Forensic Accounting Application and The

International Journal of Economics & Business Zambrut
ISSN: 2717-3151, Volume 3, Issue 1, page 17 - 25
Forensic Accounting Application

and the Extenuation of Fraud in
the Public Sector: Opinion from
Academic and Professional
Accountants
Eleng, David Mbotor1, Aminu M. Tafida2 & Emmanuel Ude Bassey3
1
Eleng, David Mbotor, 2Aminu M. Tafida, & 3Emmanuel Ude Bassey
1,3
Department of Accountancy, Cross River University of Technology, Calabar, Cross River State
2
Department of Accountancy, Taraba State University, Jalingo
Nigeria
Abstract: The study weighed opinions of Accountants in the Nigerian public sector on the relevance
of forensic accounting in mitigating fraud. Anchoring the study on the fraud triangle theory, the
survey design was adopted for the study. A well-structured questionnaire was used in gathering
data from 75 Accountants in the selected MDAs and tertiary institutions in Taraba state. The
reliability of the content was tested using Cronbach alpha and the relationship between forensic
accounting and fraud was tested using Pearson correlation and Spearman rank correlation. The
findings indicated that the level of forensic accounting knowledge among accountants in the case
study is low. Showing that there is also a low application of forensic techniques in the state owing
to the fact that there is a high rate of lack of forensic accounting experts in the states. The opinions
of the Accountants positively affirm that forensic accounting can extenuate fraud if effectively used
in public offices. Is thus recommend that, the government should pay interest in training forensic
accountants in the states.
Keywords: Forensic, Fraud, Investigative, Public Sector, Mitigation and Extenuation.
1. Introduction
Forensic accounting is a special area of practice in the accounting profession which describes
engagement that result from anticipated disputes or litigations. Forensic accounting which is also
termed investigative accounting deals with the application of financial skills and investigative
techniques to unravel issues within the content of the rules of evidence (Razaee, Crumley and Elmore
2006). Sheets (2006) views forensic accounting as simply an accounting discipline that determine issue
of facts in business litigation. Investigative accounting being a new wing in accounting profession is
still open to new definitions. Investigative accounting deals with financial expertise, fraud knowledge
Zambrut.com. Publication date: March 6, 2019. 17

Eleng, D. M., Aminu, M. T. & Bassey, E. U. 2019. Forensic Accounting Aplication and the ............
and a strong understanding of business reality and the working of the legal system. The study considers
forensic accounting as an investigative mechanism in the financial sector. Therefore, for the purpose of
this study, forensic accounting and investigative accounting will be used interchangeably. Herbert,
Tsegba, Ene and Onyilo (2017) mirror reveals that fraud examination and forensic education has been a
widely discussed subject area in light of the problems of fraudulent activities in Nigeria. There is no
formal structure for forensic accounting in Nigeria. Though is been considered in the undergraduate
and postgraduate levels, there is need for regular forensic accounting application and forensic audits as
part of corporate governance framework of both public and private entities in Nigeria.
Akani and Ogbeide (2007), observed that the prevalence of fraud and fraudulent practices in the
Nigerian public sector is alarming and mind blowing. The authors posited that traditional auditors have
failed in providing efficient and effective reports. This triggers the need for investigative accounting in
curbing emerging sophisticated crimes in the public sector.
Investigative accounting utilize special and technical skills and method in carrying out an inquiry
conducted in such a manner that the outcome will have application to the court of law. The term
corruption is widely ascribed to the Nigerian economy especially in the public sector. Several financial
management have become part of the day-to-day activities of public staff. There is an increase in
sophisticated crimes and advanced technicality in the use digital means to commit fraud which
sometimes go undetected in the public sector. Investigative accounting looks beyond the mere reality of
the values reported in the financial statement. The relevance of forensic accounting in the Nigerian
public sector cannot be over looked, the financial misappropriation in the public sector demand
thorough financial checks of transparency and accountability is to be restored. Beyond the
conversational auditing, investigative mechanism which is obtainable from forensic accountants need
to be employed in the management of public funds.
1.1 Statement of the Problem

