The Usefulness of Forensic Audit in the Prevention and Detection of Fraud

 – The Usefulness of Forensic Audit in the Prevention and Detection of Fraud –

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INTRODUCTION

The incidence of fraud and misappropriation of funds in recent time poses a threat to auditing as a branch of accounting profession because of its perennial nature.

This has resulted to questions as to whether auditing actually play any significant role towards the attainment of accountability and prevention of fraud especially that which is currently happening in our major or key financial institutions.

Most of our financial institutions today fail to recognize that the phenomenon “fraud” can appear to be more dangerous when compared to other forms of problem like armed robbery attack which can only affect the institution within a short period of time, such may have no long term effect on their operations.

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However, any significant fraud committed in an institution, not only undermines or shakes up it’s financial stability but can severely affect the reputation of the institution thereby resulting to investor’s loss of confidence.

Most times, the directors write off losses of fraud (including money laundering) under the general heading of “bad debt” rather than admitting that there have been a general failure to exercise or implement proper safeguards in the system of internal checks and control or managerial negligence in applying or perfecting the appropriate oversight to routine business process where institutions funds and assets are at risk.

In order to counter, stop and prevent the perpetration of such frauds comes forensic auditing or accounting.

1.2 Statement of the Problem

This topic “the usefulness of forensic auditing in prevention and detection of fraud” was conducted to focus on most important problems facing a corporate organization.

The failure of statutory audit to prevent and reduce misappropriation of corporate and an increase in corporate crimes has put pressure on the professional accountant and legal practitioner to find a better way of exposing this evil frame in business world such as. The problems of loss of customers/depositors. The persistent increase in business failures fuelled or encouraged by frequent incessant fraudulent activities in our financial institutions. The problem of lack of confidence on the part of the investing public to commit their resources to financial institutions due to fraud. The problem of how financial institutions to embrace forensic audit as a useful tool in prevention and detection of fraud.

BIBLIOGRAPHY

Abdullahi, S.A. (2007) “Distress in the Nigeria Banking Industry” Zaria. Ahmadu Bello University Publishers.

Akinnolemiwa, (2009) “The Auditors Responsibility to consider fraud in an Audited Financial Statement” Nigeria. Journal of Nigeria Accountants. Vol.11 No.2.

Akpakpan, B.A. (1995) On Project Writing. 2nd Edition Calabar Certaur Publishers.

America Journal of the Certified Finance Examiners. (CFE). Feb/March.

ABUDULLAHI, S.A. (2009) “Distress in the Nigeria Banking Industry”.

Chatterji, A.N. (2007) “Foresic Auditing and Investigation India”. Mumbai Publishers.

Coenen, T. (2008) “Forensic and Fraud Accounting “America all Business.Com.

Crumbley, D.L. (2005) “Forensic Accounting Journal” America. Edwards International Publishers. Daunt, J. (2002) Modern Auditing Manual Retrieved from http://www.corporate Find Law.

Emele, O.U. (1995) “Fundamentals of Research Methodology and Statistics in Education and Behaviour Sciences” Aba. Model Academic Publishers ltd.

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