, this study is relevant in the sense that it has shown that current fraud

prevention and detection mechanisms in use are not the most effective. On the

other hand, it has suggested the use of forensic accounting techniques, which is one

of the most effective methods in combating the menace.

Secondly, study will also aid in laying a solid framework for the design and the

implementation of forensic accounting practices in the Nigerian banking industry.

Since forensic accounting is still new in developing countries such as Nigeria, this

study will aid policy makers and other stake holders to draft adequate policies to

guide the practice of forensic accounting in the Nigerian banking industry.

Thirdly, the study will also serve as a guide to students and independent

researchers who may have interest in the subject matter. Findings and

recommendations from this study will serve as a guide in carrying out other

research studies in forensic accounting and fraud detection and preventions in the

Nigerian banking industry.

1.6 Scope of the study

The study is restricted to the impact of forensic accountants in controlling distress

in Nigerian banking sector. The study therefore is focused on Fidelity Bank Plc,

Enugu.

1.7 Limitations of the Study

This study encountered the following constraints:

Uncooperative attitude of some of the respondents: some of the respondents

refused to fill my questionnaires and some refuse to return the filled ones.

Financial problems: the success of my research work depends on the finance

availability and this affected the researcher because the finance at her disposal was

not sufficient to carry out the research effectively.

1.8 Definition of Terms.

FORENSIC ACCOUNTING:- It is a specially practice area of accounting that

describes engagements that results from anticipated disputes or litigations.

FORENSIC: According to oxford advance learners dictionary means connected

with or used in the court to law.

FRAUD: This is a type of criminal activity, defined as abuse of position, or false

representation or prejudicing someone’s rights for personal gain.

FORENSIC AUDITING: This is an examination and evaluation of a firm’s or

individual financial information for use as evidence in court. A forensic audit can

be conducted in order to prosecute a party for fraud, embezzlement or other

financial claims.

BANK AUDITING: This is an examination of the accounts and be conducted by

internal and external agency known as the auditors

FINANCIAL INSTITUTION: Financial institution is an establishment that

conducts financial transactions such as investment, loans and deposits. Almost

everyone deals with financial institution on a regular basis.

COMMERCIAL BANK: This is a type of financial institution that provides

services such as accepting deposits, making business loans and offering basic

investment products.
 CHAPTR TWO

LITERATURE REVIEW

2.1 Conceptual Framework

2.1.1 Concept of Forensic Accounting

Forensic accounting is the integration of accounting, auditing and investigative

skills (Zysman, 2004). Dhar and Sarkar (2010) define forensic accounting as the

application of accounting concepts and techniques to legal problems. It demands

reporting, where accountability of the fraud is established and the report is

considered as evidence in the court of law or in administrative proceedings.

Degboro and Olofinsola (2007) noted that forensic investigation is about the

determination and establishment of facts in support of a legal case. That is, to use

forensic techniques to detect and investigate a crime is to expose all its attending

features and identify the culprits. In the view of Howard and Sheetz (2006),

forensic accounting is the process of interpreting, summarizing and presenting

complex financial issues clearly, succinctly and factually often in a court of law as

an expert. It is concerned with the use of accounting discipline to help determine

issues of facts in business litigation (Okunbor and Obaretin, 2010).

Forensic accounting is a discipline that has its own models and methodologies of

investigative procedures that search for assurance, attestation and advisory

perspective to produce legal evidence. It is concerned with the evidentiary nature

of accounting data, and as a practical field concerned with accounting fraud and

forensic auditing; compliance, due diligence and risk assessment; detection of

financial misrepresentation and financial statement fraud (Skousen and Wright,

2008); tax evasion; bankruptcy and valuation studies; violation of accounting

regulation (Dhar and Sarkar, 2010).

Curtis (2008) argues that fraud can be subjected to forensic accounting, since fraud

encompasses the acquisition of property or economic advantage by means of

deception, through either a misrepresentation or concealment.

Bhasin (2007) notes that the objectives of forensic accounting include: assessment

of damages caused by an auditor’s negligence, fact finding to see whether an

embezzlement has taken place, in what amount, and whether criminal proceedings

are to be initiated; collection of evidence in a criminal proceedings; and

computation of asset values in a divorce proceedings.

According to the institute of forensic accountancy (IFA) of Nigeria, forensic

accounting is the specialty practice of accounting that describes engagement that

results from anticipated disputes or litigations. Forensic accounting to the

Webster’s dictionary means’ belonging to use in or suitable to court to jurisdiction

or to public discussion debate. Forensic audit or forensic accounting can be used

interchangeably forensic accountants 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, have specialist forensic accounting department, within this

groups, there may be further sub-specialization for example, some forensic

accountant may just specialize in insurance claims, personal injury claims, fraud

construction or royalty audit (Timbee, 2011).

Forensic accounting is that aspect of accounting that provides analysis that is

suitable to the court which will form the basis for discussion debate and ultimately

disputes resolution (Wallace, 1991).

Furthermore, forensic accounting comprises the use of accounting, auditing and

investigative skills to assist in legal matters and the application of specialized body

of knowledge to the evidence of economic transaction and reporting suitable is the

purpose of establishing accounting or valuation of administrative proceedings, it

consists of two major components; litigation support and service, which recognized

the role of the accountant as an expert consultant.

Investigative service that uses forensic accountant’s skills and many requires

possible custom testimony.

However, Forensic Accounting is different from the old debit and credit

accounting as it provides an accounting analysis that is suitable to the organization

which will help in resolving the disputes that arises in the organization

Mohammed, 2008.

A forensic account has a unique job because of the responsibilities involved in the

integration of accounting, auditing and investigative skills. Using all these skills, a

forensic accountant is evidently, a true investigator and is trained beyond the

numbers and deals with the business reality of the situation (WALLACE, 1991).

