Forensic Accounting and Litigation Support: The Role of Expert Witnesses in Legal Proceedings (Published)
This research examines the role of forensic accounting and litigation support in uncovering complex financial transactions and schemes used in money laundering cases in Nigeria. The study applied agency theory, developed by economists such as Jensen and Meckling, Ross, and Fama and Jensen, and used a qualitative research design, secondary sources, and content analysis to analyze the data collected. The study found that the cases of James Ibori, Darius Ishaku, and Diezani Alison-Madueke demonstrate the importance of forensic accounting and litigation support in uncovering complex financial transactions and schemes used in money laundering cases in Nigeria. The use of expert witnesses who provided forensic accounting evidence played a significant role in securing the conviction and forfeiture of assets of the defendants in these cases. Expert witnesses helped establish the existence and extent of money laundering activities, identified and traced the source and destination of laundered funds, explained complex financial transactions and schemes, demonstrated the link between defendants and their accomplices, estimated the value and location of assets acquired with laundered funds, and provided credible and reliable information that withstood cross-examination. The study also found that the expert witnesses helped educate and inform the judges or jury about forensic accounting concepts and techniques, simplified and clarified complex financial issues, enhanced the credibility and persuasiveness of the prosecution’s case. The research concludes that forensic accountants must invest in investigative skills and uphold the qualities of honesty and objectivity to be effective expert witnesses in litigation support services. Furthermore, the study revealed that forensic accounting specialists can be invaluable in the collection of evidence, as they can help legal teams unearth information that might define the framework of litigation and detect fundamental issues that might not be noticeable to others.
This study evaluates the effect of red flags on fraud detection in Micro finance banks in Awka Metropolis. Hypotheses were raised to determine the significance of the effect. Red flags were measured using: Structural red flags, Personnel red flags financial red flags and internal control/operational red flags. The study adopted a descriptive as well as survey research design. A well-structured self-administered questionnaire was used as the main tool for data collection and was administered to 180 respondents out of which 165 were retrieved and appropriately filled. Reliability of the research instrument was calculated and the Cronbach’s alpha coefficient was 0.76. Data were analyzed using multiple regression analysis. Preliminary analysis such as descriptive statistics and correlation analysis were also conducted to ascertain the normality and check for the presence of multi-colinearity among the variables used. From the hypotheses tested, the results indicated that structural red flag, financial red flag and internal control/operational red flag characteristics have positive and significant effect on fraud detection in Micro Finance Banks in Awka Metropolis. While Personnel red flag characteristics have statistical inverse effect on fraud detection. The study recommended among others that a whistle blower equivalent should be established to provide secrete information on any shady dealings or any false records in the accounts.
Citation: Nonye Stella Agubata (2021) Alertness to Red Flags and Fraud Detection in Micro Finance Banks in Awka Metropolis, European Journal of Accounting, Auditing and Finance Research, Vol.9, No. 9, pp.41-54
This paper aims to provide evidence of a missed opportunity to detect and halt financial fraud and bankruptcy of Enron Corporation early enough. The paper utilizes data from the financial statements of Enron Corporation 10K reports in the US SEC Edgar Data Base from 1997- 2001 to detect financial fraud and imminent bankruptcy of Enron Corporation. Financial fraud and bankruptcy were assessed in terms of Z-score and Days’ Sales Receivables, Gross Margin, Asset Quality, Sales Growth and Total Accruals to Total Assets indices. The modified Altman Z-Score Index and Beneish Models were used to determine the indices for Enron Corporation. The results revealed that the modified Altman Z-Score Model yielded score indexes which signified financial statement manipulation and bankruptcy. While the Beneish Model yielded indices were found to be higher than the non-manipulation means thresholds implying that, receivables and revenues were out of balance for some years. The analysis and results in this paper provide evidence that Enron Corporation engaged in financial fraud resulting into bankruptcy and there was a missed opportunity to detect and halt the financial fraud and bankruptcy as early as 1998 if an effective corporate governance system had been in place. Strengthening of corporate governance frameworks, adoption of proactive strategies to corporate failures and vigilance of the stakeholders in public firms are recommended as some of the ways of avoiding similar scandals in future.
