Statement of Hypotheses In this research work, the hypotheses are; Hypotheses H1: There is a significant difference between Traditional External auditor and Professional Forensic Accountant H2: The use of Forensic Accounting will significantly reduce the occurrence of Fraud cases in YEDC. Scope of the study In the light of broad coverage, the researcher intends to focus on the fraud detection and prevention in Electricity industries using YEDC as a case study. The scope of the research therefore, covers a period of 2013 to 2018 Conceptual Framework Oliver (2004), since the complication and ambit of commerce has expanded all over the globe, it is important to track funds and financial information has grown.
There has been a corresponding increase in illegal financial activity, according to separate surveys by the U.S Section of Justice, Price Water House Coopers, and the Association of Certified Fraud Examiners (ACFE). Ironically, illegal transactions and culprits of financial crimes also have to keep record of their cash flow and manage their operational performance to generate profits, fund activities and avoid detecting and seizing of their assets.
Joshi (2003) attributed the beginning of forensic accounting to an economist whose name was Kutilya. Kutilya was the first person that explicitly recognizes the importance of forensic accountant. He mentioned 40 different ways of embezzlement centuries ago. He however declared that the word forensic accounting was coined by Peloubet in 1946. He said, forensic accounting is a branch of account. It uses the expertise gained in account more especially in the area of investigation in other discover and resolve legal cases. It is the science of using accounting as a tool to identify and develop proof of money flow. These tools and/or techniques, skills and knowledge can be invaluable for fraud and forensic accounting investigators. Crumbley (2001) wrote on same when he declared that a form of forensic accounting can be traced to a court decision that took place in1817. He stated that also that a young Scottish accounting issued a circular advertising his expertise in arbitration support in 1824 but that Peloubet most likely was the first to bring out the phrase forensic accounting. Probe of fraud and corruption is confirmed thus, not to be new, even in Nigeria. It is only gaining prominence because of growing wave of the crime under the seemingly new classification in the last five years (Coenen, 2005). Forensic accounting also called fact finding (investigative) accounting or fraud audit is a amalgamation of forensic skill and accounting. Forensic science according to Crumbley (2003) may be defined as application of the laws of nature to the laws of man. He refers to forensic scientists as examiners and translators of proof and facts in legal cases that also requires expert opinions regarding their findings in court of jurisprudence. The skill in question here is accounting science, meaning that the examination and interpretation will be of economic information. Joshi (2003) further sees forensic accounting as the application of specialized knowledge and specified skill to stumble up on the evidence of economic translations. Zysman (2001) put forensic accounting as the integration of accounting, auditing, and investigative skills. Simply put forensic accounting is accounting that is suitable for legal review offering the highest level of assurance and including the now generally accepted connotation of having been arrived at in a scientific fashion (Crumbley 2006). Coenen (2005) stated that forensic accounting involved the application of accounting concepts and techniques to legal problem. It demands reporting, where the accountability of the fraud is established and the report is considered as evidence in the court of law or in the administrative proceedings (Joshi, 2003). It provides an accounting analysis that is suitable to the court, which will form the basis of discussion, debate and ultimately dispute resolution (Zysman, 2001). These means that forensic accounting is a field of specialization that has to do with provision of information that is meant to be used as evidence especially for legal purposes. The persons practicing in this field (i.e. forensic accountants) investigate and documents financial fraud and white-collar crimes such as embezzlement and investigate allegations of fraud, estimates losses damages and assets and analyses complex financial transactions. They provide those services for corporation, attorney, criminal investigators and the government (Coenen, 2005). Zysman, (2001) the forensic accountant’s engagements are usually geared towards finding where money went, how it got there, and who was responsible. They are trained to look beyond the numbers and deal with business reality of the situation. According to the Black’s law Dictionary, (1979) ‘Fraud consists of some deceitful practice or willful device, resorted to with intent to deprive another of his right, or in some manner to do him an injury. As distinguished from negligence, it is always positive, intentional. Fraud, as applied to contracts, is the cause of an error bearing on a material part of the contract, created or continued by artifice, with design to obtain some unjust advantage to the one party, or to cause an inconvenience or loss to the other. Fraud, In the sense of a court of equity, properly Includes all acts, omissions, and concealments which involve a breach of legal or equitable duty, trust, or confidence justly reposed, and are injurious to another, or