Exploring the Applicability of Forensic Accounting in Improving the Quality of the Financial Statements of Listed Deposit Money Banks in Nigeria

This paper explored the applicability of forensic accounting in improving the quality of the financial statements of listed Deposit Money Banks in Nigeria. A survey was conducted through the administration of a questionnaire to a sample of 230 respondents which was composed of some members of the staff of the listed DMBs, the Big-4 Audit firms, the Nigeria Deposit Insurance Corporation (NDIC), the Economic and Financial Crimes Commission (EFCC) and members of the Institute of Forensic Accountants of Nigeria. The study employed descriptive statistics and bivariate regression analsis to analyze the data. The hypothesis tested showed that the forensic accounting application could improve the quality of the listed DMBs’ financial statements. The paper, therefore, recommended the immediate creation of forensic accounting departments in the DMBs under the control and supervision of the Boards’ Audit Committees composed of persons knowledgeable in forensic accounting. Other recommendations include formalization, standardization and getting statutory/regulatory forensic accounting practice in Nigeria. While staff of forensic accounting departments of the DMBs should be fully involved in the annual audit exercise, also, the professional accounting (audit) firms should involve forensic accountants in designing audit plans and include them in the audit teams, particularly where there are higher risks of management fraud, in order to boost confidence in their audit reports. The overall implication of the study findings is that full scale forensic accounting application in the listed DMBs is possible and necessary to complement the existing practice of internal audit/inspection to further improve the quality of the financial statements of the organizations.