Financial statement fraud likelihood determinants in micro financial institutions in Cameroon (Published)
The state of health of an organisation is scientifically diagnosed from its financial statements. Where the financial statements’ quality is compromised, decisions taken based on such fraud infected financial statements could lead to devastating consequences. Many consumers of micro-financial services, sometimes express worries about the quality of financial reports issued. These worries are further compounded by empirical studies which disclose that financial statement fraud though the least common, is the most costly to an organisation. As a consequence this study sets out to investigate the financial statement fraud likelihood determinants prevalent in micro financial institutions in Cameroon. Data was collected through a survey, analysed and regressed. The empirical results revealed that fraudulent audit confirmations, falsification of financial amounts, alteration of accounting records, misrepresentations, and improper capitalisation of expenses are the main likelihood determinants. Although financial statement fraud cannot be completely eradicated given that they are perpetuated by human beings who themselves are imperfect, it can be significantly mitigated when micro financial institutions become conscious of the events or conditions that motivate the commission of financial statement fraud. Micro financial institutions are encouraged to create enabling environment for the stagnation of these elements by strengthening the internal control systems of assets, liabilities, expenses, and revenues. Independent audits be carried out irregularly, perpetrators of fraud held responsible, and employees treated decently and fairly. Management should introduce financial management ethics to employees and be very sensitive to behavioural red flags.
The Role of External Auditors in Error and Fraud Discovered in the Financial Statements in the Jordanian Public Shareholding Companies (Industrial) (Published)
The Purpose of this study is to identify the role of external auditors in error and fraud discovered in the financial statements in the Public shareholding industrial Companies in Jordan. It is also about recognizing the role of external auditors with the duties assigned to them when auditing financial statements and discovering error and fraud in those statements. The current study also concentrated on the principle of confidentiality whether it should prevent the external auditor from informing the competent authorities about any fraud or error that takes place in the company they are auditing. The researcher chose a random sample of external auditors affiliated to Jordan Association of certified public Accountants, who audited the financial statements of the public shareholding industrial companies in Jordan. The study produced a set of important results and recommendations the most prominent of which was that there is a statistically significant relationship between the prompt reporting by the auditor about the existence of error or fraud cases and the maintenance of privacy towards the establishment they are reviewing its accounts. There is also a statistically significant relationship between uncovering error and fraud in the financial statements of the companies and the responsibility shouldered by the external auditor. The researcher also advises the shareholders to follow up the financial systems of the companies they participate in and to demand for periodical modernization of those systems.
WHISTLEBLOWER REWARD AND SYSTEMS IMPLEMENTATION EFFECTS ON WHISTLEBLOWING IN ORGANISATIONS (Published)
Whistleblowing has become a major concern globally following tremendous organisational misconduct that had befallen huge organisations and has ultimately led to the collapse of some organisations, with its trickling down effects translating into global economic meltdown. Several countries have adopted and signed up to whistleblower acts including Ghana as a way of addressing this challenge of corruption and fraud, for which some organisations have implemented whistleblowing systems and provided reward systems to encourage whistleblowing. The study employs fisher’s exact test to analyse the effect of whistleblowing implementation systems in organisations in Ghana and its associated reward systems effects on whistleblowing. It observes that, these have not been as effective as desired, particularly as whistleblowing implemented systems have minimal or no effect and reward systems intended to motivate whistleblowing fails to motivate its essence such that, the presence of these systems have not impacted on organisational productivity
The New Fraud Diamond Model: How Can It Help Forensic Accountants In Fraud Investigation In Nigeria? (Published)
Fraud has been associated with human organisation from recorded history. Investigating and detecting fraud is not an easy task and requires thorough knowledge about the nature of fraud, how it can be committed and concealed. Forensic Accountants are increasingly being asked to play an important role in helping organisations investigate, prevent and detect fraud. This paper aims at broadening Forensic Accountants knowledge about fraud and why it occurs. The paper adopts secondary source of data to explain Wolf and Hermanson fraud theory and shows its relevance, presents the other fraud models and relates them to Wolf and Hermanson’s model, and proposes a “New Fraud Diamond Model’’ that Forensic Accountants could use when assessing the risk of fraud in Nigeria.
Whistleblower Reward and Systems Implementation Effects on Whistleblowing in Organisations (Review Completed - Accepted)
Whistleblowing has become a major concern globally following tremendous organisational misconduct that had befallen huge organisations and has ultimately led to the collapse of some organisations, with its trickling down effects translating into global economic meltdown. Several countries have adopted and signed up to whistleblower acts including Ghana as a way of addressing this challenge of corruption and fraud, for which some organisations have implemented whistleblowing systems and provided reward systems to encourage whistleblowing. The study employs fisher’s exact test to analyse the effect of whistleblowing implementation systems in organisations in Ghana and its associated reward systems effects on whistleblowing. It observes that, these have not been as effective as desired, particularly as whistleblowing implemented systems have minimal or no effect and reward systems intended to motivate whistleblowing fails to motivate its essence such that, the presence of these systems have not impacted on organisational productivity.