Forensic audit involves examination of legalities by blending the techniques of

property (VFM audit), regulate the investigative and financial audits. The

objectives is to find out whether or not true business value has been reflected in the

financial statements and in the course of examination to find whether any fraud has

taken place, forensic audit are performed by special class of financial experts

known as forensic accountants, this class includes certified fraud examiners people

with bachelor’s degree or equal professional experience who have a background in

accounting, persecuting fraud, loss prevention or criminology/ sociology who pass

the (CFE test); CPA’s or chattered accountant. Forensic audits begin by taking all

the accounts, inventories, assets, capital and other economic elements and

determining how they should work together.

2.1.2 Benefits of Forensic Accounting

Objectivity and credibility: there is little doubt that an external (third) party would

be far more independent and objective than an internal auditor who ultimately
reports to management on his findings. An established firm of forensic accountants

and its team would also have credibility stemming from the firm's reputation,

network and track record. Accounting expertise and industry knowledge is also

another benefit of forensic accounting; an external forensic accountant would add

to the organization’s investigation team with breadth and depth of experience and

deep industry expertise in handling financial frauds of the nature encountered by

the organization. Again, provision of valuable manpower resources is another

benefit of forensic accounting; an organization in the midst of re-organization and

restructuring following a major financial fraud would hardly have the full-time

resources to handle a broad-based exhaustive investigation. The forensic

accountant and his team of assistants would provide the much needed experienced

resources, thereby freeing the organization’s staff for other more immediate

management demands. This is more critical when the nature of the fraud calls for

management to move quickly to curtail the problem and when resources cannot be

mobilized in time. Forensic accounting also enhances effectiveness and efficiency.

This arises from the additional dimension and depth which experienced individuals

in financial fraud investigation bring with them to focus on the issues at hand. Such

individuals are specialists in rooting out financial fraud and would recognize

transactions normally passed over by the organization’s accountants or auditors

 Forensic accounting strengthens control mechanism, with the objective of

protecting the business against financial crimes, be they potential catastrophic one-

off events that could threaten the viability of the business, or smaller-scale but

repetitive appropriations of company assets over a number of years. Forensic

accounting can play an important role for companies under review by regulatory

authorities and can also be invaluable to ensure regulatory compliance for

example; forensic accounting can also be useful in helping companies to ensure

that their anti-money laundering procedures can help protect organizations.

Forensic accounting can help protect organizations from the long term damage to

reputation caused by the publicity associated with insider crimes. Forensic

accounting also provides a sound base of factual information that can be used to

help resolve disputes, and can be used in court should the victim seek legal redress.

Forensic accounting can improve efficiency by identifying areas of waste. Forensic

accounting can help with the detection and recording of potential conflicts of

interest for executives by improving transparency and probity in the way resources

are used, in both private and public entities.

2.1.3 Services Provided By Forensic Accountant

Forensic accounting consists of a broad area of financial statement investigation

and litigation support. Various positions including consultants, internal auditors,

bankruptcy specialists, bank examiners, and valuators of closely held businesses,

as well as lawyers and professors, can be held by forensic accountants. Among the

many services offered by forensic accountants are: litigation support, expert

witness engagements, divorce business valuation, and lost earnings engagements.

Litigation support consulting is a service where forensic accountants provide an

opinion based on known facts or facts that are yet to be uncovered. When the facts

are unknown, the forensic accountants investigate the situation and then form an

opinion based on their investigative work. Litigation support services include

engagements concerning professional liability claims and civil claims. Professional

liability claims consulting includes quantifying the loss from events of insurance

disputes, delayed construction, and stolen trade secrets. Civil claims consulting

examples include business valuations, employee theft, and investigating accidents

(Fillmer, 2003).

Expert witness engagement is the second service rendered by forensic accountant.

Forensic accountants may serve as expert witnesses in litigation cases involving

the area of accounting. The forensic accountants may be asked to prepare a tax

analysis, perform economic fact-finding, suggest interrogation questions, or help

interpret documentation. The accountants may or may not be required to testify as

an expert witness in a courtroom. Serving as an expert witness is quite important

and challenging. The forensic accountants must keep in mind the judge and jury

may not be familiar with accounting jargon. Thus, the accountant should explain
everything thoroughly and avoid being too complex. As an expert witness, the

accountant must perform all investigative work himself because he will be the one

answering in the court. Inability to answer a question on the witness stand can

damage forensic accountants’ professional reputation and future careers (Fillmer,

2003).

Divorce business valuation is the third services rendered by forensic accountants

where they are frequently called upon to resolve divorce settlements between

spouses who have ownership in a private company, partnership, or business. It is

the forensic accountant’s job to evaluate the business and determine an appropriate

financial breakdown of the assets. The accountant’s objective in settling a divorce

business valuation is to establish a realistic value of the business consistent with

the client’s goal, a value defendable under cross-examination in the courtroom.

Information available to the accountants may be limited and some information may

even be a misrepresentation of the financial situation. Thus, it is important that the

forensic accountants conduct a deep investigation, and look beyond the balance

sheets and statements of earnings. When analyzing the balance sheets, the

investigator must be concerned about hidden assets and liabilities. Examples of a

hidden assets and liabilities are: fully depreciated equipment, ownership of

franchise and royalty rights, misstated inventories, the cash surrender value of life

insurance policies, unrecorded leases, and under-funded pension liabilities. Any

and all adjustments made to the balance sheets should be of concern to the forensic

accountants. Such balance sheet adjustments may include adjusting investments to

the lower of cost or market, LIFO reserve adjustments, and amortization methods.

The forensic accountant should be looking for hidden or unrecorded earnings and

possible overstated expenses when analyzing the statement of earnings.

Unrecorded cash receipts are an example of unrecorded earnings. Examples of

unrecorded expenses include overstated travel expenses, entertainment, and

utilities. The statement of earnings must also be analyzed for any adjusting entries

such as: adjustments to top executive salaries or bonuses, lease expenses to a

related party, and interest on related party debts.

