INFLUENCE OF FORENSIC ACCOUNTING ON FRAUD REDUCTION IN NIGERIA BANKING SECTOR

This study examines the influence of forensic accounting on fraud reduction in selected accounting firms in Ikeja Local Government, Lagos State, Nigeria. The objectives were to investigate the impact of forensic accounting services, litigation support services, and internal controls on fraud reduction. Three research questions guided the study, with a corresponding null hypothesis tested at a 0.05 significance level. The study targeted 102 employees across 10 accounting firms, utilizing a descriptive survey design and total enumeration sampling technique. Data were collected using a self-developed structured questionnaire (Forensic Accounting and Fraud Reduction in Nigeria Questionnaire, FAFRNQ), validated for face and content validity, with reliability established via the test-retest method. Descriptive statistics (mean, standard deviation) addressed research questions, while Pearson Product Moment Correlation Coefficient (PPMC) tested the hypothesis. Findings revealed a moderate positive relationship between forensic accounting and fraud reduction (r = 0.452, p = 0.000). Respondents strongly agreed (grand means: 3.3–3.9) that forensic accounting services enhance financial record accountability, litigation support aids fraud prosecution, and internal controls deter fraudulent activities, though gaps in detection efficiency (mean: 3.5) and control communication (mean: 3.3) were noted. Recommendations include investing in forensic accounting training, establishing litigation support units, and strengthening internal controls through segregation of duties and employee training. These findings highlight forensic accounting’s pivotal role in reducing fraud, offering insights for accounting firms, regulators, and policymakers to enhance financial integrity and stakeholder trust.