PROBITY OF FINANCIAL STATEMENT AND FORENSIC ACCOUNTING TECHNIQUES

Abstract

This study examined the relevance of forensic accounting techniques in ensuring the integrity of the financial statements. Stakeholders who are members of recognized professional accountancy bodies in Nigeria were requested to answer research questions. This study adopts survey research method with the use of primary data and purposive random sampling techniques. The sample size was calculated with the formula by Krejceie and Morgan (1970). 350copies of questionnaires were administered, and 321 questionnaires were returned, representing 92% of the entire questionnaire. Nominal scale method was used in the demographic section while Like scale was used in other sections of the questionnaire. Hypotheses were formulated, tested, and analyzed using multiple regression analysis. It was found that forensic accounting techniques “FAT” (FPDDS, FAIIS, LMAS, and CARDR) have positive influence on the integrity of financial statements (IFS) of business organizations, as evidenced from the individual level of significance of 0.006,0.045, 0.000, and 0.047 which are less than the 5% acceptable level of significance and the coefficient of determination of the main model of 0.23 meaning that about 23% variation of the IFS is attributable to FAT while the remaining 77% change in the IFS can be attributed to other factors not covered in the model. It was also found that the inclusion of forensic accounting techniques will strengthen the activities of internal control functions. This is also evidenced by the sign and size of the coefficients, that is β4 – 7 are +0.203,+0.256, +0.270, and +0.134 respectively > 0. The study fraud prevention, detection and deterrence skills (FPDDS), forensic audit, investigation, and interviewing skills (FAIIS), litigation, mediation and arbitration skills (LMAS), and computer-assisted reviews and document reviews (CARDR) as forensic accounting techniques have a significant positive effect on the integrity of financial statements (IFS). The study recommended that business organizations should consider setting up forensic accounting unit within an organization to lend credence to the integrity of financial statement of business organizations.