CHAPTER ONE
1.0 INTRODUCTION
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.
1.1
BACKGROUND OF THE STUDY
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 tge 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.
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;
a.
To curb the menace of corruption that
constitutes the cog in the wheel of
progress
of Nigerians.
c.
To imbibe the spirit of hard work in the
citizenry and discourage ill-gotten wealth.
d.
To
identify illegally acquired wealth and confiscate it.
e.
To
build an upright workforce in both public and private sector of the economy.
f.
To contribute to the global war against
financial crimes and terrorism financing in Nigeria.
1.2
STATEMENT OF THE PROBLE
In this study, there are certain
problems that are related to the application of
forensic
auditing and the include;
1. Insufficient
skilled manpower for the use of automated tools or software.
2. Insufficient
documented materials for investigating suspects.
3. Inadequate
techniques for obtaining evidence.
4. High
cost of analysis.
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 QUESTION
Based
on the foregoing, the following research questions were formulated:
i.
Is there any significant relationship
between automated forensic auditing and fraud control?
ii.
Are there methods adopted to adequately
train forensic auditors with investigative skills?
iii.
Are these measures employed to solve the
problem of insufficient documented materials necessary for investigating
suspects?
iv.
Are these standards set for improving on
techniques that are meant for obtaining evidence?
1.5
RESEARCH HYPOTHESES
The
following are the hypotheses to be tested.
Ho1:
There
is no significant relationship between automated forensic auditing and fraud
control.
HA1:
There
is a significant relationship between automated forensic auditing and fraud
control.
Ho2:
There
are no methods adopted to adequately train forensic auditors with investigative
skills.
HA2:
There
are methods adopted to adequately train forensic auditors with investigative
skills.
H03:
There
are no measures employed to solve the problem of insufficient documented
materials necessary for investigating suspects.
HA3:
There
are measures employed to solve the problem of insufficient documented
materials necessary for investigating suspects.
1.6
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.
1.7.
SCOPE 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.
This research work was faced with
certain challenges owing to the fact that
the topic in
question is not yet widely known. VI2:
i.
Inadequate Materials: This
was the major constraint of the research work, for it was limited to few
materials and mainly on internet.
ii.
Time Factor: This
is another factor that limited the flow of this research work. Time
factor is a constraints limitation the study. Inadequate time to work due to
some school activities that restricts student from going out to research.
iii.
Distance: The
different location of where the materials are to be gathered from posed
a problem to this work, since it requires going from one accounting firm to
another to gather facts relating to the topic.
iv.
School Exeat: Here
getting permission to sign out of school is a very big problem to the
researcher. School exeat sometimes limits us student from gathering enough
material for our work.
v.
Fund: This
serves as a major constraint to the research work. Enough funds are required
in getting materials for this work.
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.
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