FORENSIC ACCOUNTING AND PREVENTION OF FRAUD – CHAPTER 3 AND 4

CHAPTER THREE

RESEARCH METHODOLOGY

3.1       Research Design

            The study is mainly designed to find out the relevance of forensic accounting to fraud detection and prevention in private and public sectors in Nigeria using Emenite Ltd, Emene Enugu and Nigerian bottling company Enugu.

            The structural framework of this study is based on the survey research design. In designing the study, the research tried to reduce sources of invalidity by avoiding the use of volunteer as treatment group, which implies that careful selection was made by the researcher from the population as to whom the subject matter under study by the researcher concerns.

3.2       Sources of Data     

            In the course of this research, primary and secondary sources of data where used for information collection n the achievement of the researchers objective of the study.

3.3       Population of Study

            A population is made up of all conceivable elements relating to a particular phenomenon of interest to the research study (Asika 2000). In this study, the researcher used the random sampling method to select two (2) sectors in Enugu where he resides out of numerous private and public sectors in Enugu. The sectors selected comprises of one private sector and one public sector. The sectors selected are

i.          Private –         Emenite limited, Emene Enugu State

ii.         Public-           Nigerian Bottling company Plc, Enugu State

A total of Ninety (90) copies of questionnaire where distributed to Emenite Ltd and Nigerian company evenly, containing the same information of which seventy-eight (78) was returned, out of which sixty-three (63) were correctly filled while fifteen (15) were not correctly filled it then suggests eighty- one percent (81%) success rate and nineteen percent (19%) failure rate as calculated below

78                    1                                  78 = total number of questionnaire returned  

                                                            100 = constant percentage     

3.4       Sample Size Determination

            Within the study area of private sector a public sector were selected of which only ninety (90) respondents were selected by random sampling since it is humanly impossible to interview every staff of all the public and private sectors in Nigeria. Therefore, since the population is known, this formular was used

                        1+ N(e)²

Where:

n          =          Sample size

N         =          Population

e          =          error margin (0.05)²

3.5       Method of Data Collection

            For the purpose of obtaining necessary information about the relevance of forensic accounting to fraud detection and prevention in private and pubic sectors in Nigeria using the researcher administered the constructed questionnaires in a structured and unstructured questions as well as conducting personal interview with different categories of people which are primary ways of gathering the necessary information needed for this research study.

            Also secondary data source was used which includes information needed about the research topic understudy were taken from already published materials such as text books, journals, magazines, newspapers, libraries and unpublished materials from internet and other peoples dissertation and also through desk research.

3.6       Validation of The Instrument

            The data collection instruments in the course of this study were carefully chosen and applied in such a way as to allow for validity. The questionnaire and interview instrument used in this study indicated that there are some worth characteristics validity in proving to be dependable as to allow for precision, accuracy and error free.

3.7       Reliability of the Instrument         

            The questionnaire and interview turned consistent result in collection of data and indicated their characteristics reliability while the hypotheses were tested the chosen instrument equally indicated their practicability in terms of economic convenience and interpretability. The questionnaire consists of a good number of questions drawn in a way to elicit the required information the questionnaire has.

3.8       Method of Data Analysis      

            The research used the statistical techniques such as percentage table and Z test to analyze the data collected. From the respondents that supports the topic and those that do not support the topic and those that have no idea about the topic understudy. The hypotheses where also analyzed with a percentage table to show the true view of people concerning the topic understudy. This is to ease understanding and interpretation of the result and then draw reasonable conclusion from them.

            The formular used is as follow

        
         n     

Where

            P          = % response positive to answers in the questionnaire

            P0        = positive side of the normal curve usually 0.5

            n          = population used for the study and for critical Z     

            Z 

   

CHAPTER FOUR

DATA PRESENTATION, INTERPRETATION AND ANALYSIS

4.1       Overview

            In this chapter, the information collected or gathered through questionnaire, oral interview, journals, published and unpublished materials, text books and newspapers were analyzed. Analysis is the breaking down of the ordering of the quantitative information gathered through research. A total of ninety (90) questionnaire were distributed and seventy-eight (78) was returned. Out of the seventy-eight (78) that was returned, sixty-three (63) were correctly filled while fifteen (15) were not correctly filled which showed eighty-one (81%) percent success rate and nineteen percent (19%) failure rate. But for the purpose of clearity and understanding we used the number that was correctly filled to analyze to what extend do forensic accounting relevant to fraud detection and prevention in the selected private and public sector out of the numerous in Enugu State.