Corrupt practices and financial mismanagement have taken a sophisticated dimension. The get rich
ideology has rumbled multinational corruption and extinguished financial transparence and
accountability in the public sector. Money Laundry, misappropriation of asset, manipulation of figures,
and creative accounting application on financial report is the order of the day. Digital technology and
advancement amongst its benefit also poses several challenges in the financial sector. Increase in digital
advancement has added crimes that are to an extent sometimes not traceable. The inability of traditional
auditor to check mate this crimes have called for the need to involve of investigation accountants in the
public sector in tackling these financial crimes in Nigeria.
1.2 Objectives of the Study

The major objective of the study was to seek opinions of Accountants on the relevance of Forensic
Accounting techniques in mitigating against fraud in the public sector.
2. Theoretical Framework
 White collar crime theory
White collar crime was coined in 1939 by Edwin Sutherland. It depict crime committed by an
individual respectable and high socially placed occupation. The theory differentiated the
motives and characteristics of the typical street criminal and person working in an organization.
The white collar crime there are explain the criminal and fraudulent incidence in among staff in
organization both private and public sector. The theory labels that presentations and judges are
more important on white collar as opposed to street criminals. Fridrichs (2007) posted that
crime only differ from one another in the background of its perpetrators. It is assumed that a
great number of white collar crimes go undetected and some time if deleted, it is not reported.
Investigative accounting professionals will serve as the only instrument that can fore still the
incidence of the fraudulent practices in the public sector. Okoye and Gbegi (2013) adopted the
white collar crime theory in explaining forensic accounting as a tool for fraud detectives and
preparation in the public sector

 The fraud Triangle

Cressey (1919-1987) carried out a careful study which resulted to the theory of the fraud
triangle. He called embezzlers trust violators. The violation of trust on employment both in the
public and private sector poses a treat the financial accountability. Cressey identification this
problem as a break of trust be individual who solve their financial problems be involve in
fraudulent activities. Cressey postulated the fraud triangle to explain the causes and effect of
fraud in three (3) dimension.
i. Unshakable needs and pressure: the author observed that the individual involve in
fraudulent actions have resisted sharing his financial distress with another person
thereby resulting to financial mistrust to solve his problem.
ii. Opportunity: The individual involve in financial crime, only executes his plans when
opportunity arises, which could be as a result of an inefficient control system. This
crimes are usually carried out systematically to afford possible traces. This the culprit
does, to solve his financial distress.
iii. Rationalization: Trust is worthy and held at high esteem. Self-justification and rational
excuses becomes the attitude of the fraudulent employee when he has lost trust through
financial crimes.
The theories reveals that they is a need for a more insightful, investigative and sophisticated digital
way of monitoring finances in the public sector so as to drastically reduce fraud to minimum in public
ministries and agencies. Forensic accounting also known as investigative accounting if utilized in the
public sector, will go a long way to reduce fraud.
2.1 Conceptual Framework

