Fraudulent practices in Nigeria banks have led to increased losses and collapse of commercial banks, hence the need to use forensic approach services to detect and prevent such fraudulent activities. The banking industry is a very important institution with many internal controls in order to overcome the fraudulent practices. The objective of this study was to examine the usefulness of forensic approach to bank Auditing and investigation in Nigeria , the most prevalent type of fraud and to establish the major areas of application of forensic accounting services. The data collection instrument preferred for the study was a questionnaire. Findings from the study saw that fraud detection and prevention increased when forensic accounting services was employed. The sample size of 179 were used and was chosen among the 9 commercial banks in Nigeria using Bowleys proportional allocation formula Data were analyzed using table and simple percentage, hypothesis were tested using chi-square statistics ( x2). The study findings indicated that the application of forensic approach services by banks led to increased fraud prevention in the commercial banks and the highest application was on enhancing quality of financial reporting.
1.1 Background to the Study
Considerable scandals that have been experienced in recent years in commercial banks in Nigeria have reduced the confidence to financial and non financial statements leading to improved regulations governing both the banking sector and the accounting practices as well. Due to this, forensic accountancy as a profession with its services as litigation support, consultancy expert testimony and fraud auditing (investigation accountancy) filled a large gap in prevention of such frauds. History has shown that despite the presence of Sarbanese-oxley legislation of 2002 in the United States and the publishing Enron and other big companies in US, employees have continued to manipulate even the best internal controls available for their own personal gain. These scandals have financially devastated employees and investors and severely harmed the reputation of auditors, analysts and corporate managers. It is in realization of this that various initiatives have been put into place to enhance and enforce the applicability of forensic accounting services by use of the right people, tools, techniques and insight to prevent and detect fraudulent activities and to ensure that the applicability of such services are effective. Modern Information technology has even increased the pace of electronically manipulated frauds in the complex business environment. According to Fraud Survey of KPMG (2008), the total value of fraud reported was $301.1 million with an average value for each organization of $1.5million in Australia and New Zealand of 420 organizations surveyed which represented 20% of the 2018 surveys distributed. In May 2011 in a response to spiraling fraud cases, the CBN demanded an audit of automated payment processing systems operated by commercial banks after their investigations showed the rising cases of fraud were in fact being initiated by bank employees at the point of entry of information into their internal payment systems. Due to this, this study focused on the impact of forensic accounting services on fraudulent practices in the commercial banks in Nigeria. Theoretical prediction indicated that, the application of Forensic Accounting Services helps to prevent fraud occurrence in the commercial banks. According to Gollwitzer (1990), the mindset of a fraud specialist will lead them to search for pertinent information pertaining to frauds. When people are much aware that their fraudulent activities were to be disclosed by the application of forensic accounting services, they feared to commit fraud in the banking industry.
1.2 Statement of the Problem
The failure of statutory audit to prevent and reduce misappropriation of fund and an increase in corporate crimes have put pressure on the professional accountant and legal practitioner to find a better way of exposing this financial crimes. The problem is incessant financial crimes in the corporate world require regular audit. Forensic auditing should be responsible for digging out frauds committed through application of auditing, accounting, and investigative techniques in order to come up with sufficient evidence that can be used in court proceedings (Albrecht et al, 2001). Although a number of studies had been done on the concept of forensic accounting services, none of them had focused on the impact of forensic accounting services on fraud prevention and detection specifically in commercial banks in Nigeria hence making this study justifiable as it was to address if such applications had an impact on prevention and detection of fraud in our financial institutions.