Forensic auditing mechanism and fraud detection: the case of Nigerian public sector

Abstract

PurposeThis study investigates the perception of professionals in the field of accounting, and those associated with forensic auditing, about the knowledge and skills, experience and technique that a forensic auditor should possess to provide high-quality services in fraud detection. The study also shows the impact of forensic auditing tools on fraud detection.Design/methodology/approachWith the use of a self-administered questionnaire, the study adopts a survey design in which 298 respondents participated. Data were subjected to descriptive statistics (ranking, mean and standard deviation), inferential statistics (binary logistic regression and ordinary least square regression).FindingsThe findings indicate that adequate knowledge of economic damage calculation and financial statement valuation is essential for forensic auditors' service. The results also reveal that forensic auditor skills and techniques is a significant predictor for fraud detection in the Nigerian public sector.Practical implicationsThe paper draws attention of the federal government parastatals to the need to improve their internal control system to reduce the fraudulent practices in their parastatal. The study also draws the attention of the Nigeria University Commission and the Institute of Chartered Accountants of Nigeria on the needs for revision of the accounting curricular for the training of accounting graduates and professional accountants in Nigeria.Social implicationsThe paper is of importance to other developing nation as it provides empirical evidence on the needs to do periodic forensic audits of government corporations.Originality/valueWith the persistent increase in the number of fraudulent cases, current views of those associated with forensic auditing (judiciaries, parastatals, forensic auditors and academics) on mechanisms for timely detection of fraud are needed.