Lost earnings engagements are another service rendered by a forensic accountant

related to litigation support provided by forensic accountants also includes

investigating lost earnings cases. Lost earnings are the monies the plaintiff would

have made had it not been for the actions of the defendant. Examples of lost

earnings cases include damage or loss estimates, personal injury, and wrongful

death.

Forensic accountants gather and analyze information to determine lost earnings

and then form an opinion based on their in-depth analysis. During the investigative

process accountants must make judgment calls such as weighing his obligation to

the client with the standards established in the profession. The forensic accountants
must keep in mind that he is being paid to develop an opinion based on their

investigations.

Forensic accountants follow a five-step process to estimate the value of lost

earnings. First, they must identify the amount to be used as the base earnings.

Next, they must determine a damage period and identify an appropriate rate of

growth. Adjustments must then be made for mitigating circumstances. Finally,

forensic accountants will choose an appropriate discounting technique.

In order to identify the base earning the accountants must identify the amount of

revenue being received prior to the incident that caused the earnings to cease or

decline. The forensic investigators should examine revenue from normal business

operations as well as revenue from special projects. The growth rate is the

expected percentage rate increase of earnings during the damage period, and it is

based on the base earnings and the damage period. Industry standards and

historical data are also consulted to determine the growth rate. The accountants

then identify mitigating circumstances, which offset the monetary value of damage

suffered. Mitigating conditions include the effect of income taxes and the effect of

consumption of resources. Forensic accountants have six different discounting

methods to choose from including: traditional discounting, inflate discounting,

partial offset discounting, total offset discounting, Supreme Court discounting, as

well as trial and error discounting. Future earnings are quantified and then
discounted to present value based on the discounting method chosen (Fillmer,

2003).

2.1.4 Competence Required of a Forensic Accountant

To be considered capable and effective, a forensic accountant must possess the

following characteristics/qualities; deductive analysis, creative thinking,

unstructured problem solving, investigative flexibility, analytical proficiency, oral

communication, written communication, specific legal knowledge and composure.

A Forensic Accountant must be open to consider all alternatives, scrutinize the fine

details and at the same time see the big picture. In addition, a Forensic Accountant

must be able to listen effectively and communicate clearly and concisely.

Moreover, the forensic accountant, auditor and investigator are required to possess

some skills which are complementary to the qualities enumerated above.

Deductive analysis is the ability to identify financial contradictions that do not fit

in the normal pattern of assignment. In consideration of the barrage of recent

financial reporting scandals this skill appears to be necessary and essential for a

forensic accountant to meet the objective of uncovering a potential financial fraud.

Forensic accounting courses aimed at financial misrepresentations should

incorporate course objectives to meet this ability. Creative thinking is the ability of

the forensic accountant to differentiate between opinion and fact. The essence of

being an expert witness is to be able to perform the task of discerning fact from
fiction in order to maintain a credible testimony. Courses developed in this area

should emphasize the ability to remove any non-corroborated opinions from expert

reports and testimony.

Unstructured problem solving is a situation where the forensic accountant has the

ability to treat each situation as inherently unique and preparedness to solve

problems with an unstructured approach. Accounting education has been based

around concentrating on compliance with rules and procedures. This skill is a

direct contradiction to this concept. It can be argued that a shortcoming of auditors

is not seeing the proverbial forest beyond the trees. Forensic accountant have the

ability to move away from standardized audit procedures and thoroughly examine

situations for a typical warning signs. He should also possess the ability to look out

for what should be provided rather than what was provided. Considering the post

financial fraud regulatory environment, solving a financial puzzle with less than a

complete set of pieces appears to be the direction the current business environment

is heading. He should have the ability to effectively communicate in speech via

expert testimony and general explanation of the bases of opinion. The forensic

accountant should also have the ability to effectively communicate in writing via

reports, charts, and graphs and schedules the bases of opinion. Forensic accountant

should have the ability to understand basic legal processes and legal issues

including the rule of evidence. Forensic accountant should also have the ability to
maintain a calm attitude when under pressure. The most prevalent area where this

is necessary is expert testimony in either deposition or court. The composure of an

expert can be an integral component in the ultimate outcome of the case.

2.1.5 Forensic accounting mechanisms

Forensic accounting have several mechanisms or tools which a forensic accountant

use in detecting and preventing financial frauds which are different from the

mechanism employed by the traditional accounting. The forensic accounting

mechanisms are explained below: Benford’s law, computer-assisted audited tools,

data mining technique and ratio analysis.

Benford’s law refers to the probability distribution that is characterized by the

significant digits in real data set. It is also known as the first-digit law. It is the

expected frequencies of the digits in list of number (Nigrini and Mittermaier,

1997). The law states that in lists of numbers from many real life sources of data,

the leading digit is distributed in a specific, non-uniform way. It assumes that when

data is ordered, it forms a geometric sequence. According to Cho and Gaines

(2007), Benford’s law is a fine example of a deeply non-intuitive and intriguing

mathematical result that is simple enough to be described.

Benford’s law relates to the first digits of a collection of numbers. By simple

intuition, each integer from 1 through 9, in a large data set should appear as the

leading digit with approximately equal probability. On the contrary, Benford’s law
shows that the digit 1 leads by approximately 30 per cent of the time and each

successive digit is less common, with 9 occurring in less than 5 per cent of the

times.

With recent audit failures and the subsequent issuance of Statement on Auditing

Standard No. 99, Consideration of Fraud in a Financial Statement Audit (American

Institute of Certified Public Accountant, AICPA, 2002), the need for the

accounting and auditing profession to search for analytical tools and methods of

fraud detection became very glaring. Indeed, SAS No. 99, paragraph 28 and SAS

No. 56 require auditors to make use of analytical techniques during the planning

stage of the audit with the view to identifying the existence of unusual transactions,

events and trends.