Modugu and Anyaduba (2013), studied forensic accounting and financial fraud in Nigeria. Using
survey design and sampling 143 accountants, management staff, practicing auditors and shareholders,
the authors examination of the significant agreement amongst stakeholders on the effectiveness of
forensic accounting in financial fraud control and financial reporting and internal control efficiency
reveals a statistical significance between forensic accounting and the effectiveness of fraud control and
financial reporting credibility as revealed by the stakeholders responses. In a similar study, Okoye and
Gbegi (2013) examined forensic accounting as a tool for fraud detection and prevention in the public
sector with specific focus in Kogi state. Using primary and secondary data and analyzing his data with
ANOVA, the authors findings showed that forensic accounting reduces fraud in the public sector and
further reveals a difference between professional forensic Accountants and Traditional Accountants.
This proposes that forensic accounting is a better tool in detecting and curbing fraudulent mishaps in
public offices. Adegbie and Fakile (2012) evaluated forensic accounting as an antidote to economic and
financial crime in Nigeria. Case studying government parastatals which included EFCC, ICPC, Lagos
State ministry of finance, PHCN and FIRS. Employing the use of SPSS in computing chi-square, the
findings showed that forensic accounting is the perfect financial strategy to curb and resolve economic
and financial crimes in the Nigeria business environment. Emeh and Obi (2013) carried out a survey to
examine the correlation between the presences of Forensic Accountants (PFA), Number of Accountants
with forensic Accounting Skills (NAFT) and Extent of Forensic Accounting practices with extent of
employee theft (FET), Extent of financial fraud (EFT) and extent of top management fraud (ETMF).
Using a well-structured questionnaire and sample of 105 respondents, and analyzing using spearman
rank correlation, the study result reveals a negative correlation between PFA, NAFT and EZFAP with
EFR.
Previous studies have shown a positive relationship between forensic accounting and fraud. Owing
to the fact that financial crimes and other corrupt practices have been very peculiar to the Nigerian
public sector, the effect have been very devastating. It is therefore needful for the government to
intensify and utilize the skills of forensic Accountants in public offices.
2.1.1 White Collar Fraud

Fraud is a deliberate deception to secure unfair or unlawful gain (Wikipedia). White collar fraud is
a non-violent crime committed for financial gain. First captured by Edwin Sutherland in 1939, white

collar crime is a crime committed by a person of respectability and high social status in the course of
his occupation. Fraud is a wing of white collar crime, at some cases, fraud does not cause a loss of
money, property or legal right but still be an element of another civil or criminal wrong. In other to
reduce the incidence of fraud, developing countries like Nigeria have enacted laws, set up tribunals,
probe panels and established anticorruption institutions to combat the menace of fraud and corruption
(Dada, Owolapi and Okwu, 2013). Existing literature shows that this laws have not really reduced fraud
in the Nigerian public sector.
There is daily occurrence of financial fraud and other corrupt practices which are perpetrated
almost unnoticed and uninvestigated in the Nigerian public sector. Little or no attention has been paid
to a proper implementation, initiation and setting up of adequate scientific application of investigative
accounting technique and skills to reduce the occurrences of fraud. The media is filled up with a
myriads of reports in respect to several degree of corrupt practices perpetrated in the Nigerian public
sector. Several cases of fraudulent acts have been reported. Ikhilae (2015) reports that ICPC filed a
charge against five directors of the ministry of Niger Delta Affairs accusing them of, among others,
defrauding the ministry of ₦605 million. Turker (2015) updated that EFCC have held charges on fraud
and money laundry on several top government officers. A 2012 study by Oboh reveals that between
2007 and 2009, NNPC over deducted funds in subsidy claim to the time of ₦28.5 billion. The Auditor-
General for the federation submitted that in an audit examination. The author found out that FIRS
revenue were lately remitted to CBN by the collecting banks and further noted that there was no
documentary evidence to authenticate the payment of the penalties and interest amounted to ₦172,685
million to the federation account in 2009. A cases of NCS audit examination shows a disagreement
between the figures of revenue obtained from the custom and the figures of revenue remitted to the
federation account by NCS and this gave rise to a difference of ₦11.122 billion. A close look at fraud
in Nigeria is instigated by top government officials. Citing the case of aviation 5.6 billion scam in 2009
which was perpetrated by the minister of Aviation (Ojeme, 2010). In Kogi state, 1.9 billion scam was
perpetrated by the commissioners for LG and Chieftaincy matters and agriculture respectively, and LG
chairman. EFCC media reports that in 2009-2010, Nigeria has lost 13.8 billion to fraud (Oboh 2012).
The revelation of previous studies, identifies that quality assurance is lost in the public sector. It
further shows the level of compromise, lack of integrity, absence of credibility, internal administration
incompetence that has enveloped the Nigerian public sector. The public sector needs serous
intensification in the aspect of financial checks and balances, traditional auditing skills and application
of conventional accounting methods cannot police and visibly gun down the crime of financial fraud in
government ministries, parastatals and agencies. An investigative mechanism that is more modern,
computerized, sophisticated, strategic, tactical, insightful need to be put in place to check mate finance
issues in public offices (Gbegi and Adebisi 2017).
2.1.2 Investigative Accounting

