This study was centered
on corporate planning and organizational growth. The main objective of this
to examine the assessment of the problems of financial statement fraud on
organizations with solution to it .The study employed the descriptive and explanatory design;
questionnaires in addition to library research were applied in order to collect
data. Primary and secondary data sources were used and data was analyzed using
the chi-square statistical tool at 5% level of significance which was presented
in frequency tables and percentage. The respondents under the study were 100 respondents.
The study findings
revealed the following; Fraud has a heavy cost on an organization; there is a
solution to financial statement fraud. Based on the findings from the study, organizations
should be vigorously involved in corporate governance as it helps in the reduction
and prevention of fraud in organizations.
1.1 STATEMENT OF THE PROBLEM
The current business
environment and even more economic recession, have in recent times pushed the
top management of many organization into paying
attention to how to make financial statements of their companies look better
in order to attract investors by manipulating figures in their financial
statement either by increasing or decreasing the figures depending on what they
want to achieve at the moment using aggressive or creative accounting otherwise
known as financial statement fraud (Anumak, 2007).
recent times, fraud has been discovered to pose a big threat on organizations.
It is a big business risk which can incur a very big cost leading to a lot of
problems of which one of the problems is loss of confidence of shareholders and
the public on the company. This research work tries to solution to financial
statement fraud. Another area on which the research work will focus on “is
auditor involvement in solving fraud problems. We will also look into corporate
governance as a tool in fraud prevention cost of fraud will be discussed too.
is a very big business risk which if not prevent will have a very big negative
impact on organizational performance.
1.2 BACKGROUND OF THE STUDY
web star dictionary defines fraud as “an intentional deception to cause a
person to give up property or lawful right, which could also mean deceit,
trickery or cheating. According to statement of internal audit standard No2 of
the Institute of Internal Auditors, USA, fraud is defined as an array of
irregularities or legal acts characterized by international deception.
world of financial statements fraud needs no introduction. The practice of
manipulating the financial statements of companies to bolster their position is
act new but got to a height in Enron and world.com saga (Razace.2002).
to the Association of Certified Fraud Examiners (ACFE), financial statement
fraud is the deliberate misrepresentation of the financial condition of an
enterprise accomplished through the intentional omission mount in the financial
statement of organization to deceive financial statements users. It caused the
accounting firm a very big embarrassment and saw the demise of the world
leading accounting firm, Author Anderson (AA) (Isaac, 2008.2).
current business environment, have pushed the top of many companies and
organization with paying attention to how to make the financial statement look
better in order to attract investors or paint a good picture of their
companies, using aggressive accounting (Anumaka; 2007:1)
is classified into two categories:
involving the manipulation of the records and accounts
usually by employees involving the theft, un-appropriation or embezzlement of
companies funds in the form of cash or its other assets usually by junior
Apart from the problem of scarce resource,
organization run the typical risk of fraud and errors even more problems
solution to fraud is not sought far. In this project work, problems of
financial statement fraud will be extensively assessed with its solution in
relation to organization.
1.3 OBJECTIVE OF THE
major purpose of this research work is the assessment of the problems of
financial statement fraud on organizations with solution to it. Areas like
reason for fraud, types and implication of costs of fraud will be discussed.
Since auditors are to express their opinion on the
financial statement of an enterprise as to truth and fairness of such
statement, the internal auditor’s role in the prevention of fraud will be
looked into. The use of corporate governance as a tool on the fraud prevention
will be discussed or properly examined plus the current effort of the Nigerian
Accounting Standard Board to curb fraud.
1.4 RESEARCH QUESTIONS
research questions that have been drafted in financial statement frau in an organizations:
Issues and solution are as follows:
financial statement fraud a problem in an organization?
Can I prevent fraud?
How can I prevent fraud?
What are the costs of fraud?
Who can significantly reduce fraud in
Is auditor impropriety a yardstick to
Who can be held liable for fraud?
Can I detect fraud?
can be prevented/there is solution to fraud?
1.5 RESEARCH HYPOTHESIS
a means of solving the problems mentioned in the research questions, the
following hypothesis are formulated:
ALTERNATIVE: There is no solution
NORMS: There are problems
associated with fraud
ALTERNATIVES: There are no problems
associated with fraud
NORMS: There is solution to
1.6 SIGNIFICANCE OF THE STUDY
the major objective of this write-up is the assessment of problems/costs of
financial statement fraud on organizations with solution to it, the study will
benefit various parties. One of the benefits is to the management of business
organizations. It will help them to know the effect/cost of fraud, how to
prevent it, even how to recognize fraud. It will also benefit investors,
share-holders, financial information users etc. who may resort to audited
financial state of organizations to take investment decisions. It will also be
readily available for academic consumption.