4.2       Data Analysis          

1.         Is forensic system new in Nigeria

Table – 4.01

Responses	Emenite Ltd	Nigerian bottling coy	Total	Percentage
Yes	10	2	12	19
No	25	26	51	81
No idea	–	–	–	–
Total	35	28	63	100

Table 4.01 revealed that nineteen (19%) percent believe that forensic accounting is new in Nigeria while eight-one percent (81%) says that it is not new in Nigeria.

2.         Is there need for the services of a forensic accountant to be employed in your organization.

Table – 4.02

  

Responses	Emenite Ltd	Nigerian bottling coy	Total	Percentage
Yes	32	27	59	94
No	–	–	–	–
No idea	3	1	4	6
Total	35	28	63	100

Table 4.02     shows that ninety-four percent (94%) of the respondents admits that the services of a forensic accountant is needed in there organization while six percent (6%) said that they do not know whether the services of forensic accountant is needed in there organization.

3.         Has forensic accountants helped in detecting and preventing fraud?

4

Responses	Emenite Ltd	Nigerian bottling coy	Total	Percentage
Yes	32	27	59	94
No	–	–	–	–
No idea	3	1	6
Total	35	28	63	100

 

Table 4.03 reveals that total of ninety-four percent (94%) of respondents believed that forensic accountant has contributed much in detecting and preventing fraud because of the way they carryout there duty while total of six percent (6%) of the people have no idea as to whether forensic accountant has made impact in detecting and preventing fraud.

4.         Do you think that forensic accountants are analytically minded and inquisitive as people said.

Responses	Emenite Ltd	Nigerian bottling coy	Total	Percentage
Yes	21	18	39	62
No	6	8	14	22
No idea	8	2	10	16
Total	35	28	63	100

     

Table 4.04 shows that a total of sixty-two percent (62%) respondents believe that forensic accountants are analytically minded and inquisitive 22% of the respondents said that they are not analytically minded and inquisitive because of the way auditors carryout there own job but sixteen percent (16%) of the respondents said that they do not have any idea as to whether forensic accountants are analytically minded and inquisitive.

5.         Do you believe that the money paid to a forensic accountant is equivalent to the services rendered by him

  Table – 4.05

Responses	Emenite Ltd	Nigerian bottling coy	Total	Percentage
Yes	21	18	39	62
No	5	7	12	19
No idea	9	3	12	19
Total	35	28	63	100

  

Table.4.05 implies that a total of sixty-two percent (62%) of the respondents strongly believe that what is being paid to forensic accountant is commensurate with the services they render while nineteen percent 919%) of the respondents said no to that and nineteen percent  (19%) of the respondents also said they have no idea of it.

6.         Is forensic accountant is different from the traditional auditor

Table -4.06

Responses	Emenite Ltd	Nigerian bottling coy	Total	Percentage
Yes	32	27	59	94
No	–	–	–	–
No idea	3	1	4	6
Total	35	28	63	100

Table-4.06 revealed that a total of fifty-nine (59) respondents representing ninety-four percent (94%) are of the opinion that forensic accountants are far better than the auditors in carrying out their duties while four (4) respondents which represents six percent 6% have no ideas as to whether forensic accountants are better than the traditional auditors they know.    

7.     
    Is there need for a forensic accountant to possess a sense of urgency and commitment?

Table 4.07

Responses	Emenite Ltd	Nigerian bottling coy	Total	Percentage
Yes	33	27	60	95
No	–	–	–	–
No idea	2	1	3	5
Total	35	28	63	100

In table 4.07 above, sixty (60) respondents ninety-five percent (59%) agrees that there is every need for a forensic accountant to possess a sense of urgency and commitment to their duties knowing fully well how tasking there job is while three (3) respondents representing five (5%) percent said they do no have idea of it since they are not familiar with what forensic accountants do.

8.         Do you believe that the use of a forensic accountant in an audit investigation will increase the cost of the audit?

Table 4.08

Responses	Emenite Ltd	Nigerian bottling coy	Total	Percentage
Yes	4	7	11	18
No	30	20	50	79
No idea	1	1	2	3
Total	35	28	63	100

From table 4.08, eleven (11) respondent representing eighteen  percent (18%) believes that the use of a forensic accountant in an audit investigation will increase the cost of the audit while fifty (50) respondents representing seventy-nine percent (79%) of the respondents strongly believe that n additional cost will be incurred by the organization when forensic accountants will be carrying out their duties and also believe that whatever money paid to them worths there services and two respondents (2) representing three (3%) percent said they have no idea of the question that was asked.