Forensic accounting otherwise known as investigative accounting employs accounting, auditing
and investigative skills to conduct an examination into a company’s financial reports. Investigative
accounting makes use of an analytical method of accounting suitable for court processes. Investigative
accounting is a unique area of the accounting profession that involves the engagements that result from
actual or anticipated disputes or litigation. Investigative accountants also referred to as forensic
accountants. Investigative accountants are expected to give expert reports as well as evidences in a
competent court eventual trials. Investigative accounting engagements can fall into the following
categories:
i. Economic damages
ii. Securities fraud
iii. Tax fraud and
iv. Computer forensic i.e. e-discovery. (wikipedia)
The investigative techniques also encompass the determination of whether criminal matters
occurred such as securities fraud, employee theft, and falsification of figures in financial statement.

3. Methodology
The study adopted the survey research design in seeking the opinions of the respondents. A well-
structured and validated questionnaire was utilized in sourcing responses from the selected respondents
on forensic accounting techniques and its relevance in mitigating fraud in the public sector.
3.1 Study Area and Focus

The study was carried out in Taraba state, Nigeria to seek the opinions of Public sector
Accountants and Accountants in the Academia on the relevance of forensic accounting methods in the
mitigation of fraud and other financial misappropriation in the public sector.
3.2 Population
The population is categories thus:
i. Public Sector Accountants (PSA)
ii. Accountants in the Academia (AA)
(Adopted and modified from Saidu, 2015)
In light of the above, the respondents were drawn from the Ministry of Finance, Office of the
Accountant General of the State, Office of the Auditor General for the State, Federal University
Wukari, Taraba state, Taraba State University, Jalingo and Kwararafa University Wukari, Taraba state.
10 Accountants were randomly selected from the MOF, AGS and AuGS offices, while 15 Accountants
both Teaching and non-teaching staff were selected from Federal University Wukari, Wukari, Taraba
State University, Jalingo and Kwararafa University Wukari, Taraba state. In this regards, the sample
size was pecked at 75.
3.3 Instrumentation and Method of Analysis

A well-structured questionnaire was used in gathering data from the respondents. (Questionnaire
was adopted and modified from Efiong, 2012 and Saidu, 2015). Cronbach alpha was used in testing the
reliability of the instrument. Descriptive statistics was used in presenting the data showing frequencies,
percentage in charts. Pearson Poison and Spearman rank correlations was used in analyzing the
relationship between the variables employing the use of SPSS 21.
3.4 Data Presentation
Figure 1: Forensic accounting awareness
80
70
60
50
40
30 Not aware
20
10 Aware
0
Frequency Percentage
Aware 71 94,70%
Not aware 4 5,30%
Aware Not aware
The chart explains the level of forensic accounting awareness among Accountants in both the
academic institutions and ministries in consideration. 94.70% out the total 75 Accountants

