Tax evasion detection in Nigeria: Analysis of the specific forensic accounting techniques used

Abstract

The study investigated the specific forensic accounting techniques used in the detection of tax evasion in Nigeria. The study used a self-administered, semi-structured questionnaire, prompting experts' opinion on the type or the combination of the tools of forensic accounting applied in carrying out tax evasion assignments. Krejcie & Morgan (1970) formula was adopted to determine the sample size of 301 from the population of 1,387, comprising forensic accounting practitioners and tax officials of Lagos State, Nigeria. Descriptive statistics like mean, standard deviation and percentages were applied for data analysis. The study reveals that all the identified 13 forensic accounting techniques were put into use but with diverse opinion. The study also finds out that Benford's Law, Identifying Anomalies' Document Review, Revenue Approach, Business Intelligence, Revenue Approach, Trend Analysis, Net Worth Comparative Method, Data Mining Tools, and Expenditure Approach, among others, were rated as being frequently used. The findings show that there is no agreement as to the specific tools to be adopted for tax evasion detection and no record of it included in the reports to government. The study however, established the use of different types of techniques among the practitioners. Thus, the study recommends that the practitioners should include in the report of their tax evasion engagement to the government, the forensic accounting techniques, or the combination thereof, used along with the respective results.