Computer-assisted audit tools is the ability to use technology to assist auditors to

perform audit task and come out with result which are correct and at faster rates

(Braun and Davis, 2003). The result is that there is improvement in audit

efficiency. Here, audit tasks are performed without being tied down to manual

methods, making them more intensive, quick and efficient (Zhaol, Yen and Chang,

2004). Computer –assisted audit tools (CATTs) allow auditors to choose the task

that they want to perform and they are able to select transactions, meet specific

criteria, get additional information about control effectiveness, and test 100 per

cent of populations( Braun and Davis, 2003; AICPA., 2006).

According to Singleton and Flesher (2003), CATTs are computer tools and

techniques that the auditors use as part of the audit procedures, which aid to

process data of audit significance as they are contained in the entity’s information

systems. Zhaol, Yen and Chang (2004) has also shown that computer-assisted audit

tools improve audit efficiency i.e., the auditor can perform the tasks and is able to

use the whole population rather than rely on using samples. The computed-assisted

tools are: test data, integrated test facility, parallel simulation, embedded audit

module and generalized audit software. Braun and Davis (2003) argue that even

though five types of CATTs have been advanced in audit literature, they could be

grouped into two to show their relevance. Basically, test data, integrated test

facility and parallel simulation examine the internal logic of the application while

the embedded audit module and generalized audit software look at the indirect

logic application.

Data mining technique is a data search which is sophisticated and has the

capability to use statistical algorithms to discover patterns and correlation in a data,

with the intention to find explicit, but potentially useful information. Data mining

derives its name from searching for information in a large databases example

gigabytes and mining from mountain in search for ore. This helps management to

focus on important information in the data which may have been hidden.

According to Thearling, (n.d), the analysis which is offered by DM has moved

from being retrospective (past events) to prospective. The pattern of extraction is

very important in data mining since it deals with relationships between subsets of

data (Shaw et al 2001).

Data mining has to do with the ability of the researcher to search and analyze data

in order to find the implicit but potentially useful information which has been

buried due to the passage of time on the gigabytes of the system (Berry and Linoff,

1997).Data mining is also an iterative process whereby progress can be defined by

discovering, either through automatic or manual methods. It is useful in an

exploratory analysis, where there is no predetermined interest outcome (Kantardzic

2002 as cited in Kirkos, Spathis and Manolopoul 2007). DM uses a board family of

computational methods which are statistical analysis, decision trees, neural

network, rule induction and refinement, and graphic visualization (Shaw,

Subramaniam and Tan 2007). It is used to extract patterns from large data sets.

These patterns are very important component of the data mining activity which

deals with relationships between the subsets of the data.

Ratio analysis is a tool which the forensic accountant can apply to conduct a

quantitative analysis of the firm’s information on the financial statement. The

accountant uses ratio analysis on the current year to compare with the previous

year. The comparison to show how the firm is doing in the current year over the

previous and the company can then conclude on the well-being of the company
(Hopwood, Leiner and Young 2012). Knowing that the “fraud in business is a

matter of grave social and economic concern” (Kaminski 2004).

Ratio analysis could also be employed in the same way to check on the financial

health of the company when it has to do with fraud because it will serve as a

pointer to waste, abuse and fraud. Frauds which are not on record have more

negative impact on the firm and in many cases involve top level management

(Wells, 1990). That is the amounts are large and may not be easily detected by the

traditional audit procedures. The forensic accountant has to be careful about such

and work his way not to fall a victim of such prey.

It is argued that ratio analysis is possibly to the most powerful identifier of fraud

(Coderre, 2002). It examines patterns in the financial statement to highlight

possible fraudulent transactions and also pinpoint the specific transaction which is

usual as it carries on the operation, and could be used in both small and large

samples. It points out discrepancies. Ratio analysis can identify fraud by

computing the variance in a set of transactions and then calculates the ratios for the

selected numeric field.

The ratio of the highest value to the lowest value that is maximum / minimum, in

this case if the result is close to 1, the forensic accountant know that there is not

much doctoring of the result. This implies that there is not much variance between
the highest and the lowest prices. But if the ratio is large, this is an indication that

too much was paid for in the product than required (Mehta and Mathur 2007).

Ratio of the highest value to the next highest value i.e. maximum value /next

maximum value, where the result is compared between the highest value and the

next highest value and the difference is large, this indicates that the result has

deviated then the examiner checks to know the reason for such a departure which

could be a possible fraud indicator.

The ratio analysis variance compares the data from the firm with that of the firm

and the figures are not what is borrowed from theory and as such shows a true

picture of the firm. This is a powerful tool, when employed will be able to detect

the fraud even if it is just for the first time such fraud was perpetuated and are used

by most Certified Fraud Examiners. The examiner knows that not all firms are the

same and when considering the enormous fraud that the firm is facing he should

not only go out with one skill but should be prepared to deal with the situation as

he finds deem.

2.1.6 Financial Fraud and Banks Distress

A good example of how fraud has led to the failure of a financial institution was

the fraudulent act, which occurred in 2006 at the all states trust bank plc. As a

result of fraudulent act of one man, the whole nation including the government has

been put in a very bad state of which people’s life savings disappeared into thin air.
Government accounts were unable to pay their workers resulting to hardship and

starvation and also the fill of the bank.

Another example was what happened in hallmark bank plc, which led to the failure

of the bank and the arrest of the chairman/chief executive of the bank, Mr. Marc

Wabara. The fraud was in connection with about $58 million (N7.5 billion),

belonging to the joint development zone (JDZ) trapped in the bank. The money

was placed in a fixed deposit account with hallmark bank, but could not be

produced on demand. This development led to the involution of the economic and

financial crimes commission (EFCC) to hallmark bank plc to help recover the JDZ

funds and this led to the discovery of some questionable dealings between the bank

and one south east state, where hallmark bank had an irrevocable standing order

(1S0) from the south, east state said to have borrowed it billions of naira. In order

to recover the loans, when the federal allocation is released every moth, hallmark

bank makes a direct deduction of a certain percentage of the loans it gave to the

said state. According to our source which is “the daily star” paper of Tuesday,

September 4, 2012, the bank was eventually closed in January 16. 2006.

