The Role of Forensic Audit on Management Frauds in Nigerian Deposit Money Banks

Olofinlade Samuel Oluwapelumi

doi:10.11648/j.ijafrm.20210603.11

Abstract

This study investigates the role of forensic audit on management frauds in Nigerian deposit money banks’. Specifically, the paper examines the nexus that exists between forensic audit/accounting mechanisms on prevention of management frauds in Nigeria deposit money banks. The data for this paper were obtained from secondary source which were gathered from the audited financial statements as well as accounts of some of the listed deposit money banks in Nigeria. The study is descriptive and highly empirical as it involves the use of panel regression technique as tool of analysis. The result findings from regression analysis reveal from hypothesis one that there exist a meaningful and positive nexus between forensic audit and prevention and curbing of management fraud in Nigeria deposit money banks, also findings outcome from hypothesis two reveal that there is a strong and positive nexus between forensic audit mechanism and faithful representation of financial statements while the third hypothesis establish a strong correlation between financial accounting and understandability of financial statements. This affirms that forensic accounting/audit mechanisms are related tools towards preventing management frauds, faithful representation of financial records and understandability of financial statements. The study therefore recommends that the financial regulators as well as deposit money banks in Nigeria should undergo training and re-training of their strategic level management and staff on the intricacies of forensic accounting/audit so as to maximize shareholders wealth and be fair to other stakeholders.

Highlights

Many dreams of successful shareholders and promoters would have been unsuccessful and non-achievable if not for involvement of different managers in different fields
In the height of these, they engage in management earnings which may be known as management fraud or financial statements frauds
The objective of this study is to: 1) investigate the role of forensic audit on management frauds in Nigerian deposit money banks. 2) to investigate the nexus between forensic audit and faithful representation of financial statements; 3) to examine if any meaningful nexus exists between forensic accounting and qualitative characteristics of financial records

Summary

Introduction

Many dreams of successful shareholders and promoters would have been unsuccessful and non-achievable if not for involvement of different managers in different fields. Management consists of different professionals from diverse fields who are engaged to carry on the activities of the organization in order to achieve organisational objectives. They make use of various methods and set divergent policies so as to safeguard company’s resources and achieve set goals. Management fraud is mainly carried out by top level management which is persuaded with robust benefits so as to achieve perfect expectations of the capital market This is done in order to keep firm’s stock price at dividend attractive and sound position for return on investment for willing and current investors or entrepreneur. Some top management do involve in income smoothing so as to hide the truth from the auditors and other stakeholders

Objectives

Methods

Findings

Conclusion