PROBLEMS AND PROSPECTS OF FORENSIC ACCOUNTING IN THE FINANCIAL PERFORMANCE OF NIGERIA BUSINESS ENTERPRISES (INNOSO TECHNICAL ENUGU)
1.1 Background of the study
Forensic accounting provides an accounting analysis that is suitable to the court which will form the basis for discussion, debate and ultimately dispute resolution. It encompasses litigation support, expert witnessing and investigative accounting. Akintoye (2008) said forensic accounting is accounting that is suitable for legal review, offering the highest level of assurance, and including the new generally accepted connotation of having been arrived at in a scientific fashion and providing the needed findings in settling disputes. He said the primary orientation of forensic accounting is explanatory (cause and effect) analyses of phenomena including the discovery of deception (if any) and its effects introduced into an accounting system. Crumbley et al. (2009) define forensic accounting as the action of identifying, recording, settling, extracting, sorting, reporting and verifying past financial data or other accounting activities for settling current or prospective legal disputes or using such past financial data for projecting future financial data to settle legal disputes. Mehta and Mathur (2007) posited that forensic accounting involves a financial detective with a suspicious mind, a financial bloodhound, someone with a „sixth sense‟ that enables reconstruction of past accounting transactions and an individual who looks beyond the numbers.
Bhasin (2007) noted that the objectives of forensic accounting include: assessment of damages caused by an auditors‟ 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. He argues that the primary orientation of forensic accounting is explanatory analysis (cause and effect) of phenomenon including discovery of deception (if any), and its effects introduced into the accounting domain. Forensic accountant may apply certain examination techniques similar to those used in financial audits but the objective of these procedures is quite different.
The forensic accountant may examine a trail of paperwork to corroborate the calculations needed to meet the specific goal of the engagement. This could be a useful instrument to prosecute cases of corruption in Nigeria too.
1.2 Statement of problem
Financial irregularity is a severe problem of concern globally. It is the major concern to developing nations. It is so endemic that fraud and corruption is gradually becoming a normal way of life. Financial irregularities are so common that almost every individual financial irregularly hands cannot be washed.
Starting from the public sector to the private sector; from the presidential villa of the nation, down the political office-holding ladder, to the ward councilors; from managing directors of a company, through middle management cadre and to as low as messengers. Individual perpetrates fraud and corrupt practice according to the capacity of their office. Although financial irregularities affects private and public sector, the magnitude of public office fraud, together with the extent to which citizens are affected, calls for alarm.
No money is entirely free, every Naira and Kobo has its legal use, and consequently misuse of any amount will impact negatively, on where it should legally be used. The effect of these can be on an organization or a whole nation. If the effect is not direct it may be indirect as it may affect facilities and infrastructure that is supposed to be beneficial to the concerned.
Unless it is impossible, individual or establishment affected negatively by the fraudulent or corrupt practices will want to seek redress.
Individual, corporate body and interested government organs takes action towards seeking redress using divergent institutions like the police and the law court. Whatever an investigator wants to do, will not be complete if the extent to which the affected person is affected is not quantified. This and other pecuniary areas are where the service of the experts “forensic accountant” are been engaged for a very long time worldwide and probably, recently, in Nigeria.
1.3 Objective of the study
The aim of this research work is to examine problems and prospects of forensic accounting in the financial performance of Nigeria business enterprises with particular reference to Innoso Technical Enugu, the specific objectives of this study includes the following;
1. To evaluate the relevance of forensic accounting in the development of Nigerian business enterprises.
2. To examine the impact of forensic accounting on the financial performance of Nigerian business enterprises.
3. To examine the extent at which Innoso Technical apply forensic accounting in their financial activities and how it has affected the organization.
4. To identify the problems associated with the adoption of forensic accounting in Nigerian business enterprises.
5. To proffer possible solutions to the problems identified.
1.4 Research Hypothesis
Based on the above research objectives and research question the researcher formulated the following research hypotheses;
Ho: Forensic accounting is not relevant in the development of Nigerian business enterprises.
H1: Forensic accounting is very relevant in the development of business enterprises in Nigeria.
Ho: Forensic accounting does not have any impact on the financial performance of business enterprises in Nigeria.
Ho: Forensic accounting has significant impact on the financial performance of business enterprises in Nigerian.
Ho: There is no problem associated with the adoption of forensic accounting on business enterprises in Nigerian.
H1: There are so many problems associated with the adoption of forensic accounting in Nigerian business enterprises.
1.5 Research Question
The research developed the following research questions;
1. What are the relevance of forensic accounting in the development of Nigerian business enterprises?
2. What are the impacts of forensic accounting on the financial performance of Nigerian business enterprises?
3. To what extent does Innoso Technical Enugu apply forensic accounting in their financial activities and how does affect the organization?
4. What are the problems associated with the adoption of forensic accounting in Nigerian business enterprises?
1.6 SIGNIFICANCE OF THE STUDY
This research work will be of immense help to:
- The Researcher: it will help the researcher to know more on problems and prospects of forensic accounting in the financial performance of Nigeria business enterprises.
- Stake Holders: It will also be of great importance to stake holders as it will enrich their knowledge on the benefits and usefulness of forensic accounting in the financial performance of Nigeria business enterprises.
1.7 Scope of the Study
The study shall focus on problems and prospects of forensic accounting in the financial performance of Nigeria business enterprises with particular reference to Innoson Company in Enugu.
1.8 Limitations of the Study
The researcher in carrying out this study encountered numerous problems, which includes:
FUND – This included lack of enough fund to move around and visit the organizations, the researcher has to visit the organizations more than two times, the researcher equally needed enough money to source material which constitutes an impediment. High cost of transportation in the city due to long distance also imposed its own limitation on the researcher.
LACK OF RESEARCH MATERIALS: lack of research materials was also one of the problems faced by the researcher in the cause of this research work.
RESPONDS OF THE RESPONDENTS: Another constraint to the researcher is that some of the respondents found it difficult to express their view with regards to the subject matter.
From the above points the researcher tried his best to bring out in detailed study on problems and prospects of forensic accounting in the financial performance of Nigeria business enterprises but the above constraints have limited the researcher to only Innoson Company metropolis.
1.9 DEFINITION OF TERMS
vForensic: The use of scientific method in investigation of crime.
vFraud: Criminal deception to gain advantage of money