A Study On The Effectiveness Of Automated Forensic Auditing On Fraud Control In Nigeria

Project and Seminar Material for Criminology And Security Studies

A Study On The Effectiveness Of Automated Forensic Auditing On Fraud Control In Nigeria


Abstract


This study is on effectiveness of automated forensic auditing on fraud control in Nigeria. The total population for the study is 200 staff of EFCC, Abuja. The researcher used questionnaires as the instrument for the data collection. Descriptive Survey research design was adopted for this study. A total of 133 respondents made up detective assistants, detective inspectors, senior officers and junior officers were used for the study. The data collected were presented in tables and analyzed using simple percentages and frequencies


Chapter One


Introduction

1.1 Background of the Study

Mobile wise geek (2011) defined fraud as a deliberate misrepresentation that causes a form of monetary losses. All of these are usually required for an act to be considered fraud, if someone lied about his name. United states legal (2011), defined fraud an international misrepresentation of material existing facts made by one person to another with the knowledge of its falsity and for the purpose of inducing the other person to act, and upon which the other person relies with resulting injuries or damages. Fraud has been in existence from the beginning of creation, and the increase of fraud on daily basis brought about forensic auditing. Forensic auditing is defined as the activity that consist of gathering, verifying, processing, analyzing of and reporting of data in order to obtain facts and /or evidence in the area of legal of financial disputes and or irregularities including fraud and giving preventative advice. IFA (2011). Fraud is an independent criminal offence, and it is the main phenomenon that gave birth to forensic auditing, especially those related to economic crime. These economic crimes are known to be an unpleasant fact and a disheartening issue in the heart of many organizations, and the control of it, is a concern for any organization that employs employees, accountants or other hired professional that have access to the organization’s income, receipts or funds. Therefore, we are faced with the inescapable conclusion that forensic auditors are charged with the responsibility of controlling and preventing those fraudulent practices.
Brief History of Economic and Financial Crime Commission (EFCC)

The Economic and Financial Crime Commission (EFCC) has grown to a robust and reputable national institution that now commands respect. They have gained the admiration of Nigerians and the international community as a whole as the most vibrant anti-corruption fighting organization that has fought corruption to a standstill within the short time of its existence. Over the years, Nigeria suffered tremendously in her economy in the hands of corrupt leaders who for selfish reasons reduced a country like Nigeria which is rich in oil to one of the poorest countries in the world. All these brought about the establishment of EFCC.

i. Formation of the Economic and Financial Crime Commission (EFCC)

The Economic and Financial Crime Commission (EFCC) was established in 2003 by the Economic and Financial Crimes Commission Act 2002, and re- enacted in 2004 by the Act as a body corporate with perpetual succession and common seal. It has its headquarter at No 5 Fomella Street, Off Crescent, Wuse 11, Abuja. With Nuhu Ribadu as the first executive chairman until 2008 he was replaced by Fomida Waziri, and Mr. Ibrahim Lamorde was appointed the chairman of the commission on 15th February 2012 and he is still the substantive chairman till date.Its establishment was partially in response to pressure from the financial task force on money laundering (FATF), which named Nigeria as one of the 23 countries non-corporative in international communities’ effort to fight money laundering.

ii. Vision Statement:

To make Nigeria a safe and corrupt free business environment for sound health and positive image of the country.

iii. Mission Statement:

The mission statement of the commission includes;

  1. To curb the menace of corruption that constitutes the cog in the wheel of progress of Nigerians.
  2. To protect national and foreign investments in the country.
  3. To imbibe the spirit of hard work in the citizenry and discourage ill-gotten wealth.
  4. To identify illegally acquired wealth and confiscate it.
  5. To build an upright workforce in both public and private sector of the economy.
  6. To contribute to the global war against financial crimes and terrorism financing in Nigeria.

1.2 Statement of the Problem

In this study, there are certain problems that are related to the application of forensic auditing and they include;

  1. Insufficient skilled manpower for the use of automated tools or soft
  2. Insufficient documented materials for investigating suspects.
  3. Inadequate techniques for obtaining evidence
  4. High cost of analysis.

