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FORENSIC AUDIT: A TOOL FOR FRAUD DETECTION AND PREVENTION IN NIGERIAN BANKS
Abstract
This study examines forensic audit as a tool for fraud detection and prevention in Nigerian banks. The study took a census of the 27 Deposit Money Banks (DMBs) listed on the Nigerian Stock Exchange (NSE) as at 31st December, 2019. The study used the secondary source to collect data from the Nigerian Deposit Insurance
Corporations’ (NDICs) annual report of 2019. The study covered a period of ten (10) years spanning 20102019. Data generated were analyzed using charts, graphs, tables and regression. Our findings revealed that forensic audit has a significant negative effect on number of fraud cases, number of staff involved in bank fraud, and actual amount of bank losses through fraud in Nigerian DMBs. However, forensic auditing has insignificant impact on expected losses generated through fraud activities in the Nigerian banks. This study recommends that entity policy makers should educate staff on the implication of perpetrating fraud and the moral and economic hazard to the entity, the individual involve and economy as whole; employees should be rotated from time to time, this will enable entities discover where there are gap and loophole of fraud and Strong internal procedure should be put in place and should be constantly be updated to meet current trend.
Keywords: Forensic audit, fraud detection, fraud prevention, banking sector, Nigeria.