Forensic Accounting and Financial Reporting Quality of Listed Deposit Money Banks in Nigeria

Abstract

Economic volatility and stakeholder dissatisfaction such as inadequate regulatory monitoring, public sector inefficiency, corporate governance issue, financial reporting irregularities, weakness in traditional auditing widespread corruption and financial mismanagement have led requests for improved financial system protection, necessitating the implementation of forensic accounting. This research was initiated to explore the impact of forensic accounting on financial reporting quality in Nigerian listed deposit money banks (DMBs). The longitudinal research included 10 DMBs listed on the Nigerian Exchange Group as of December 31, 2022. The rationale behind selecting 10 DMBs is based on DMBs with largest asset base. The data which includes investigative accounting and litigation support services was examined by descriptive statistics and ordinary least squares regression. This study discovered that investigative accounting has a positive and significant (coefficient = 0.0034, p-value = 0.0000) effect on the financial reporting quality of listed DMBS in Nigeria. The study also discovered that litigation support services have a positive and significant effect (coefficient = 0.0007, p-value = 0.0000) on the financial reporting quality of listed DMBS in Nigeria. On overall result shows that forensic accounting has a negative and significant effect on the financial reporting quality of listed DMBS in Nigeria. This research concludes that forensic accounting assist DMBs improve financial reporting quality. It was recommended that DMBs priorities the adoption and implementation of forensic accounting practices. This can be achieved by creating a dedicated forensic accounting unit within the bank to handle all fraud detection and prevention activities, implementing a robust internal control and investing in forensic accountants' training and continuous professional development, as well as providing financial professionals with the necessary skills and tools.