Also on a 12 page paper report read by Senator Joyce Nwaogu, the chairman

committee on banking, insurance and other financial institutions, which was signed

by A.B Nyako, Director legal department of Nigeria deposit insurance corporation

(NDIC) titled; “Re schedule of insider credit of banks closed on 16th January
2006” as cited by daily independent newspaper of July 13 2009, reports on the

names of the failed banks, directors, account numbers amount collected and

companies used to siphon depositors’ money obtained. According to the report, 14

of the banks were in such a state that they could not do it alone and they merged

with others to carry out the act. Most of them have since been absorbed under the

purchase and assumption model of banks distress resolution adopted by both the

CBN and the NDIC. It was also stated that private sector deposit in 13 of the banks

stood at N87.2 billion which has been assumed by the quartet of UBA, Ecobank,

Zenith bank and Afribank Nigeria, while public sector reportedly stood at

N188.6billion for 12 of the failed banks. Of this, only N94.4 billion is said to be

classified as public deposits. It further stated that insider related credit amounted to

N53.3

Billion or 8.85%, it was reported also that it was fraudulent activities of the bank

and some notable Nigerians that led to their being sent to “Abyss”.

2.2 Theoretical framework

Scholars and researchers have produced comprehensive theories based on forensic

accounting and financial fraud. Their aim was to provide a framework for

understanding forensic accounting and financial fraud prevention and detection in

the Nigerian banking industry.

The theories adopted for this work are white collar crime theory, fraud diamond

theory, fraud triangle theory and fraud scale theory. The purpose of adopting the

aforementioned theories for this study is that they all captured the essence of the

work.

2.2.1 White collar crime theory

White collar crime can be traced back to 1939. Sutherland (1949) as cited in

Michael (2004) happened to be the first to formulate the term. Sutherland

originally presented his theory in an address to the American Sociological Society

in an attempt to study two fields, crime and high society which had no previous

empirical correlation. He defined his idea as crime committed by a person

respectable and of high social status in the course of his occupation. He noted that

in his time, less than two percent of the persons committed to prison in a year

belong to the upper class. His goal was to prove a relation between money, social

status and the likelihood of going to jail for a white-collar crime, compared to more

visible, typical crimes, although, the percentage is a bit higher today. Hence,

because of the status of those who engaged in these atrocities, the service of a

trained and experienced investigator like the forensic accountant is required to

forestall the occurrence of such fraud.

2.2.2 Fraud diamond theory

Wolf and Hermanson (2004) introduced the fraud diamond model where they

presented another view of the factors to fraud. The model adds fourth variable

“capabilities” to the three factor theory of fraud triangle. Wolf and Hermanson

believed many frauds would not have occurred without the right person with right

capabilities implementing the details of the fraud. They also suggested four

observation traits for committing fraud: authoritative position in the organization,

capacity to understand and exploit the organization’s systems of accounting and

internal control confidence that they will not be detected, or if caught, they will get

out of it easily and Capability to deal with the stress created within and otherwise

good person when he or she commits bad act.

With the additional element presented in the fraud diamond theory affecting

individuals’ decision to commit fraud, the organization and auditors need to better

understand employees’ individual traits and abilities in order to assess the risk of

fraudulent behaviors. In addition, better systems of checks and balances should be

implemented and monitored to proactively minimize risks and losses as a result of

fraudulent activities in the workplace. Hence, because of the capability of those

who engaged in fraud and other form of atrocities, the service of a trained and

experienced investigator like the forensic accountant is required to forestall the

occurrence of such fraud.

2.2.3 Fraud triangle theory

The theory identifies the key elements that lead perpetrators to commit fraud in any

organization. The fraud triangle theory consists of three elements that are

necessary for theft or fraud to occur: perceived pressure, opportunity, and

rationalization. Albrecht, Hill, and Albrecht (2006) compared this theory to a fire,

using the simple explanation that three elements are necessary for a fire to occur:

oxygen, fuel, and heat. Like fire, fraud is unlikely to exist in the absence of the

three elements mentioned in the fraud triangle theory, and the severity of fraud

depends on the strength of each element. In other words, for an individual to make

any unethical decisions, perceived pressure, an opportunity, and a way to

rationalize the behaviours must exist. Hence, to forestall the occurrence of such

fraud, the service of a trained and experienced investigator like the forensic

accountant is highly required.

2.2.4 Fraud scale theory

The fraud scale is very similar to the fraud triangle; however, the fraud scale uses

an element called “personal integrity” instead of rationalization. This personal

integrity element is associated with each individual’s personal code of ethical

behavior. Albrecht et al. (1984) argued that, unlike rationalization in the fraud

triangle theory, personal integrity can be observed in both an individual’s decisions

and the decision-making process, which can help in assessing integrity and

determining the likelihood that an individual will commit fraud. Experts agree that
fraud and other unethical behaviors often occur due to an individual’s lack of

personal integrity or other moral reasoning (Dorminey et al., 2010; Rae &

Subramaniam, 2008). Hence, to forestall the occurrence of such fraud, the service

of a trained and experienced investigator like the forensic accountant is highly

required.