by which an undue and unconscientiously advantage is taken of another fraud (sometimes referred to as fraudulent act) includes all the multifarious means human ingenuity can devise that are resorted to by one individual to get an advantage over another by false suggestions or suppression of the truth. It includes surprises, tricks, cunning or dissembling and any unfair way by which another is cheated. Dandago (1997), fraud is an intentional misrepresentation of financial information by one or more individuals among management, employees or third parties. It involves the use of criminal deception to obtain an unjust or illegal advantage. It is a deliberate cheating or deception intended to gain an undue advantage. Fraud is different from error, which refers to unintentional misstatements or omissions of amount or disclosures from an entity’s accounting records or financial statements. (Onochie, 2005). The role and skills of forensic Accountants Professional Forensic Accountants use their knowledge of effective fraud and forensic accounting technique to identify fraudulent activities and then preserved the evidence discovered. (Houck et al 2006). Hence, it is important to understand that the role of a forensic accountant is different from that of regular auditor. It is widely known that an auditor determines compliance with auditing standards and considers the possibility of fraud. Crumbley and Apostolou (2005), claim that a Professional Forensic Accountant has a single-minded focus on the detection, and deterrence of fraud. Roche, as cited by Crumbley and Apostolou (2005), describes a forensic accountant as someone who can look behind the faced-out, accept the records, at their face value-someone who has a suspicious mind that (considers that) the documents he or she is looking at may not be what they purport to be and someone who has the expertise to go out and conduct very detailed interviews of individuals to develop the truth, especially if some are presumed to be lying. Krell (2002) says forensic accounting often involves an exhaustive, detailed effort to penetrate concealment tactics. Stephen Seliskar says, in terms of the Sheer labor, the magnitude of effort, time and expense required to do a single, very focused (forensic) investigation “as contrasted to auditing a set of the financial statements-the difference is incredible. International Journal of Academic Research in Business and Social Sciences March 2013, Vol. 3, No. 3 ISSN: 2222-6990 6 www.hrmars.com/journals The above views imply that the role of Professional Forensic Accountant is different from that of other accountants. They are different in their further education and training of years of experience. In addition, forensic accountant, are closer to being investigators, economists who do economic and market estimation and appraisers-who are typically trained in finance or valuation theory in business. As an investigator a Professional Forensic Accountant can be seen as those who are specialist in fraud detection, and particularly in documenting exactly the kind of evidence required for successful criminal prosecution; able to work in complex regulatory and litigation environments; and with reasonable accuracy, can reconstruct missing, destroyed, or deceptive accounting records. Meanwhile, as an economist, they are particularly effective at economic loss, damage and social harm estimates; familiar with the assumptions, algorithm, and calculations in econometric models and opportunity cost scenarios; can measure and quantify such things as loss of goodwill and reputation. Finally, as an appraiser, forensic accountants should be able to reliably express informed opinion on matter of business value, based on generally accepted theory; effective at evaluating the historical and projected degrees of risk and return of any going concern as well as any and all financial transactions involving assets, property taxes, and equities (Bologna and Lindquist, 1995). Moreover, bologna and Lindquist (1995) assert that the characteristic that differentiates fraud auditors and Professional Forensic Accountants from regular auditors is the persistence and doggedness to which a suspicion is followed upon. Professional Forensic Accountants may be ordered in by a regulatory agency after receiving notice from an employee whistle blower, or press coverage may make it know that the company has a scandalous ECO or history (Bologna and Lindquist 1995). There are no professional standards for when regular auditors should become whistleblowers, and unfortunately, the involvement of a forensic accountant is almost always reactive. There is a need for more proactive monitoring of the signs of financial crime. Razae (2002) stated that, furthermore, Professional Forensic Accountants react in response to criminal complaints, statements made in civil litigation, and rumors that come to the attention of authorities. Suspicion should perhaps refer to sings of cover up or disguise class action suits by shareholders may stimulate a forensic accounting investigation, but class-action suits only hurt the corporation, and let the offending CEO go free. Regular auditors, as have been seen, also tend to not make good witness in court, and they sometime are more a hindrance than help for law enforcement. There may be a need for the auditing and assurance professions to change their ways before new, emerging fields move in to fill the gap. In regard to the above arguments, forensic accounting should play an important role as expert witnesses and fraud investigators. Accordingly, forensic