1.3 Objective of the Study

The general objectives of the study, is to examine the role of automated forensic auditing on fraud control, while the specific objectives of the study are as follows.

  1. To determine why there are insufficient skilled manpower needed for operating automated tools.
  2. To investigate the reasons for insufficient documented materials.
  3. To examine the cause of not obtaining enough techniques used as evidence
  4. To evaluate the reasons for high cost of analysis.

1.4 Research Hypotheses

For the successful completion of the study, the following research hypotheses were formulated by the researcher;

  1. H0: There is no significant relationship between automated forensic auditing and fraud control.
    H1: There is no significant relationship between automated forensic auditing and fraud control.
  2. H02: There are no methods adopted to adequately train forensic auditors with investigative skills.
    H2: There are methods adopted to adequately train forensic auditors with investigative skills.

1.5 Significance of the Study

This study of forensic auditing will be helpful to the following categories of users.

For Management:

It will serve as a reference document for management to use as a guide for investigating and controlling fraud.

For Auditors:

It will serve as a revision kit for practicing auditors in the field.

For the Public:

It will add to existing knowledge by exposing the public on the matter of fraud, making them know that even if fraud cannot be completely eradicated, it can be controlled.

For Researchers / Analyst:

It will serve for future research study.


1.6 Scope and Limitation of the Study

This study covers the activities of the Economic and Financial Crime Commission (EFCC), in Nigeria, especially the branch that is situated in Port- Harcourt. The researcher encounters some constrain which limited the scope of the study;

a) Availability of Research Material:

The research material available to the researcher is insufficient, thereby limiting the study

b) Time:

The time frame allocated to the study does not enhance wider coverage as the researcher has to combine other academic activities and examinations with the study.

c) Organizational Privacy:

Limited Access to the selected auditing firm makes it difficult to get all the necessary and required information concerning the activities.


1.7 Definition of Terms

Automation:

This is the use of control systems and information technology to reduce the need for human work in the production of goods and services.

Forensic:

Belonging to, used in or suitable to courts of judicature.

Fraud:

Irregularities involving the use of criminal detection to obtain unjust or illegal advantage.


1.8 Organization of the Study

This research work is organized in five chapters, for easy understanding, as follows

  • Chapter one is concern with the introduction, which consist of the (overview, of the study), historical background, statement of problem, objectives of the study, research hypotheses, significance of the study, scope and limitation of the study, definition of terms and historical background of the study.
  • Chapter two highlights the theoretical framework on which the study is based, thus the review of related literature.
  • Chapter three deals on the research design and methodology adopted in the study.
  • Chapter four concentrate on the data collection and analysis and presentation of finding.
  • Chapter five gives summary, conclusion, and recommendations made of the study

Chapter Five


Summary, Conclusion and Recommendation

5.1 Introduction

It is important to ascertain that the objective of this study was to ascertain a study of effectiveness of automated forensic auditing on 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 effectiveness of automated forensic auditing on fraud control in Nigeria


5.2 Summary

This study was on a study of effectiveness of automated forensic auditing on fraud control in Nigeria. Four objectives were raised which included: insufficient skilled manpower for the use of automated tools or soft, insufficient documented materials for investigating suspects, Inadequate techniques for obtaining evidence, High cost of analysis. In line with these objectives, two research hypotheses were formulated and two null hypotheses were posited. The total population for the study is 200 staff of EFCC, Abuja. The researcher used questionnaires as the instrument for the data collection. Descriptive Survey research design was adopted for this study. A total of 133 respondents made up detective assistants, detective inspectors, senior officers and junior officers were used for the study. The data collected were presented in tables and analyzed using simple percentages and frequencies


5.3 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 occurrence of fraud in our financial system which has hampered the 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 frustrate and expose the criminals that victimize us all. Ezeilo (2010). However, the automated forensic tools which were 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.


5.4 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.


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