Therefore, the fraud diamond theory specifically adopted and considered fit to

support the topic “forensic accounting and financial fraud detection in the Nigerian

banking industry in the sense that it traces the root cause of financial fraud and

proffer solution to the alarming incidence of financial fraud. The fraud diamond

theory suggests that financial frauds would not have occurred without the right

person with right capabilities implementing the details of the fraud. The fraud

diamond theory also stress the need for a fraud control mechanism emphasizing

that the organization and auditors need to better understand employees’ individual

traits and abilities in order to assess the risk of fraudulent behaviors. In addition,

better systems of checks and balances should be implemented and monitored to

proactively minimize risks and losses as a result of fraudulent activities in the

workplace.

2.3 Empirical Review

There are several empirical studies on forensic accounting and fraud detection and

Prevention. Many of these studies draw evidence from developed economies like
the United States of America, the United Kingdom and Canada. Empirical

evidence also exists on the relationship between forensic accounting and fraud

detection. The following studies show the methodology, sample and main findings

of these studies.

Okoye (2011) in his examination of forensic accounting as a tool for fraud

detection and prevention used primary and secondary sources of data. 370

questionnaires were administered to staff of 5 selected ministries in Kogi area.

Tables and simple percentages were used to analyze the data. The statistical tool

used to test hypotheses was Analysis of Variance (ANOVA). Among the findings

was that, the use of forensic accounting do significantly reduce the occurrence of

fraud cases in the public sector and therefore can help better in detecting and

preventing fraud cases in the public sector organization.

Okunbor & Obaretin (2010), a total of 140 statistically sampled respondents of ten

Companies from five sectors quoted in Nigerian Stock exchange. Using the simple

regression model and descriptive statistics for the purpose of data analysis. The

result showed that the application of forensic accounting by quoted companies in

Nigeria is not effective in curbing fraudulent activities. The general consensus was

that it had not been effective as revealed by the frequency scores of those who

disagreed.
Ebimobowei (2011) examined the effect of forensic accounting services in fraud

detection. The primary data was collected with the help of a well-structured

questionnaire of three sections administered to twenty four banks in Port Harcourt,

the capital of Rivers State and the data collected from the questionnaires were

analyzed with descriptive statistics, Augmented Dickey-fuller, ordinary least

square and Granger Causality. The result reveals that the application of forensic

accounting services affects the level of fraudulent activities of banks.

Islam, Rahman and Hossan (2011), in their study concentrated on issues relevant to

the current status of the application of forensic accounting in Bangladesh and how

efficiently it works as a fraud detection tool. They established that forensic

accounting as a fraud detection tool has relevance to efforts for combating fraud

and corruption in Bangladesh.

They say that forensic accounting now appears as one of the strategic tool for the

management of all types of corruption.

Gottschalk (2010) used a structured questionnaire of 517 potential respondents

only 141 responses were completed and used for the analysis with the help of

descriptive statistics. The results reveal that control is the most important means by

which fraud is prevented and controlled. However, some respondents believe that

influence is more important in terms of ethical guidelines and other measures.

Muthusamy (2010) utilized Partial Least Square technique, a component of

Structural Equation Modeling (SEM). A questionnaire was formulated, refined,

and subsequently used in the pilot study. A list comprising 9642 large Malaysian

companies was generated with data obtained from the Inland Revenue of Board

Malaysia. The survey was distributed to 20% or 1982 companies that were chosen

through random sampling. Only 305 returned surveys were useable. The result was

that, the present conceptual model confirmed both perceived benefits and

perceived risks as significant direct antecedents of attitude.

Njanike (2009) used the questionnaire which consisted of three parts that is

personal, detection and investigation sections designed to capture information on

the forensic accounting status quo and the suggestions on the way forward. A

sample of thirty forensic auditors from thirteen commercial banks, four building

societies and four audit firms in Zimbabwe. Result was that forensic audit

departments suffer from multiple challenges, amongst them being lack of materials

resources, technical knowhow, interference from management and unclear

recognition of profession.

Koh (2009) in his study, examined forensic accounting in the dimension of public

acceptance towards occurrence of fraud detection, in his study the most

emphasized important subject was that the forensic accounting is conducted to

improve the understanding in detecting and reducing accounting fraud. The author
thinks that it has been practiced by audit firm as one of the tools to investigate a

company’s financial statements for fraudulent activities as requested by certain

parties. In conclusion in terms of their study, they emphasized that the forensic

accounting activities such as investigative accounting and litigation support will

enrich the organizational performance.

CHAPTER THREE
 RESEARCH METHODOLOGY

3.1 Research Design

The research design used for this research work is descriptive design. A descriptive

design consist of a set of gathered data or information analyzed, summarized

and/or interpreted along certain line of thought for the pursuit of specific purpose

or study.

3.2 Area of the Study

This research work covers the Fidelity Bank Plc, Enugu. Most of the data used in

this work were gathered from the Fidelity Bank Plc, Enugu.

3.3 Population of the Study

Population means the whole body of items, objects, materials or people that fall

within a geographical location in which the researcher intends to investigate for his

or her study. That is the whole participant of the study. Therefore the target

population for this research includes the staff of the Fidelity Bank Plc, Enugu. The

population comprises of 65 staff of Fidelity Bank Plc, Enugu.

3.4 Sampling Method

The research sample for this study was determined by using Taro Yamane

formular. The sample size therefore was determined by using the formular
 N
n = 1+ N ¿ ¿

Where,

n= sample size to be determined

N= Population (65)

1= Fixed Number Factor

e= margin of error usually 0.05%

N
n= 1+ N (e) ²

n = 65

1 + 65(0.05)2

n = 65

1 + 0.1625

n = 65

1.1625

n = 55.9 ≈ 56

Therefore the sample size (n) = 56

3.5 Research instrumentation

The study is based on both primary and secondary data. The primary data involves

the use of questionnaires, oral interview, telephone conservation, observations etc.

The secondary data involves the use of textbooks, journals, magazines, newspaper

etc.

