Automated Forensic Auditing and Fraud Control-in-Nigeria
Chapter One
Objective of the study
- To determine why there are insufficient skilled manpower needed for operating automated tools.
- To investigate the reasons for insufficient documented materials.
- To examine the cause of not obtaining enough techniques used as evidence.
- To evaluate the reasons for high cost of analysis.
CHAPTER TWO
REVIEW OF RELATED LITERATURE
FRAUD DETERRENCE AND DETECTION
The fact that fraud cannot be completely eliminated does not guarantee that it should be ignored, for it can be controlled to reduce losses. Then, this control for fraud brings about fraud deterrence and detection. Fraud deterrence is the proactive identification and removal of the causal and enabling factors of fraud. It is based on the premise that fraud is not a random occurrence, but it occurs when the conditions are for it to occur. its purpose being that it proactively deter financial misrepresentation so as to ensure more accurate financial reporting and in turn increase investor’s confidence. Wikipedia (2011). However, Wiley (2006) stated that fraud deterrence is a preventive measure preferred on that improving on organizational procedures to reduce the causal factors of fraud is the best defense against fraud as they are design to reduce the risk of fraud and misconduct from occurring. On the other hand, fraud detection which is more of an act, requires innovative and creative thinking which may involve reviewing historical transactions in order to identify indicators of a non-conforming transaction that may lead to fraud. They are usually design to uncover fraud and misconduct when it occurs. Cendrowski, Martin and Petro (2006).
ELEMENTS OF FRAUD
All kinds of fraud including financial statement fraud are outcome of at least three (3) elements which include, pressure, opportunity and rationalization. These three elements make up what we call the fraud triangle. 1. Pressure or motive: it is the need for committing fraud. 2. Rationalization: The mindset of fraudster that justifies them to commit fraud. 3. Opportunity: The situation that enables fraud to occur and this often happens when internal control is weak or non-existent.
TYPES OF FRAUD
The different types of fraud which includes: Employee embezzlement, management fraud, investment scams, vendor fraud, customer fraud, miscellaneously fraud was categorized into three (3) broad headings by Keshi (2011), as internal fraud, external fraud and corruption or collusion. Internal Fraud: This is the most common form of fraud found in organizations. The perpetrators of this kind of fraud are managers (i.e. top or middle management) and employees. External Fraud: This is another form of fraud that is being perpetrated by those outside the organization, which may include customers or organized criminal. Corruption or Collusion: This is one of the most difficult kind of fraud to recognize. It is fraud perpetrated within the corporation by an inside employee and an outsider.
FRAUD THEORIES
Anomie Theory: This theory is seen as a condition of malaise in individuals, characterized by an absence or diminution of standard of values. When applies to a government or institutions anomie implied a social unrest or chaos or disorder. Chandola (2009).
CHAPTER THREE
RESEARCH METHODOLOGY
INTRODUCTION
In this chapter, we described the research procedure for this study. A research methodology is a research process adopted or employed to systematically and scientifically present the results of a study to the research audience viz. a vis, the study beneficiaries.
RESEARCH DESIGN
Research designs are perceived to be an overall strategy adopted by the researcher whereby different components of the study are integrated in a logical manner to effectively address a research problem. In this study, the researcher employed the survey research design. This is due to the nature of the study whereby the opinion and views of people are sampled. According to Singleton & Straits, (2009), Survey research can use quantitative research strategies (e.g., using questionnaires with numerically rated items), qualitative research strategies (e.g., using open-ended questions), or both strategies (i.e., mixed methods). As it is often used to describe and explore human behaviour, surveys are therefore frequently used in social and psychological research.
POPULATION OF THE STUDY
According to Udoyen (2019), a study population is a group of elements or individuals as the case may be, who share similar characteristics. These similar features can include location, gender, age, sex or specific interest. The emphasis on study population is that it constitutes of individuals or elements that are homogeneous in description.
This study was carried to examine automated forensic auditing and fraud control in Nigeria. EFCC in Portharcourt form the population of the study.
CHAPTER FOUR
DATA PRESENTATION AND ANALYSIS
INTRODUCTION
This chapter presents the analysis of data derived through the questionnaire and key informant interview administered on the respondents in the study area. The analysis and interpretation were derived from the findings of the study. The data analysis depicts the simple frequency and percentage of the respondents as well as interpretation of the information gathered. A total of eighty (80) questionnaires were administered to respondents of which only seventy-seven (77) were returned and validated. This was due to irregular, incomplete and inappropriate responses to some questionnaire. For this study a total of 77 was validated for the analysis.
CHAPTER FIVE
SUMMARY, CONCLUSION AND RECOMMENDATION
Introduction
It is important to ascertain that the objective of this study was to ascertain automated forensic auditing and fraud control in Nigeria. In the preceding chapter, the relevant data collected for this study were presented, critically analyzed and appropriate interpretation given. In this chapter, certain recommendations made which in the opinion of the researcher will be of benefits in addressing the challenges of automated forensic auditing and fraud control in Nigeria
Summary
This study was on automated forensic auditing and fraud control in Nigeria. Three objectives were raised which included: To determine why there are insufficient skilled manpower needed for operating automated tools, to investigate the reasons for insufficient documented materials, to examine the cause of not obtaining enough techniques used as evidence and to evaluate the reasons for high cost of analysis. A total of 77 responses were received and validated from the enrolled participants where all respondents were drawn from EFCC in Portharcourt. Hypothesis was tested using Chi-Square statistical tool (SPSS).
Conclusion
Nigeria seems to have acquired a name that is synonymous with corruption. As a nation, it has carved out for itself the reputation of the most corrupt in the world. Our treatment in international politics as a parish state can either be reversed nor (and our call for foreign investors) be meaningful if corruption is left un-embattled in Nigeria Chukwumaeze (2000). However the quest to combat this economic monster called fraud brought about the concept of forensic auditing as well as Economic and Financial Crime Commission (EFCC) that are out to reduce the incessant occurance of fraud in our financial system which has hampered the progress o organization’s objectives and loss of confidence by investors who prefer to invest abroad rather than risk their resources in a country like Nigeria where fraud is perpetrated by many. Owing to this, Gbadamosi (2008) is of the opinion that fraud has become a pandemic disease, surpassing geopolitical boundaries, race, ideology or the level of economic development. Although, with determination and little effort, fraud can be managed to limit financial losses as well as fraustrate and expose the criminals that victimize us all. Ezeilo (2010). However, the automated forensic tools which was discussed earlier in this research work has being a helpful tool for identifying root cause of fraudulent practices and facilitation of security measures in organizations. It also ensures the validity and reliability of information used in curbing fraudulent acts.
Recommendation
- The internal control system of every organization should be strengthened through regular audit exercise, so as to reduce the occurrence of fraudulent practices.
- Training of forensic auditor should be done regularly so as to enable them carry out investigations successfully.
- Seminars should be organized to encourage the use of automated tools by organizations, so as to make them aware of the fact that they can save more in preventing frauds unlike when the fraud has already occur.
References
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- ACFE (2002). “Report on Fraud Occurrence”, http://www.wikipedia.com. Retrieved on 11th May.
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- Apostolou, B. (2000). “Internal Fraud investigation,” Louisiana. Institute Of Internal Auditors Publications.
- Bytes, S. (2011). “Forensic tools”. http://www.securebytes.com. Retrieved on 27th June.
- Chukwu, L.C. (2010). “Auditing and Investigation”, Owerri. Benson Publications.
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