9.         Does the benefits of using forensic accountants, however, out weight their cost

Table 4.09

Responses	Emenite Ltd	Nigerian bottling coy	Total	Percentage
Yes	30	20	50	79
No	3	6	9	14
No idea	2	2	4	7
Total	35	28	63	100

 

In reference to the table above, it means that a total of 50 respondents representing seventy-nine percent (79%) are of the opinion that the benefits of using forensic accountants outweighs their cost while nine (9) respondents representing fourteen percent (14%) said that the benefits of using forensic accountants does not outweigh their cost and four (4) respondents said they have no idea of the relationships between the benefit and cost involved in using forensic accountant.

10.       Do you believe that forensic accountants in Nigeria are up to a hard job because of the high rate of dishonesty in the country.

Table 4.10

Responses	Emenite Ltd	Nigerian bottling coy	Total	Percentage < /td>
Yes	33	27	60	95
No	2	1	3	5
No idea	–	–	–	–
Total	35	28	63	100

  

From table 4:10, sixty (60) respondents representing ninety-five percent (95%) are of the opinion that forensic accountants in Nigeria will find it more difficult to do their job because of the high level of dishonesty in the country while three (3) respondents representing five percent (5%) believe that the high level of dishonesty in Nigeria will not make the job too hard for forensic accountant to do.  

11.       Do you believe that a forensic accountant who is not affected by the limitation of the audit process is in a better position to discover fraud and thus bridge the expectation gap between the auditor and investors.

Table 4.11

Responses	Emenite Ltd	Nigerian bottling coy	Total	Percentage
Yes	32	25	57	90
No	3	3	6	10
No idea	–	–	–	–
Total	35	28	63	100

        

In table 4.11 above fifty-seven (57) respondents representing ninety percent (90%) believes that a forensic accountant who is not affected by the limitation of the audit process is in a better position to discover fraud and thus bridge the expectation gap between the auditor and investors while six (6) respondents representing ten percent (10%) believes that a forensic accountant who is affected discover fraud and thus bridge the expectation gap between the auditor and  investors.

12.       Do you believe that the knowledge forensic accounting by accountants, auditors and senior staff in your organization will make some positive impact on the nations fight against fraud and embezzlement (A) Yes (B) no (C) no idea

Table 4.12

Responses	Emenite Ltd	Nigerian bottling coy	Total	Percentage
Yes	28	22	50	79
No	6	4	10	16
No idea	1	2	3	5
Total	35	28	63	100

Table 4.12 reveals that fifty (50) respondents representing seventy-nine percent (79%) believes that the knowledge of forensic accounting by their accountants, auditors and senior staff.

Will make some positive impact on the nations fight against fraud and embezzlement while ten (10) respondents representing sixteen percent (16%) of the population said no to the question and three (3) respondents representing five percent 5% of the population have no idea of the questions.   

13.       How did you heard about forensic accounting

Table 4.13

Sources	Emenite Ltd	Nigerian bottling coy	Total	Percentage
Internet	15	12	27	43
Radio/TV	2	3	5	8
Print media	8	6	14	22
Text books/ journal	5	5	10	16
Have not heard	5	2	7	11
Total	35	28	63	100

From table 4.13 twenty-seven (27) respondents representing forty-three percent (43%) said the heard about forensic accounting from internet while five (5) respondent that is eight percent 8% heard about it from radio and television, fourteen (14) respondents which is twenty-two (22%) percent read about forensic accounting print media, ten (10) respondents which is sixteen percent (16%) read about it from text books and journals. Seven (7) respondents which represents’ eleven percent (11%) of the population has no idea of forensic accounting and have not heard about it

4.3       Test of Hypothesis and Analysis

H0-     There is no relationship between forensic accounting and fraud        detection and prevention in Emenite Limited Enugu and Nigerian       bottling company Enugu.

H1-     There is a relationship between forensic accounting and fraud           detection and prevention in Emenite Limited Enugu and Nigerian       bottling company Enugu.

Responses	Emenite Ltd	Nigerian bottling coy	Total	Percentage
Yes	6	4	10	16
No	28	22	50	79
No idea	1	2	3	5
Total	35	28	63	100

Calculated Z:-

                                    n

Where P = 79%, P0 = 0.5, n = 63, 1 = constant

                        63                                63                                                                   

  Z = 0.062994078                4.6036           

Critical Z :-

  2

        100

   2                    2

P0 = 0.
5 – 0.025 = 0.4750

From table, 0.4750 is located at 1.9 by 0.06

1.9 + 0.06 = 1.96

Critical Z = 1.96

Decision Rule: 

Since the calculated Z of 4.6036 is greater than the critical Z of 1.96, it then suggests that null hypothesis is accepted while it was to be rejected – which states that, there is no relationship between forensic accounting and fraud detection and prevention in Emenite Limited Enugu and Nigerian bottling company Enugu.

Hypothesis two

H₀–      There is no relationship between forensic accountant and analytical mind, and inquisitiveness in fraud detection and prevention in Emenite Limited Enugu and Nigerian bottling company Enugu.