3.6 Validity and reliability of instrument

In order to ensure the validity of a research instrument, proper ensuring of

questionnaire and a conduct of a pretest of all the questions contained in the

questionnaire were carried out. The design of the questionnaire was also made for

respondents to tick their preferred choice from the options provided.

Reliability refers to the stability of the measurement used to study the relationships

between variables. The questions in the questionnaire were designed taking into

consideration the research questions on the subject. Thus the constructed

questionnaire was distributed by the researcher to the group of people different

from the pilot sample group but with the same characteristic, and after sometime

the copies of questionnaire were collected from the respondents and scored them.

Thus, the correct scoring was obtained again and again thereby proving the

reliability of the instrument.

3.7 Method of Data Collection

The research instrument for this study which was the questionnaire was self-

administered (person-to-person) by the researcher to 56 respondents. In effect, the

completed copies of the questionnaire were duly collected by the researcher. This

helped to avoid the loss of any copy of the questionnaire. Therefore, the total

number of questionnaire given out was the same retrieved. This method was

considered appropriate because it really enhanced the exercise, as it provided a

platform for the researcher to interact and provide further information about the

study to the respondents within the confines of research.

3.8 Method of Data Analysis

This research will make use of frequency table/percentages to analyze the

descriptive characteristics of the respondents.

 CHAPTER FOUR

DATA PRESENTATION AND ANALYSIS

The responses of the sample surveyed from the questionnaire used, and trust of

observation made from this study are summarized in tables as we progress.

This refers to the segregation of data into parts with relevant comments and best of

judgments. In other words, it means breaking down and putting in order, the

qualitative information gathered through the research exercise. It also involves

comparing and contrasting the events, patterns and relationships. As earlier stated

in chapter three, the data collected for this study are carefully analyzed in simple

percentage and tables. A total of 56 copies of questionnaire were issued to the

respondents and 50 copies were retrieved.

4.1 DATA PRESENTATION AND ANALYSIS

Table 1: Responses as to the Sex of Respondents

Sex Responses Percentage (%)

Male 22 44.0

Female 28 56.0

Total 50 100
Source: Field Survey, 2021
From table 4.1 above, 22 respondents representing 44.0% were male, while 28

respondents representing 56.0% were female. It’s obvious here that greater

percentage of the respondents were female.

Table 2: Responses as to Marital Status

Marital Status Responses Percentage (%)

Single 27 54.0

Married 23 46.0

Total 50 100
Source: Field Survey, 2021

From table 4.2 above, 27 respondents representing 54.0% were single, while 23

respondents representing 46.0% were married. Thus a greater percentage of the

respondents were single compared to the married ones.

The following are the research questions and responses of the respondents:

RESEARCH QUESTION 1: RESPONDENTS RESPONSES ON THE

EXTENT FORENSIC ACCOUNTING CAN BE USED TO LOCATE

DIVERTED FUNDS OR ASSETS IN THE FIDELITY BANK PLC, ENUGU

Table 3: To what extent can forensic Accounting be used to locate diverted

funds or assets in the Fidelity Bank Plc, Enugu?

Category Distribution Percentage (%)

Very High Extent 25 50.0
High Extent 18 36.0
Some Extent 5 10.0
Very Low Extent - -
Low Extent 2 4.0
Total 50 100
Source: Field Survey, 2021

From the table above, 25 respondents representing 50.0% believed that forensic

Accounting be used to locate diverted funds or assets in the Nigerian banking

industry to a very high extent, 18 respondents representing 36.0% said it was to a

high extent, 5 respondents representing 10.0% said it was to some extent, while 2

respondents representing 4.0% said it was to a low extent.

RESEARCH QUESTION 2: RESPONDENTS RESPONSES ON THE

EXTENT FORENSIC ACCOUNTING CAN BE USED TO IDENTIFY

MISAPPROPRIATION OF ASSETS IN THE FIDELITY BANK PLC,

ENUGU

Table 5: To what extent can Forensic Accounting be used to identify

misappropriation of assets in the Fidelity Bank Plc, Enugu?

Category Distribution Percentage (%)

Very High Extent 22 44.0%
 High Extent 25 50.0%
Some Extent 3 6.0%
Very Low Extent - -
Low Extent - -
Total 50 100
Source: Field Survey, 2021

From the above responses, 22 respondents representing 44.0% believed that the

Forensic Accounting be used to identify misappropriation of assets in the Nigerian

banking industry to a very high extent, 25 respondents representing 50.0% said It

was to a high extent, while 3 respondents representing 6.0% said it was to some

extent.

RESEARCH QUESTION 3: RESPONDENTS RESPONSES ON THE

EXTENT FORENSIC ACCOUNTING CAN BE USED TO DETECT

FRAUDULENT FINANCIAL TRANSACTIONS IN THE FIDELITY BANK

PLC, ENUGU

Table 6: To what extent can Forensic Accounting be used to detect fraudulent

financial transactions in the Fidelity Bank Plc, Enugu?

Category Distribution Percentage (%)

Very High Extent 27 54.0
High Extent 20 40.0
Some Extent 2 4.0
Very Low Extent - -
Low Extent 1 2.0
Total 50 100
Source: Field Survey, 2021

From the above data, 27 respondents representing 54.0% believed that Forensic

Accounting be used to detect fraudulent financial transactions in the Nigerian

banking industry to a very high extent, 20 respondents representing 40.0% said it

was to a high extent, 2 respondents representing 4.0% said it was to some extent,

while 1 respondent representing 2.0% said it was to a low extent.

4.2 Discussion of Findings

The various research questions as regards this study have been examined and the

findings for research question one showed that a greater percentage (50.0%) of the

respondents believed that forensic accounting can be used to locate diverted funds

or assets in the Fidelity Bank Plc, Enugu to a very large extent.

In the research question two a greater percentage (50.0%) of the respondents

believed that Forensic Accounting can be used to identify misappropriation of

assets in the Fidelity Bank Plc, Enugu to a large extent.