consulted affirmed a positive knowledge of forensic accounting while 5.30% have no knowledge of
wing of accounting termed forensic. The respondents who indicated a lack of forensic accounting
knowledge emanated from the ministry. The Academics indicated a full knowledge of forensic
accounting as a result of it being taught as a course in the institutions and the regular assess to
published works on the subject.
Figure 2: Utilization of forensic accounting in MDAs?
73,30%
80,00%
70,00%
60,00%
50,00%
40,00%
30,00%
14,70% 12,00%
20,00%
10,00% Series1
0,00%
Yes No Partially
The chart 2 reflects the level of forensic accounting usage in MDAs and Institutions in accounting
processes in the organizations.
 The indications show a 14.70% positive response that forensic accounting is used in the
ministry or institution. Chartered and certified accountants who have acquired some forensic
skills have shown that their presence in the ministry and those in the institution have
necessitated the use of forensic techniques in monitoring transaction and ensuring the no or
minimal occurrence of fraud.
 An uncomfortable 73.30% haven’t felt the touch of forensic accounting usage in the
organization. The negative response rose out of the fact that the organization, does have an
employed forensic accountant/auditor and the accounting process and procedures used in the
organization doesn’t depict forensic accompaniment. Forensic accounting is digital based, and
this MDAs and the institutions are not fully using digital gadgets in carrying out transactions.
 The partial indication of the presence of forensic accounting in some ministries and institutions
is attributed to the quarterly or annual visit of external auditors who forensic accounting
inclined or certified and are responsible for carrying out audit examinations which may at most
cases involve the use of their forensic skills in tracing records and trying to uncover fraudulent
transactions.

Figure 3: Personal knowledge level of Accountants on forensic accounting in MDAs
70,00%
60,00%
50,00%
40,00%
30,00%
20,00%
10,00%
0,00%
VERY HIGH
HIGH
LOW
Very high High Low

Series1 20,00% 66,70% 13,30%
The individual forensic accounting knowledge of Accountants in an organization will

determine the level of forensic accounting techniques utilization in the organization.
 The very high indication of 20% is drawn from the chartered and certified Accountants in
the MDAs and institutions.
 Indications from other Accountants shows that 66.70% of the respondents have a good
knowledge of forensic accounting.
 13.30% of the consulted Accountants have a low knowledge of the branch of accounting
termed forensic.
Reliability Test
Table 1. Reliability Statistics

Cronbach's Cronbach's Alpha N of Items
Alphaa Based on
Standardized
Itemsa
.707 .697 5
a. The value is negative due to a negative average
covariance among items. This violates reliability
model assumptions. You may want to check item
codings.
Interpretation
The internal consistency of the instrument used was reliable showing a coefficient of .707 at a less
than 10 item entering. This implies that 70.7% of the variance in the score is reliable variance. 29.3& is
error variance.

Correlation Test
Table 2. Symmetric Measures
Value Asymp. Std. Approx. Approx.
Errora Tb Sig.
Nominal by Contingency
.477 .001
Nominal Coefficient
Interval by Interval Pearson's R .079 .127 .678 .000c
Ordinal by Ordinal Spearman Correlation .066 .119 .569 .000c
N of Valid Cases 75
a. Not assuming the null hypothesis.
b. Using the asymptotic standard error assuming the null hypothesis.
c. Based on normal approximation.
The opinions of the respondents to the relationship between forensic accounting relevance to
extenuate fraud oriented occurrence in the Nigerian public sector differ. The above result of a test of
symmetric opinions using Pearson’s correlation show .079 positive affirmation to the fact forensic
accounting can reduce the occurrence of fraudulent acts especially digitally manipulated frauds.
Ranking the responses of the Accountants according to PSA or AA, professionally certified or not
professionally certified, level of forensic accounting knowledge, and applicability of forensic
accounting in organization, the opinions show .066 positive avouchment to forensic accounting as a
palliate to fraud.
4. Conclusion and Recommendation