H₁–      There is a relationship between forensic accountant and analytical mind, and inquisitiveness in fraud detection and prevention in Emenite Limited Enugu and Nigerian bottling company Enugu.

Table 4.15

Responses	Emenite Ltd	Nigerian bottling coy	Total	Percentage
Yes	6	3	9	14
No	27	20	47	75
No idea	2	20	7	11
Total	35	28	63	100

Calculated Z

           n

Where P = 75%, P0 0.5, n =  63, 1 = constant

                        63                                63                                                                   

  Z = 0.062994078                3.9686           

Let ∂ = 10% = 0.1

   2                    2

 P0 = 0.5 – 0.05 = 0.4500

From table, 0.4500 is located from table to be 1.6 + 05 = 2.1

Decision Rule  

            Since the calculated Z which is 3.9686 is greater than critical Z that is 2.1, it then suggests that null hypothesis was accepted while it was suppose to be rejected. The null hypothesis says that there is no relationship between forensic accountant and analytical mind and inquisitiveness in fraud detection and prevention in Emenite Limited Enugu and Nigerian bottling company Enugu.

Hypothesis three

H₀–      There is no relationship between forensic accountant and their services in fraud detection and prevention in Emenite Ltd Enugu and Nigerian bottling company.     

H₁–      There is relationship between forensic accountant and their services in fraud detection and prevention in Emenite Ltd Enugu and Nigerian bottling company. 

Table 4.16

Responses	Emenite Ltd	Nigerian bottling coy	Total	Percentage
Yes	4	3	7	11
No	31	25	56	89
No idea	–	–	—	–
Total	35	28	63	100

Calculated Z

Where P = 89%, P0 0.5, n = 63, 1 constant

                     63                63

Z = 0.062994078                  = 6.1911

Critical Z

Using Z

            2

       2                    2    

 P0 = 0.5 – 0.025 = 0.4750

From the table; 0.4750 is located at 1.9 by 0.06

1.9 + 0.06 = 1.96

Decision Rule:

Since the calculated Z above is greater than the critical Z we therefore conclude that the null hypothesis was accepted while it was to be rejected- there is no relationship between forensic accountant and their services in fraud detection and prevention in Emenite Limited Enugu and Nigerian bottling Company Enugu.

Hypothesis four

H₀–      There is no relationship between forensic accountant and the need for their services in Emenite Limited Emene Enugu and Nigerian bottling company Enugu.  

H₁–      There is relationship between forensic accountant and the need for their services in Emenite Limited Emene Enugu and Nigerian bottling company Enugu.  

Table 4.17

Responses	Emenite Ltd	Nigerian bottling coy	Total	Percentage
Yes	15	9	24	38
No	17	18	35	56
No idea	3	1	4	6
Total	35	28	63	100

Calculated Z

Where P = 56%, P0 0.5, n = 63, 1 constant

                     63                63

0.062994078            

Critical Z

Using Z

            2

       2                    2    

 P0 = 0.5 – 0.025 = 0.4750

From the table; 0.4750 is located at 1.9 by 0.06

1.9 + 0.06 = 1.96

Decision Rule:

            Since the calculated, Z is less than the critical Z it then suggests that there is a relationship between forensic accountant and the need for their services in Emenite Limited Emene Enugu and Nigeria bottling company Enugu.

Hypothesis five

H₀–      There is no relationship between forensic accounting and the negative view about the cost benefit basis, the introduction of some forensic accounting techniques in an audit which is not capable of stemming the tide of financial fraud and thus not cover the audit expectation gap in the organization.

H₁–      There is relationship between forensic accounting and the negative view about the cost benefit basis, the introduction of some forensic accounting techniques in an audit which is not capable of stemming the tide of financial fraud and thus not cover the audit expectation gap in the organization.

Table 4.18

Table 4.17

Responses	Emenite Ltd	Nigerian bottling coy	Total	Percentage
Yes	27	24	51	81
No	7	4	11	17
No idea	1	–	1	2
Total	35	28	63	100

Calculated Z

Where P = 81%, P0 0.5, n = 63, 1 constant

                     63                63

0.062994078 = 4.9211       

Critical Z

Using Z

            2

       2                    2    

 P0 = 0.5 – 0.025 = 0.4750

From the table; 0.4750 is located at 1.9 by 0.06

1.9 + 0.06 = 1.96

Decision Rule:

            From the calculation above, the calculated Z is greater than the critical Z and it then concludes that there is no relationship between forensic accounting and the negative view about the cost benefit basis, the introduction not capable of stemming the tide of financial fraud and thus not cover the audit expectation gap in the organization.