In the research question three, the respondents’ responses on the extent Forensic

Accounting can be used to detect fraudulent financial transactions in the Fidelity

Bank Plc, Enugu showed that Forensic Accounting can be used to detect
fraudulent financial transactions in the Fidelity Bank Plc, Enugu to a very large

extent.

CHAPTER FIVE

SUMMARY OF FINDINGS, CONCLUSION AND RECOMMENDATIONS

5.1 Summary of Findings

From the responses gotten from the respondents, some interesting findings were

made.

Major findings revealed that:

1. Forensic Accounting can be used to locate diverted funds or assets in the

Fidelity Bank Plc, Enugu to a very large extent.

 2. Forensic Accounting can be used to identify misappropriation of assets in

the Fidelity Bank Plc, Enugu to a large extent.

3. Forensic Accounting can be used to detect fraudulent financial transactions

in the Fidelity Bank Plc, Enugu to a very large extent.

5.2 Conclusion

In the light of the analysis carried out, the following conclusions were drawn.

1. Forensic accounting can be used to locate diverted funds or assets in the

banking sector in Nigeria.

2. Forensic Accounting can be used to identify misappropriation of assets in the

banking sector in Nigeria.

3. Forensic Accounting can be used to detect fraudulent financial transactions in

the banking sector in Nigeria.

5.3 Recommendations

Based on the findings of this study, it was thus recommended that:

i. Forensic accountants should be encouraged so as to equate the over-

increasing complexity in technologies over the years.

 ii. Forensic accountants at various levels should be allowed to be involved in

decision making process. This is so because most forensic accountants are

generally honest and willing to help fight against fraud if they are allowed

iii. The fight against corruption and fraud must be sincere and purposeful. In

this regard, there should be no sacred cows in the punishment of culprits and

the government and management of firms most stop paying lip-services to

the campaign against fraud and corruption.

iv. Hire the right accountants: bringing on the right employees for an institution

means two (2) things.

 Finding the people with the right skills and disposition to do well in the

organization

 Finding people with an ethical history. Background study/checks are easy to

conduct and relatively inexpensive. An important part of background check

includes; verification of past employment, contacts with reference to fraud

occurrence.
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 APPENDIX I

A LETTER OF INTRODUCTION

Department of Accountancy,

School of Financial Studies,

Institute of Management and Technology

(IMT), Enugu.

Dear Sir,

I am a final year ND student in the department of Accountancy of the above named

institution.

I am conducting a research on “the impact of forensic accountants in controlling

distress in Nigerian banking sector, a study of Fidelity Bank Plc, Enugu.” The

research is in partial fulfilment of the requirements for the award of National

Diploma in Accountancy.

You are requested to supply the information being sought as stated in the

questionnaire attached as honestly as possible. Be rest assured that all the

information supplied by you will be treated with the strictest confidentiality and be

used purely for academic purpose.

Thanks for your anticipated cooperation.

Yours faithfully

IGWE UCHECHUKWU RUTH

APPENDIX II

This questionnaire is divided into two sections the first is the personal data and

second is general questions.

INSTRUCTION: please tick (v) In the boxes provided where applicable or where

necessary give the information required.

SECTION A: PERSONAL DATA

1. Sex

Male [ ]

Female [ ]

2. Age Group

a. 20-29 [ ]

b. 30-39 [ ]

c. 40 and above [ ]

3. What is your educational quantification?

a. OND/NCE [ ]

b. HND/BSC [ ]

c. OTHERS [ ]

4. Year of service with the institution

 a. Less than 5 years [ ]

b. 5-9 years [ ]

c. 10- 19 years [ ]

d. 20 and above [ ]

5. What is your level and position in the organization?

a. Top [ ]

b. Middle [ ]

c. Low [ ]

SECTION B: GENERAL QUESTIONS

1. Fraud is a general phenomenon which exists almost in every organization

a. Yes [ ]

b. No [ ]

c. Undecided [ ]

2. The incidence of fraud affects the, the management and every worker of

the organization when it occurs.

a. Yes [ ]

b. No [ ]
 c. Undecided [ ]

3. There is a relationship between fraud and business failures.

a. Yes [ ]

b. No [ ]

c. Undecided [ ]

4. Most fraudulent activities that lead to bank failures are done by insiders; that

is people within the organization

a. Yes [ ]

b. No [ ]

c. Undecided [ ]

5. More than 70% cases of banks failures are caused by fraudulent activities

a. Yes [ ]

b. No [ ]

c. Undecided [ ]

6. Most times, employees of an institution fail to report fraudulent activities

when they occur.

 a. Yes [ ]

b. No [ ]

c. Undecided [ ]

7. There is a significant relationship between frequent occurrence of fraud and

loss of confidence in financial institutions

a. Yes [ ]

b. No [ ]

c. Undecided [ ]

8. Most times, other bank loss their customers/depositors due to a fraud

committed in another ba nk.

a. Yes [ ]

b. No [ ]

c. Undecided [ ]

9. Investors prefer foreign investments to local investments due to loss of

confidence in the Nigerian system.

a. Strongly agreed [ ]

b. Agreed [ ]
 c. Undecided [ ]

10. Forensic audit, which is an audit undertaken in relation to proceedings in a

court of law, strive to bridge the gap between accounting and law

professions in relation to fraud prevention and detection.

a. Yes [ ]

b. No [ ]

c. Undecided [ ]

11. Forensic auditing has become a useful method/technique of fraud detection

and prevention.

a. Yes [ ]

b. No [ ]

c. Undecided [ ]

12. Forensic audit is a useful method of fraud detection and prevention in

financial institution.

a. Yes [ ]

b. No [ ]

c. Undecided [ ]
13. With the use of forensic auditing technique, fraud prevention and detection

becomes easier

a. Yes [ ]

b. No [ ]

c. Undecided [ ]