The conclusion of the study is based on the responses of the respondents in the location of the
study within the time considered. The applicability of this conclusion may not be 100% lotion in other
places.
a. The knowledge level of Accountants in the state on forensic accounting and its applicability is
low.
b. There is a high rate of lack of Forensic accounting experts.
c. Digitalization of accounting transaction in MDAs will ease the use of forensic techniques which
will reduce misappropriations and pen stealing.
d. Forensic accounting owns a part in the fight against financial crimes and must be fully utilized
to achieve this.
The study thus recommends that:
a. The government should invest in training Forensic accountants.
b. Accountants should endeavor to update their knowledge of the new wings springing in the
profession, which forensic is not left out.
c. MDAs should digitalized transaction by using professional software. This will ease forensic
auditing and reduce untraceable transactions.
5. References
Adegbie, F. F. & Fakle, A. S. (2012). Economic and financial crime in Nigeria. Forensic Accounting
as antidote. British Journal of Arts and Social Sciences, 6(1), 37-50.
Dada, S. O., Owolabi, S. A. & Okwu, A. (2013). Forensic accounting a panacea to alleviation of
fraudulent practices in Nigeria. International Journal of Business Management and
Economic Research, 4(5), 787-792.
Economic and Financial Crime Commission Act (2004): Federal Government Press, Lagos,
Nigeria.
Efiong, E. J. (2012). Forensic Accounting Education: An Exploration of Level of Awareness in
Developing Economies - Nigeria as a Case Study. International Journal of Business and
Management, 7(4), 26–34. http://doi.org/10.55-39/ijbm.
Emeh, Y. & Obi, J. O. (2013). An empirical analysis of forensic accounting and financial fraud in
Nigeria. African Journal of Social Sciences, 4(2013), 112-121.

Gbegi, D. O. & Adebisi J. F. (2014). Forensic accounting skills and techniques in fraud accounting
skills and techniques in fraud investigation in Nigerian Public Sector. Mediterranean Journal
of Social Sciences 5(3) 243-252. Retrieved on 12th October, 2018.
Herbert, W. E., Tsegba, I. N., Ene, E. E., & Onyilo, F. (2017). The Rise of Fraud Examination and
Forensic Accounting in Africa: The Nigerian Experience. Archives of Business Research,
5(4), 1-18.
Modugu, K. P. & Anyaduba, J. O. (2013). Forensic Accounting and Financial Fraud: an empirical
approach. International Journal of Business and Social Science, 4(7), 281-289.
Oboh, A. (2012). “Probe of the Oil Sector”. Daily Independent Vol.11 No 22230.
Ojeme, S. (2010). Forensic Accounting “LL Reduce Fraud in Financial Industry. Retrieved on
13/6/2018 from http://www.gaflbcstocwrLcom.
Okoye, E. I. & Gbegi, D. O. (2013). Forensic accounting: A tool for fraud detection and prevention
in the public sector. (A study of selected ministries in Kogi state). International Journal of
Academic Research in Business and Social Sciences, 3(3), 1-19.
Razaee, Z. Crumbley, D.L. and Elmore, R.C. (2006). Forensic Accounting Education. A survey of
Academicians and Practitioners. Journal of Forensic Accounting. Vol 10. (3) pp 48 – 59.
Saidu, A. (2015). The application of forensic accounting techniques in fraud prevention and control in
Nigeria: an analysis of its practicability. International Journal of Advanced Studies in Business
Strategies and Management: pg 187-200
Sheetz, M. and Howard, S. (2006). Forensic Accounting and Financial Investigations for Non-
Experts. New Jersey. John Wiley and Sons Inc.
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International Journal of Economics & Business Zambrut

ISSN: 2717-3151, Volume 3, Issue 1, page 17 - 25

Forensic Accounting Application

Keywords: Forensic, Fraud, Investigative, Public Sector, Mitigation and Extenuation.

Zambrut.com. Publication date: March 6, 2019. 17

1.1 Statement of the Problem

1.2 Objectives of the Study

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 The fraud Triangle

2.1 Conceptual Framework

2.1.1 White Collar Fraud

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2.1.2 Investigative Accounting

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3.1 Study Area and Focus

3.3 Instrumentation and Method of Analysis

3.4 Data Presentation

Figure 1: Forensic accounting awareness

Aware Not aware

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Figure 2: Utilization of forensic accounting in MDAs?

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Figure 3: Personal knowledge level of Accountants on forensic accounting in MDAs

Very high High Low

The individual forensic accounting knowledge of Accountants in an organization will

Table 1. Reliability Statistics

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4. Conclusion and Recommendation

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Zambrut Journal, Link Access;

© Copyright 2019 International Journal of Zambrut | Zambrut, Inc.

Zambrut.com. Publication date: March 6, 2019. 25

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