A United States-based forensic expert, Eliezer Olukowade, has advocated the adoption of forensic accounting by the government at all levels and private organisations to address corruption and other financial recklessness in society.
Olukowade said the application of forensic accounting techniques was necessary for tackling the hydra-headed corruption in government ministries, agencies, and private establishments and tracking down those perpetrating criminal activities.
He disclosed that a total of $3.5 trillion has been lost to fraudulent financial reporting, corruption, and asset misappropriation globally due to the inability of the statutory audit system to detect and prevent corrupt practices
The expert, who was a lecturer at the Federal Polytechnic Ado-Ekiti, spoke in Ado-Ekiti, Ekiti State, on Friday while reviewing his research work titled “The Relevance of Forensic Accounting in the Detection and Prevention of Fraud in Nigeria.”
Olukowade emphasised the importance of forensic accounting and pointed out that there was an urgent need to establish a system that could detect and prevent fraud with some measure of certainty.
He added that the magnitude of financial fraud in the public service will require the prompt implementation of a sophisticated forensic accounting system to nip in the bud the virus that has continued to stifle economic growth and development.
According to him, “Forensic accounting is perceived to have evolved in response to certain emerging fraud and corruption-related cases.
The scandals that recently rocked the corporate world, with classical examples being the often-cited Enron and WorldCom cases, have also brought the field of forensic accounting to the forefront.
“So, the general expectation is that the forensic accounting system may offer respite from the seeming vulnerability of conventional accounting to financial fraud.
It is seen as encapsulating all other investigation-related areas in uncovering frauds.”
He argued that statutory auditing in preventing fraud in the system had not yielded the desired results because it lacked the capacity to uncover fraud, unlike forensic auditing, which was configured to outsmart the complex web of conspiracy and deception that often characterised corrupt practices.
Olukowade revealed that the services of forensic accountants are required by organisations to remove fraud and also engender integrity, objectivity, and trust in accounting and financial reporting.
“The Forensic accountant, being a fraud investigator, is very much likened to a physician who requires diagnostic and explanatory work to discover what really is happening.
“In view of the above, it can be said that a forensic accountant goes beyond the normal audit to uncover any fraud by using forensic software tools in investigating transactions and events.
“I think it is high time that auditors acquired forensic skills in the discharge of their duty.
All normal statutory audits should contain elements of forensic accounting, as evidence of fraudulent activities can be easily discovered if a thorough and holistic evaluation of the adequacy and compliance of the internal control mechanism is made.
“All these are aimed at fraud prevention and detection.
This may not be achieved by an auditor without understanding forensic accounting methods,“ he added.
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