ORGANISATION THAT DEALS WITH FORENSIC ISSUES in Nigeria – EFCC,ICPC AND POLICE
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LASISI ADEJOKE, AJOBI JOHN OSHONAME, AMOSU OMOLARA
1.0 INTRODUCTION
The term forensic means suitable for use in a court of law, and it is to that standard and potential outcome that forensic accountants generally have to work. Litigation services and investigative accounting are the two main branches of forensic accounting, according to some experts (Crumbley, 2005; Coppolla, 2006).Forensic accounting is a discipline that has its own models and methodologies of investigative procedures that search for assurance, attestation and advisory perspective to produce legal evidence. It is concerned with the evidentiary nature of accounting data, and as a practical field concerned with accounting fraud and forensic auditing; compliance, due diligence; detection of financial misrepresentation and financial statement fraud(Dhar and Sarkar, 2010).Okunbor and Obaretin (2010) reported that the spates of corporate failures have placed greater responsibility and function on accountants to equip themselves with the skills to identify and act upon indicators of poor corporate governance, mismanagement, frauds and other wrong doings. It has become imperative for accountants at all levels to have the requisite skills and knowledge for identifying, discovering as well as preserving the evidence of all forms of irregularities and fraud. Therefore, fraud requires more sophisticated approach from preventative to detection. One of the modern approaches that can be used from the prevention to detection is called forensic accounting. It touches almost all disciplines especially, accounting, auditing, investigation, law and psychology (Enofe, Agbonkpolor & Edebiri, 2015). Key institutions like Independence Corrupt Practices Commission (ICPC), Economic and Financial Crime Commission (EFCC) were established to fight corruption. All these could not work effectively because of various challenges like politicization and blackmail, constitutional immunity as stated in section 308 of Nigerian constitution, public apathy and doubtful attitudes towards anti-corruption work, and slow justice. Forensic accounting encompasses three major areas of investigation, dispute resolution and litigation support. In the light of the problem of financial crimes discussed above,
1.1 The Concept of Forensic Accounting
Hopwood, Leiner, and Young (2008) define forensic accounting as the application of investigative and analytical skills for the purpose of resolving financial issues in a manner that meets standards required by courts of law.
It is the integration of accounting, auditing and investigative skills (Dada, Owolabi&Okwu, 2013).
According to Curtis (2008), forensic accountants are essential to the legal system, providing expert services such as fake invoicing valuations, suspicious bankruptcy valuations, and analysis of financial documents in fraud schemes.
Crumbley (2003) defined forensic science as the application of laws of nature to the laws of man. He described forensic scientists as examiners and interpreters of evidence and facts in legal cases that also offers expert opinions regarding their findings in court of law.
Dhar and Sarkar (2010) define forensic accounting as the application of accounting concepts and techniques to legal problems. It demands reporting, where accountability of the fraud is established and the report is considered as evidence in the court of law or in administrative proceedings. Forensic accounting is a discipline that has its own models and methodologies of investigative procedures that search for assurance, attestation and advisory perspective to produce legal evidence.
Onodi, Okafor and Onyali (2015) are of the opinion that forensic investigative skills are required to uncover and establish the occurrence of financial crimes due to the incidence of fraud and misappropriation of funds in recent time that is posing a threat to traditional auditing as a branch of accounting profession.It is concerned with the evidentiary nature of accounting data, and as a practical field concerned with accounting fraud and forensic auditing; compliance, due diligence and risk assessment; detection of financial misrepresentation and financial statement fraud. Forensic accounting is a discipline that has its own models and methodologies of investigative procedures that search for assurance, attestation and advisory perspective to produce legal evidence.
Ehioghiren & Atu, (2016)opined that financial crimes cannot be precisely defined but can be described. No one description suffices.
Williams (2005) incorporates corruptions, bribes cronyism, nepotism, political donation, kickbacks, artificial pricing and frauds of all kinds to his description of financial crimes.
Nwaze (2012) defined fraud as a predetermined as well as planned tricky process or device usually undertaken by a person or group of persons with the sole aim of cheating another person or organization to gain ill-gotten advantage which would not have accrued in the absence of such deceptive procedure.
