Forensic Accounting Practice and Fraud Management in Nigeria Public Sector Entities

Abstract

Fraud and financial crimes remain persistent challenges undermining the effectiveness and credibility of Nigeria’s public sector institutions. Despite the adoption of conventional auditing and internal control mechanisms, the frequency and scale of financial mismanagement indicate that traditional approaches are insufficient to address the growing sophistication of fraud. This study investigates the impact of forensic accounting practices on fraud management in Nigerian public sector entities. Specifically, it explores the role of forensic tools internal control systems, investigative accounting, litigation support, and computer forensics in fraud detection, prevention, and deterrence. The goal is to evaluate whether forensic accounting contributes meaningfully to reducing fraud and enhancing financial accountability within public institutions. The study adopts a quantitative research design using a structured survey administered to a purposively selected sample of professionals across key public institutions, including the Economic and Financial Crimes Commission (EFCC), Independent Corrupt Practices Commission (ICPC), Federal Inland Revenue Service (FIRS), and the Nigerian Financial Intelligence Unit (NFIU). Descriptive and inferential statistical techniques, including correlation and multiple regression analysis, were employed to examine the relationship between forensic accounting practices and fraud management outcomes. Findings from the analysis indicate a statistically significant and positive relationship between forensic accounting practices and fraud management effectiveness. Investigative accounting showed a strong positive correlation with fraud management (r = 0.71, p < 0.01) and emerged as a significant predictor (β = 0.362, p < 0.01). The overall regression model explained approximately 68% of the variance (R² = 0.68) in fraud management outcomes. Investigative accounting and litigation support had the most substantial impact on fraud detection and prosecution, while computer forensics played a crucial role in uncovering digital financial crimes. Internal control practices, when reinforced with forensic tools, improved accountability and fraud prevention. However, the study also revealed challenges such as limited skilled manpower, inadequate forensic infrastructure, and resistance from entrenched interests, which hamper the full integration of forensic accounting in public sector governance. The results support the argument that forensic accounting offers a more rigorous and legally grounded alternative to conventional audit processes in addressing fraud. The integration of forensic practices within public sector institutions could strengthen transparency, deter unethical behaviour, and improve the recovery of misappropriated funds. Broader implications suggest that adopting forensic accounting could restore public confidence in governance systems and enhance Nigeria’s anti corruption drive. The study recommends targeted policy reforms, investment in forensic accounting training, and the development of standardized frameworks for implementation. Future research should explore comparative international models, assess longitudinal impact, and investigate the integration of advanced technologies like blockchain and AI in public sector fraud management.