An Evaluation of the Relevance of Forensic Accounting on Fraud Detection in the Nigerian Public Sector: A Case Study of Bayelsa State, Nigeria

Introduction

Government spending has always been of significance but more so in current times where the government budget runs in to trillions of naira (or hundreds of billions of USD) (Akinlo, 2013; Aregbeyen & Kolawole, 2015). This spend is so massive today and largely being funded by debts that the Nigerian public through its legislators is demanding to know whether the huge outlays of funds are being judiciously spent or whether they should be spent at all. Officials and employees who manage public sector activities are by virtue of that duty, required to render accounts of their activities to the public. Despite this, the incidence of fraud continues to increase across public sector organizations and across nations. Although fraud is a universal problem that no nation is immune to, developing countries such as Nigeria however tend to suffer more from fraud in the public sector as it directly hampers the growth of the economy (Okoye & Gbegi, 2013; Abdullahi & Mansour, 2018).

Fraudulent practices and corruption have resulted in poor infrastructural development, poor investment in security, poor development of health and education, weak citizen empowerment and job creation which all contribute to the state of insecurity present in Nigeria currently (Adebisi & Gbegi, 2015; Nwankwo, 2014; Page, 2018). The menace of fraud in the Nigerian public sector dates back to the colonial era when administrators were deployed to govern different areas of the country and they instead used their newfound powers to enrich themselves (Abdullahi & Mansor, 2015; Owolabi, 2007). The problem however continued to persist after the country gained independence due to different corrupt military regime ruling one after the other (Abdullahi & Mansor, 2015; Owolabi, 2007). The first democratic administration took over in 1999 under the leadership of General Olusegun Obasanjo (a retired army general and former head of state during the military regime) and marked the beginning of Nigeria’s fight against fraud and corruption.

The Nigerian government has since taken several steps to address the evil of fraud and corruption in the society for example the enactment of legislations to criminalize all corrupt conducts including unjust enrichment. Several laws were enacted including Independence corrupt practices commission (ICPC) Act, 2000, Economic and Financial Crimes Commission (EFCC) Act, 2004, Money laundering (Prohibition) Act, 2004, Public Procurement Act, 2007, Fiscal Responsibility Act, 2007. The ICPC Act 2000 and the EFCC Act 2004 formed these respective bodies who are charged with the investigation and prosecution of fraud in Nigeria. Although they have enjoyed some success, the menace of fraud nonetheless prevails (Ngwube & Okoli, 2013).

Forensic accounting evolved in response to growing fraud related cases as a brief of all other investigation related areas in uncovering fraud. The increasing sophistication of fraud requires that forensic accounting be added to the tools necessary to bring about the successful investigation and prosecution of those individuals involved in criminal activities (Moduga & Anyaduba, 2013). For instance, the scandals that recently rocked the corporate world with classical examples being the oft cited Enron and WorldCom cases have highlighted the need for forensic accounting. The extent of the incidence of fraud has made traditional auditing and investigation inefficient and ineffective in detecting fraud (Oyerogba, 2021). Forensic accounting is a rapidly growing field of accounting that describes the engagement that results from actual or anticipated dispute or litigations (Amake & Ikhatua, 2016). The word forensic translates to being suitable for use in a court of law, and accountants generally operate to that standard (Crumbley, Heitger, & Smith, 2005). Forensic Accounting therefore is an investigative style of accounting used to uncover the incidence of illegal financial activities.