Karwai (2002) is of the view that financial fraud in organizations vary widely in nature, character and method of operation in general. He reported that the identification of the causes of fraud is very difficult because modern day organizations frauds usually involve a complex web of conspiracy and deception that often mask the actual cause. It was noted by
Nwaze (2008) that fraud is perpetrated in many forms and usually has insiders (staff) and outsiders conniving together to successfully implement the act.
CLASSES OF FRUAD
Fraud may be classified into two broad ways: nature of fraudsters and method employed in carrying out the fraud.
On the basis of the nature of the fraudsters, fraud may be categorized into three groups, namely; internal, external and mixed frauds. Internal fraud relates to those committed by members of staff and directors of the organizations while external fraud is committed by persons outside the organization and mixed fraud involves outsiders colluding with the staff and directors of the organization. Although fraud affects the whole world, the magnitude of fraud in Nigeria and the extent to which the economy is affected is a call for alarm (Abiola, 2009).Financial crimes are crime against property, involving the unlawful conversion of the ownership of property (belonging to another) to one’s own personal use and benefit. Financial crimes may involve additional criminal acts, such as computer crime, elder abuse, burglary, and even violent crime such as armed robbery or murder. Financial crimes may be carried out by individuals, corporations, or by organized crime groups. Victims may include individuals, corporations, governments, and entire economies.
2.0 Organizations that deals with forensic issue- EFCC, ICPC AND POLICE
2.1 ECONOMIC FINANCIAL AND CRIME COMMISION (EFCC)
The Economic and Financial Crimes Commission (EFCC) is a Nigerian law enforcement agency that investigates financial crimes such as advance fee fraud (419 fraud) and money laundering.[1] The EFCC was established in 2003, partially in response to pressure from the Financial Action Task Force on Money Laundering (FATF),[2] which named Nigeria as one of 23 countries non-cooperative in the international community’s efforts to fight money laundering.[1] The agency has its head office in Abuja, Nigeria. 1 The perceived challenges of the EFCC
Undeniably, the war against corrupt practices has been hampered by a number of factors. These include the Nigerian political system which encourages corruption, presence of overburdened weak judicial system, fraudulent practices by defense attorneys and therefore, the performance of the EFCC in the war against corruption has been undermined both by factors beyond the control of the EFCC as well as internal challenges within the Commission.
THE INDEPENDENT CORRUPT PRACTICES COMMISSION
The Independent Corrupt Practices Commission (ICPC), (in full the Independent Corrupt Practices and Other Related Offence Commission) is a Nigerian agency that was inaugurated on 29 September 2000 following the recommendation of President Olusegun Obasanjo. The mandate is to receive and investigate reports of corruption and in appropriate cases prosecute the offender(s), to examine, review and enforce the correction of corruption prone systems and procedures of public bodies, with a view to eliminating corruption in public life, and to educate and enlighten the public on and against corruption and related offences with a view to enlisting and fostering public support for the fight against corruption. The Corrupt Practices and other Related Offence Act 2000 governs the committee’s activities.
THE NIGERIA POLICE FORCE CRIMINAL INVESTIGATION DEPARTMENT
The Nigeria Police Force Criminal Investigation Department (FCID) is the highest investigating arm of the Nigeria Police. Its functions include investigation and prosecution of serious and complex criminal cases within and outside the country.
