CHAPTER ONE

INTRODUCTION

1.0      BACKGROUND OF THE STUDY

Accounting is regarded as one of the oldest profession in the world and the major pillar on which business success or failure is measured. It is a known fact that within the educational setting, accounting programs have had a monopoly on educating students to become professional accountants in industry and public accounting (Albrecht and Sack, 2008). Corporate organization and government establishment that wanted to employ accountants focused their recruiting activities on traditional tertiary institutions and accounting programs. These educational and hiring monopolies no longer exist.

The position of accounting in corporate world is very crucial and before the Enron, WorldCom and many others, as well as the collapse of one of the “Big Five” accounting firms (McMullen and Sanchez, 2010) in corporate scandals, accounting programs were the most sought after course among the business related courses in tertiary institutions. Presently, accounting profession is being pulled and sharpened by contending forces (Langenderfer, 1974). Such as corporate fraud, financial statement fraud, incidence of creative accounting, and ever increasing inadequacy of auditing in detecting, preventing and deterring financial fraud.

Accounting is faced not only with the contending forces, there is need to increase the knowledge and skills requirement of stakeholders (student, academic and professional accountants) to meet the growing public expectation about the scope of accounting in reporting financial position in

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the present corporate reality. As a fall out of accounting principles and practices not meeting the growing needs of the society, professional accounting bodies and academics put concerted efforts and instigate series of studies to open up new areas of research within the existing principles and practices of the accounting profession.

The series of studies constitute a body of knowledge or generally accepted principles and practices to solve the vest contending forces. This new field of specialization within the accounting profession is called forensic accounting. Forensic accounting is a direct response to the public expectation from corporate world, academics and practitioners of the accounting profession to proffer a lasting solution to the fall out of corporate scandals.

In business world, the important of forensic accounting in building lost confident in investors and financial reporting cannot be over-emphasized. Therefore, forensic accounting is a rapidly growing area within the accounting profession, due to the prevalence of fraud in business (Peterson and Reider, 2001). According to Central Bank of Nigeria (CBN) report on corporate fraud in Nigeria banking sector reform, billions of naira was lost to fraudulent activities by executive management of the affected rescue banks. This is due partly to the failure of statutory audit to prevent and reduce mis-appropriation of corporate fund and an increase in corporate crime has put pressure on the professional accountant and legal practitioner (Owojori and Asaolu, 2009).

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As at today, a trained accountant from Nigeria tertiary institutions has skill in accounting, psychology, law, investigation, information technology and research. These courses are the core discipline that made up the forensic accounting. While the contributing disciplines have ensured the diversity of forensic accounting education, this emerging discipline lacks an academic and theoretical basis and it is at the infantry stage at the professional level in Nigeria.

Financial accounting education, as essential tool in training future accountants/ auditors from Nigeria tertiary institutions cannot be over-emphasized. Forensic accounting is a method of investigating financial transactions and business situations in order to obtain the truth of and develop an expert opinion regarding possible fraudulent activity (Nunn, McGuire, Whitcomb, and Jost, 2006). 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, 2008).

Formal college of education training of financial accounting are still at its infancy or almost non-existing in Nigeria tertiary institutions. Despite the facts that the core disciplines of forensic accounting courses are taught in these institutions. According to Smith and Crumbley (2009), accounting programs around the world have been revising their curricula to include courses in “fraud/forensic” accounting.

The pertinent question that can be asked then is why are Nigeria tertiary institutions yet to integrate financial accounting into their curriculum? Perhaps, answer to the primary purpose of this research study, which is, evaluating the prospects and challenges of integrating fraud and 3

financial accounting curriculum into Nigeria tertiary institutions may provide solution to the

pertinent question.

1.1     STATEMENT OF THE PROBLEM

Fraud and corruption are gargantuan twin brothers that have limited the growth and infrastructure development of many nations and led many firms to the road of bankruptcy. Detecting fraud has become a high priority in the accounting profession and the failure of statutory audit to detect, prevent and reduce misappropriation of corporate fund give rise to the profile and need of forensic accounting in Nigeria. Yearly, tertiary institutions in Nigeria produce competent accountants/ auditors with skill in typical auditing courses that are not suitable for future auditors with the skills and characteristics needed for today’s electronic work environment.

In the recent banking sector reform in Nigeria, most of the financial misappropriation and fraud are uncovered with the services of foreign financial accounting experts. This is due partly to shortage of skill financial accountants in the country. While professional body such as Institute of Chartered Accountants of Nigeria (ICAN) acknowledged lack of professional exposure in forensic accounting by establishing faculty to train Chartered Accountants as Certified Financial Accountants (CFA), tertiary institutions in Nigeria are yet to integrate forensic accounting in their curriculum.

Studies have suggested that the increase in the adoption of forensic accounting courses as part of the accounting curriculum in a growing number of universities in developed countries is

indicative of the demand for sets of competences and skills that are commensurate and sophisticated enough to confront the complexities that businesses faced with respect to growing threats arising from fraud (Efiong, 2012).

This study intends to find out how forensic accounting can be integrated into the existing accounting curriculum of Nigeria tertiary institutions to help solve the problem of corporate fraud and corruption and strengthen the typical statutory audit.

1.2      OBJECTIVES OF THE STUDY

The aim of this research study is to evaluate the prospects and challenges of fraud and forensic accounting education in Nigeria tertiary institutions. Specifically, the objectives of this research study are as follows:

(i)                 To understand the integration of fraud and financial accounting into the exiting accounting curriculum in tertiary institutions in Nigeria.

(ii)               To know if inclusion of forensic accounting as a course to the existing accounting/ auditing course will increase student expertise.

(iii)                 To examine the effect of administrative support in developing and integrating fraud/forensic/financial accounting into existing accounting curriculum.

(iv)      To understand the prospects and challenges of fraud and financial accounting integration into curriculum in Nigeria tertiary institutions.

1.3         RESEARCH QUESTIONS

In order to achieve the objectives of this research study, the study will attempt to provide answers to the following research questions.

(a)                How can fraud/ forensic/financial accounting be integrated into the exiting accounting curriculum in tertiary institutions in Nigeria.

(b)               How would inclusion of forensic accounting as a course increase student expertise?

(c)                What is the effect of lack of administrative support in developing and integrating fraud/forensic accounting into existing accounting curriculum?

(d)               What are the major prospects and challenges of integrating fraud and forensic accounting into exiting accounting curriculum in tertiary institutions in Nigeria?

1.4     RESEARCH HYPOTHESES

In an attempt to provide answers to the research questions raised in Section 1.3 above; the following hypotheses will be tested.

Null Hypotheses

Alternative Hypotheses

H0: Fraud/ forensic/financial accounting cannot be

H1:  Fraud  and  forensic  accounting  can  be

integrated into exiting accounting curriculum in

integrated into exiting accounting curriculum in

tertiary institutions in Nigeria.

tertiary institutions in Nigeria.

H0: Inclusion of forensic accounting as a course

H1: Inclusion of forensic accounting as a course

will  have  no  significant  effect  on  student

will have significant effect on student expertise.

expertise.

H0: Lack of administrative support will have no

H1: Lack of administrative support will have

significant effect in developing and integrating

significant effect in developing and integrating

fraud/forensic

accounting

into