CHAPTER ONE

INTRODUCTION

1. BACKGROUND OF THE STUDY

Financial crimes and fraudulent activities have been one of the most popular challenges to the worldwide economy. Corruption and other fraudulent practices seem to be a global menace that affects severely the economy of any nation and the society where it exists. It has been subject of continuous discussions in literature as the cause of retardation to developing economies like Africa, Latin America, and Asia as seen today. Economic and financial crimes are believed in most intellectual discourse to be one of the fundamental problems of the Nigerian economy that has negatively impacted its economic growth and development as a nation. These crimes are common and rampant in public sectors and it is the bane of slow development to the Nigerian economy as a whole. There is absolutely no aspect or sector of the economy that is not inflicted by this menace ranging from the financial institution to the health and education sectors as well as the public service. Hamilton and Gabriel (2012), opine that the level of fraudulent practices, corruption and other sharp practices in the Nigerian public sector is alarming and seen as norms and way of life. Financial crimes include oil bunkering, embezzlement, bribery, looting, money laundering, fraud, tax evasion and foreign exchange malpractice (Mukoro, 2013).

Ehioghiren and Atu (2016) as well as Onodi et al. (2015) posits that financial crimes comprise subsidy fraud, advance fee fraud, identity fraud, bank fraud, mortgage fraud, cheque fraud, embezzlement, credit card fraud , hedge fund fraud , consumer fraud and occupational fraud. Gottschalk (2010) notes that financial crimes are categorized into four groups which comprise: theft, fraud, manipulation and corruption; these crimes are perpetrated by individuals, organized persons as well as institutions. There is absolutely no aspect or sector of the economy that is not inflicted by this menace, ranging from the financial institution to the health, and education sectors as well as the public service. Dada (2014) posits that fraudulent activities and other sharp practices were uncovered and reported in the area of legislative process, salaries and wages, pensions and in government business. Financial crimes such as embezzlement, bribery, corruption, identity fraud, mortgage fraud, occupational fraud, bankruptcy, security fraud, amongst others are perpetrated by individuals, corporate institutions as well as organized group of people in order to acquire criminal enrichment (Ogutu and Ngahu, 2016; Onodi et al., 2015).

Forensic accounting is understood to have evolved in response to certain emerging fraud related cases. For example ENRON and WorldCom scandals have drawn or shocked the world and exposed corporate deceit and greed embedded in human minds to the field of forensic accounting, more and more attention is now given to the field (Ozuomba, Ofor & Okoye, 2016). Moreover, financial related fraud and increase in financial crime has led to the need of forensic accounting in order to aid investigation and prosecution of the syndicates of financial crimes just liked in the case of some prominent political parties ex-governors in Nigeria are presently facing trials on money laundering, embezzlement, misappropriation of funds, security fraud, breach of contract from different court of laws within the country and many more including some public civil servants that converted public treasury as personal assets to their pockets.

1. STATEMENT OF THE PROBLEM

Fraud is part and parcel of a cancerous threat that negatively affects the Growth and Development of any nation which shouldn’t be underestimated globally. It is part of the reasons why there is need for forensic accounting to play a major role toward preventing fraud in Nigerian public sector. Fraud can be seen as an act of doing unlawful thing which portrays the violation, concealment of trust. While forensic accounting is targeted toward detecting and preventing an individual or corporate body from doing an act of questionable character or integrity. Now, if forensic accounting is expected to be seen as an aspect of accounting that is suitable for legal review and offering the highest level of assurance, then why in spite of the fact that some law enforcement agencies such as an Independence Corrupt Practices and other related offences Commission (ICPC), Economic and Financial Crimes Commission (EFCC), and Code of Conduct Bureau (CCB) these agencies are working day and night in tracing hidden assets, funds and many more but still fraud is at alarming rate in Nigeria.

The upsurge in fraudulent practices in the all aspect of national life all over the world has become a source of concern and that of Nigerian public sector has been embarrassing in recent times (Okpala & Enwefa, 2017).The major factors responsible for the high rate of fraud include the advent and the extensive growth in computer technology and globalized economies supporting e-fraud, poor financial and regulatory framework, weak internal control system and societal attitude to achievement at all cost. Poor remuneration of public servants is also a major issue. The weakness in government financial management system has encouraged the manifestation of huge cases of frauds, misappropriations and other financial irregularities. Public officers directly and indirectly steal both tangible and intangible government properties which have led to substantial losses and government inability to effectively and efficiently carry out its functions (Nwaiwu & Aaron, 2018). The issue of fraud has been identified as one of the major source of government poor economic and political performance. The traditional accountants and conventional auditors on the ground of their limited financial crime based training seem not to have the tenacity to tackle the fraud trend in the ordinary course of their duties (Bhasin, 2016).

1. AIM AND OBJECTIVES OF THE STUDY

The aim of this study is to investigate the contributions of forensic accounting on fraud detection and control in the public sector.

Specifically, the study seeks to:

1. Examine the relationship between forensic accounting and fraud control in the public sector
2. To examine the impacts of forensic accounting on fraud control in the public sector
3. To examine the factors hindering the forensic accounting on fraud control in the public sector
4. To find out ways of promoting forensic accounting on fraud control

1. RESEARCH QUESTIONS

1. What is the relationship between forensic accounting and fraud control in the public sector
2. What are the impacts of forensic accounting on fraud control in the public sector
3. What are the factors hindering the forensic accounting on fraud control in the public sector
4. what ways can promote forensic accounting on fraud control

1. RESEARCH HYPOTHESIS

H0 there is no significant relationship between forensic accounting and fraud control in the public sector

H1 there is significant relationship between forensic accounting and fraud control in the public sector

1. SIGNIFICANCE OF THE STUDY

The study is very important because it will serve as an eye opener to the forensic accounting department on the level of fraud rate in the public sector.

The study findings will examine the contributions of forensic accounting on fraud detection and control, and as such forensic department should be accorded necessary modalities and logistics in carrying out their job effectively.

1. SCOPE OF THE STUDY

The study is on the contributions of forensic accounting on fraud detection and control in the public sector. The is limited to the finding out the relationship that exist between forensic accounting and fraud control; the impacts of forensic accounting on fraud control; and the challenges hindering forensic accounting on fraud control in the public sector.

1. LIMITATION OF THE STUDY

TIME CONSTRAINTS: One the challenges experienced by the researcher is the issue of time; the research will simultaneously engage in departmental activities like seminars and attendance to lectures. But the researcher was able to meet up with the deadline for the submission of the project.

FINANCIAL CONSTRAINTS: Every research work needs funding; however lack of adequate funds might affect the speed of the researcher in getting materials for completion of the project.

1.9 DEFINITION OF TERMS

Forensic accounting

Forensic accounting, forensic accountancy or financial forensics is the specialty practice area of accounting that investigates whether firms engage in financial reporting misconduct. Forensic accountants apply a range of skills and methods to determine whether there has been financial reporting misconduct

Fraud control

Control fraud occurs when a trusted person in a high position of responsibility in a company, corporation, or state subverts the organization and engages in extensive fraud for personal gain. The term "control fraud" was coined by William K. Black to refer both to the acts of fraud and to the individuals who commit them.

Fraud

According to Zimbelman and Albrecht (2012), fraud can be defined as a generic term, and embraces all the multi-farious means which human ingenuity can devise, which are resorted to by one individual, to get an advantage over another by false representations.