An empirical investigation of fraud risk assessment and knowledge requirement on fraud related problem representation in Nigeria

Abstract

Purpose – The paper aims to investigate Task Performance Fraud Risk Assessment (TPFRA) and Knowledge Requirement (KR) of the forensic accountant and auditor on Fraud-Related Problem Representation (FRPR) in the Nigerian public sector. Design/methodology/approach – The study used cross-sectional design and 400 survey questionnaires. The respondents are real professional people (auditors and forensic accountants in the Nigerian public sector) as true representatives to enhance the generalization of the outcomes. A total of 36 indicator items was measured on five-point Likert scale from 1 (strongly disagree) to 5 (strongly agree). Partial Least Square – Structural Equation Modelling 2.0 3M and IBM SPSS Statistics 20.0 were used as the primary statistical analysis tool for the study. Findings – The results of the present study confirm the positive relationship between KR on TPFRA, positive relationship of KR on FRPR and positive relationship of FRPR and TPFRA. Specifically, the results revealed that FRPR positively mediates the relationship between TPFRA and KR (forensic accountant and auditor) in the areas of fraud prevention, detection and response. Research limitations/implications – The first limitation deals with fraud and corrupt practices in a developing country, Nigeria. Examining the mediating influence of FRPR on KR and TPFRA in the public sector could be considered as sensitive and raise the issue of bias. The second limitation is the adoption of cross-sectional design in which data are collected at one point in time. Researchers are encouraged to use a longitudinal design to explore interactions between KR, FRPR and TPFRA. Practical implications – This empirical study has revealed the value of KR (forensic accountant and auditor) as a significant capability requirement in the workplace. In addition, it shows the importance of FRPR as an important mental state in decision-making or judgment and also the significance of FRPR as an important mediating variable on KR and TPFRA. Originality/value – No nation is immune to fraud, and loss due to fraud in the public sector is enormous and costly; the result of this research will improve the KR of auditors and forensic accountants in the areas of fraud detection, prevention and response. It will also contribute to the regulatory, legal and institutional frameworks in accounting and auditing systems in Nigeria and portend an increase in demand for forensic accountants.

The Personality Factor of Conscientiousness on Skills Requirement and Fraud Risk Assessment Performance

“…Criminal accounting is a growing area of accounting practices that provide complementary skills and experience with the capabilities of the investigation and applied for disclosure of evidence of fraud (Nicolae & Diana, 2017). In recent years, scholars commenced querying what specific skills and technical capabilities must be available in an FA and auditor to discover fraud (Ademola et al, 2017;Popoola, 2015;Are ina et al, 2014;Ramaswamy, 2005;Messmer 2004).…”

“…Firstly, the conceptual connection in this study outline signifies the possibility that skills (forensic accountant and auditor) do influence fraud risk assessment task performance. Previous studies provide empirical evidence show that any additional skill difference can lead to significant differences in the individual behaviour, which in turn affects the fraud risk assessment task performance (Popoola et al 2015;Davis et al, 2010;DiGabriele, 2008). Other studies assume that a small change in skills would lead to significant improvements in the fraud risk assessment task performance (Popoola et al 2015;Chui, 2010;Davis et al, 2010;DiGabriele, 2008).…”

“…A forensic accountant, therefore, is entrusted with skills and competencies for preventing, detecting and responding to fraud (Popoola et al, 2015;Wells, 2012) as against the independent auditor that has an unbiased obligation to express an opinion regarding financial statements of organisations (Apostolou & Crumbley, 2008). The capability requirements of the FA such as skills, knowledge, ethics, value, and mindset/attitude constitute the cornerstone to reduce the incidences or perpetuation of fraud and fraudulent activities (Imam et al, 2015;Popoola, 2014;Hopwood et al, 2012;Boritz et al, 2008).…”

Research Topics in Accounting Fraud in the 21st Century: A State of the Art

“…Popoola et al, 2015 [120] The participation of fraud specialists in the planning of an auditing job with a risk of fraud, involves an additional effort in time and costs without there being a clear benefit commensurate with the effort.…”

“…The relationship between fraud in companies and the rotation of their managers is an obvious and contrasted fact [19,47,120]. Thus, in the work of Persons [57], which was carried out on 224 fraudulent companies judicially sued in the United States, it was highlighted that, in general, there is a greater turnover of executives in said companies, with their compensation being less.…”