FORENSIC AUDITING AS A TOOL FOR DETECTION AND PREVENTION OF FRAUD IN NIGERIA MANUFACTURING SECTOR

Fraud has been a pervasive problem in various industries, and the manufacturing sector is no exception. The manufacturing industry, with its complex supply chains, large-scale operations, and diverse financial transactions, presents numerous opportunities for fraudulent activities. These fraudulent activities range from financial statement fraud and procurement fraud to inventory manipulation and misappropriation of company assets. In the context of Nigeria and other developing economies, manufacturing firms have increasingly become targets of fraud due to weak internal control systems, inadequate financial oversight, and lack of comprehensive fraud detection measures (Akinyomi & Olagunju, 2020). The effects of fraud in the manufacturing sector are extensive and go beyond immediate financial losses. Fraudulent activities can lead to a decline in operational efficiency, loss of competitiveness, and reduced economic growth, particularly in developing economies where the manufacturing sector plays a crucial role in national development. Fraudulent practices such as overstated inventories, falsified procurement contracts, and fraudulent financial reporting distort the financial position of companies and may lead to regulatory sanctions, legal consequences, and even business failures (Bhasin, 2021). Such fraudulent schemes can remain undetected for long periods, causing cumulative damage to both the affected firms and the broader economy. Fraud in the manufacturing sector is not just an internal threat but also a challenge to the integrity of financial markets and national economies. The impact of fraud can be far-reaching, leading to financial losses, loss of investor confidence, and long-term damage to an organization's reputation. According to the Association of Certified Fraud Examiners (ACFE), businesses worldwide lose approximately 5% of their annual revenue to fraud, with the manufacturing sector being one of the most vulnerable industries (Albrecht et al., 2021). In Nigeria, for instance, significant cases of fraud in manufacturing companies have been reported, with billions of naira lost due to procurement fraud, financial misstatement, and asset misappropriation. This underscores the urgent need for more proactive fraud detection and prevention mechanisms in the industry.