The department also coordinates crime investigations/prosecution throughout the force. For effective and efficient administration , the NPF CID is divided into sections with most of them headed by Commissioner of Police. The Department is headed by DIG. USMAN ALKALI BABA psc(+), fdc
The Sections under the Force Criminal Investigation Department (FCID) include the following:
Administration;
Anti-Fraud Section;
The Central Criminal Registry (CCR);
Special Anti-Robbery Squad (SARS);
Special Enquiry Bureau
X-Squad;
General Investigation
Special Fraud Unit (SFU)
Legal Section
Forensic Science
Interpol
Homicide
Anti-Human Trafficking Unit
2.1.1 External/environmental factors
The EFCC operates in an environment that makes the achievement of its mandate very difficult. These are factors beyond the control of the EFCC. One of the difficulties lies with the Nigerian legal system that is described as outdated, limited by insufficiency of judges and unpatriotic nature of the Nigerian lawyers (Human Right Watch, 2011; Sowunmi et al., 2010; Umoh & Ubom, 2012). This can be seen in the length of time taken to dispense justice (Human Right Watch, 2011). This also poses a serious challenge to the EFCC (Obuah, 2010). For example, the absence of legal supports to admit electronic evidence in the Nigerian laws and the inadequacy of courts and judges, who at times judged as corrupt, makes the EFCC a toothless bulldog (United State Department Of International Affairs 2012) especially where government interferes with the count system in place. Although the EFCC is said to be an independent body to fight corruption, interference by government has undermined its effectiveness. For example, the removal of the chairmen of the Commission at will signify tempering with the activities of the Commission (Inokoba & Ibegu, 2011; Oke, 2014).
In addition, analysts also reported the possibility that the Commission has been used as a weapon of oppression by the ruling class (Samuel, Chinoye, & Prosper, 2013).
As observed by Inokoba and Ibegu (2011), the EFCC is criticized for been selective and discriminatory so as to meet the need of certain parties. It was suggested by Ngube and Okoli, (2013) that the Commission investigates only those who went against the incumbent government. All these claims have affected the public perception of EFCC and gradually the supports towards the EFCC (Sowunmi et al., 2010).
In addition, the existence of multiple anti-graft agencies has made the fight against economic and financial crimes a waste of time and resources. Bamidele, Olaniyan, and Ayodele (2015), argued that competition among these agencies has been a major challenge to the EFCC. Instead of concentrating on their roles in combating corruption, the Commissions have been used as ‘white elephant’ and center of expenditure. The fight of corruption was put in the hands and the responsibilities of the police. The creation of Independent Corruption Practices Commission, Code of Conduct Bureau and the EFCC saw the emergence of competition between different agencies fighting on same issue – financial crimes (Ayodele, 2014). Hence, there are calls by various groups to merge the agencies in order to cut administrative costs (Punch, 2013) and to avoid overlapping of functions.
2.1.2 Internal/organizational challenges
The job of fighting corruption requires competencies in legal, financial, investigative and forensic skills. Studies have investigated the competencies of the EFCC in fighting corruption in Nigeria. For example, Augustine and Uagbale-Ekatah (2014) examined the growing relevance of forensic accounting in fraud detection and recommended the adoption of forensic accounting by the EFCC to fight corruption.
However, Dada (2014) argued that the EFCC lack a forensic accounting unit to properly investigate economic and financial crimes. This might be due to internal factors such as untapped staffing potentials and limited organizational resources (George, Tordies, & Emmanuel, 2012). A major obstacle to the success of the Commission lies with inadequate funding. A media report indicates that the
Commission is financially incapacitated by the budget provision (Johnbosco & Joseph, 2013). The media quoted the Chairman as saying that the commission cannot even pay staff salaries and other administrative expenses due to the budget shortfall. Inadequacies in funding can affect virtually every segment of the commission. This has made the commission ineffective because it is incapable of hiring competent lawyers, accountants or other investigators to achieve the commission’s goal.
2 .1.3 Other identifiable factors
In addition to both the external and internal factors, there may be other identifiable factors that may be able to promote or hinder the adoption of forensic accounting in fraud detection process. In their studies on the adoption of forensic accounting in fraud detection, Bierstaker, Brody and Pacini (2006) and Muthusamy (2011) argued that organizational resources, behavioral controls and perceived cost of fraud might influence the adoption of forensic accounting in fraud detection process. However, these studies used professional accountants; chief finance officers in private organizations as the subject understudy. Hence, to date little efforts have been geared towards understanding organizational decision to adopt forensic accounting in fighting economic and financial crimes in developing countries. Thus, this study proposes the investigation of factors influencing the adoption of forensic accounting in fraud detection process using the following proposed research framework.
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