Impact of Forensic Accountants on Distress Quoted Companies in Nigeria
Chapter One
Objective of the study
- To Assess the Current Financial Status of Distressed Quoted Companies
- To Evaluate the Role of Forensic Accountants in Detecting Financial Irregularities
- To Investigate the Impact of Forensic Accounting on Corporate Governance Practices
CHAPTER TWO
REVIEWED OF RELATED LITERATURE
The Concept of Forensic Accounting
Forensic accounting is a recent development in the accounting profession. It is the advancement of the normal traditional auditing as it provides an accounting analysis that is suitable to the organization in resolving any dispute that may result to court settlement. Okoye (2006:34) defines accounting “as the process of identifying, measuring and communicating economic information to permit informed judgment and decision by the users of the information”. Oladipupo (2005) opined that financial investigation is an examination of the record and accounts of an organization for a special purpose. The integration of accounting, auditing and investigation yield the specialty known as forensic accounting (Edward, 2021). Forensic accounting is focused, therefore, upon both the evidence of economic transactions and reporting as contained within an accounting system, and the legal framework which allows such evidence to be suitable for the purpose of establishing accountability and/or valuation (Okolo, 2007)
Whereas accounting is concerned about the preparation of financial statements while auditing is focused on providing professional independent opinion, on the other hand forensic accounting goes step further to investigate in order to provide litigation support on fraudulent acts from the financial statements. Forensic accounting examines financial statements beyond the normal figures. It examines the intentions accruing with the processes of preparation of the financial statements to provide litigation support for court judgments. Forensic accounting is accounting that is suitable for legal review, offering the highest level of assurance, and including the now generally accepted connotation of having been arrived at in a scientific fashion (Crumbley, 2006). Forensic accounting remains the most challenging and sophisticated area in the financial sector. Although, the profession does not possess a formal definition, Razaee, Crumbley and Elmore (2006) defined forensic and investigative accounting as the application of financial skills and an investigative mentality to unresolved issues, conducted within the context of the rules of evidence. Forensic accounting as revealed by Sheetz (2006), is simply the use of accounting discipline to help determine issues of facts in business litigation. In the same mind Manning (2010) defined forensic accounting as the application of financial accounting and investigative skills to a standard acceptable by the courts to address issues in disputes in the context of civil and criminal litigation. To Dimilola and Olofinsola (2007) forensic accounting is the application of accounting methods, investigative activities and law procedures to detect and investigate financial crimes and related economic misdeeds. It is the advancement of external auditing.
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 Impact of forensic accountant on distress quoted companies in Nigeria. Lagos State secretariate 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 Impact of forensic accountant on distress quoted companies 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 Impact of forensic accountant on distress quoted companies in Nigeria
Summary
This study was on ascertain Impact of forensic accountant on distress quoted companies in Nigeria. Three objectives were raised which included: To Assess the Current Financial Status of Distressed Quoted Companies, to Evaluate the Role of Forensic Accountants in Detecting Financial Irregularities and to Investigate the Impact of Forensic Accounting on Corporate Governance Practices. A total of 77 responses were received and validated from the enrolled participants where all respondents were drawn from Lagos State secretariate. Hypothesis was tested using Chi-Square statistical tool (SPSS).
Conclusion
The study on the impact of forensic accountants on distressed quoted companies in Nigeria reveals the significant role of forensic accounting in addressing financial challenges and enhancing corporate governance practices. Forensic accountants play a crucial role in detecting financial irregularities, improving transparency, and restoring investor confidence within distressed companies. By leveraging their expertise in fraud detection, financial analysis, and regulatory compliance, forensic accountants contribute to the financial recovery and sustainability of distressed quoted companies in Nigeria.
Moreover, the study highlights the importance of regulatory support, industry collaboration, and stakeholder engagement in promoting the effective utilization of forensic accounting practices. Regulatory authorities should strengthen enforcement mechanisms, enhance corporate governance standards, and provide incentives for companies to invest in forensic accounting resources. Industry stakeholders, including corporate executives, auditors, investors, and regulators, should recognize the value of forensic accountants in safeguarding financial integrity and promoting market stability.
Recommendations
- Regulatory authorities should strengthen oversight mechanisms and enforcement actions to deter financial misconduct and promote compliance with accounting and auditing standards. Increased regulatory scrutiny of financial reporting practices and internal controls can help mitigate the risk of fraud and enhance investor protection.
- Distressed quoted companies should invest in forensic accounting expertise to proactively detect and prevent financial irregularities. Employing certified forensic accountants or engaging external forensic accounting firms can provide specialized skills and resources to address complex financial challenges effectively.
- Industry associations, professional bodies, and academic institutions should collaborate to promote knowledge sharing, training, and capacity building in forensic accounting practices. Joint initiatives, such as workshops, seminars, and research forums, can facilitate the exchange of best practices and promote continuous professional development in the field of forensic accounting.
- Companies should strengthen corporate governance practices to enhance transparency, accountability, and ethical conduct. Implementing robust internal controls, independent oversight mechanisms, and whistleblower protection programs can help prevent financial misconduct and foster a culture of integrity within organizations.
References
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