accountant should posses a specific skills and training that enable them to play their roles as expert witnesses and fraud investigators. The area of forensic accounting, as Houck et al (2006) argue, consists of a rather unique skill set that ordinarily requires additional expertise and training beyond an academic degree in International Journal of Academic Research in Business and Social Sciences March 2013, Vol. 3, No. 3 ISSN: 2222-6990 7 www.hrmars.com/journals accounting, and beyond being a CPA (Certified Public Accountant), a CFE (Certified Fraud Examiner) or CIRA (Certified Insolvency and Restructuring Advisor). Certifications are good in designating a high degree of professional expertise in rather specialized areas, but further graduate education and continuing education programs in more general fields would be better. More specifically, entry-level fraud and forensic accounting professional should posses knowledge, skills and abilities in the following areas (Houck et al 2006): 1. Criminology specifically oriented to the nature, dynamics, and scope of fraud and financial crimes; the legal, regulatory, and professional environment; and ethical issues. 2. Fraud prevention, deterrence, detection, investigation and remediation in the following areas: asset misappropriation, corruption, and false presentations, financial statement fraud; and fraud and forensic accounting in a digital environment, including computer-based tools and techniques for detection and investigation, electronics case-management tools, and other issues specific to computerized environments. 3. Forensic and litigation advisory services, including research and analysis, valuation of losses and damages, dispute investigation, and conflict resolution (i.e. arbitration and mediation). Considering the above views, it seems that forensic accounting plays a significant role in preventing and detecting possibilities of fraudulent financial reporting. It can be seen as an attainable effort to improve quality alternative research in accounting. Theoretical Framework The basic theory that has been established in this research work is white collar crime theory by Sutherland (1949) as cited in Michael (2004). The term white-collar crime dates back to 1939. Sutherland (1949) as cited in Michael (2004) was the first to coin the term, and hypothesis white-collar criminals, attributed different characteristics and motives than typical street criminals. Sutherland originally presented his theory in an address to the American Sociological Society in attempt to study two field, crime and high society which had no previous empirical correlation. He defined his idea as crime committed by a person respectability and high social status in the course of his occupation (Sutherland 1949, cited in Michael 2004). Sutherland noted that in his time, less than two (2) percent of the persons committed to prison in a year belong to the upper class. His goal was to prove a relation between money, social status, and likelihood of going to jail for a white-collar crime, compared to more visible, typical crimes, although, the percentage is a bit higher today. Much of Sutherlands work was to separate and define the difference in blue collar street crimes, such as arson, burglary, theft, assault, rape and vandalism which are often blamed on psychological, associational and structural factors. Instead, white-collar criminals are opportunists, who over time learn they can take advantage of their circumstances to accumulated financial gain. They are educated, intelligent, affluent, individuals who are International Journal of Academic Research in Business and Social Sciences March 2013, Vol. 3, No. 3 ISSN: 2222-6990 8 www.hrmars.com/journals qualified enough to get a job which allows them the unmonitored access to often large sum of money But the federal Bureau of Investigation (FBI) has adopted a narrow approach defining white-collar crime as those illegal acts which are characterized by deceit, concealment, or violation of trust and which are not dependent upon the application or threat of physical force or violence. The blue collar crime will more often use physical force, whereas, in the corporate world, the identification of a victim is less obvious and the issuer of reporting is complicated by a culture of commercial confidentially. Fredrichs (2007) stated that the only way one crime differs from another is in the backgrounds and characteristics of its perpetrators. Most, if not all white-collar offenders are distinguished by lives of privilege, much of it with origins in class inequality. It is estimated that a great deal of white-collar crimes is undetected or if detected, it is not reported. Because of the high status of the perpetrators of these crimes, a highly trained and experienced examiner or investigator like the Professional Forensic Accountant is needed to forestall the occurrence of such high profile fraud. . Research Methodology In this research work, survey design was used, which relate to collecting data from the population for intensive study and analysis. In the course of this study, the researcher in an attempt to gather useful and reliable information utilized two (2) sources of data collection namely; Primary Sources of Data collection and Secondary Sources of Data collection. Questionnaire and interview are the instruments employed to collect the data. They are special form of correspondence developed to procure authoritative information from a number of persons through the medium of well directed questions and interactions.