Study on Forensic Accounting and Quality of Financial Reporting of Quoted Banks in Nigeria

The high rate of poor quality of audited financial reports by companies, including quoted banks in Nigeria, and their confirmation as unqualified reports by external auditors prompted this study, which examined the effect of forensic accounting on the quality of financial reporting of quoted banks in Nigeria. The primary goal was to investigate the effects of forensic accounting on the quality of financial or monetary reporting by publicly traded banks in Nigeria. Cross-sectional data were derived from audited financial reports of quoted banks from 2009 to 2018. The extent to which forensic accounting influences the quality of financial reporting of quoted banks in Nigeria was determined using the ordinary least square approach. After cross examination of the validity of the pooled effect, fixed effect and the random effect, the study accepts the fixed effect model as the most appropriate. The independent variable was proxied by investigative accounting services and litigation support services while the dependent variables were proxied by accrual quality, value relevance and audit time lag. In model 1, the independent variable explains 71.6 percent of the variation on accrual quality. The F-statistics validated that the model is significant, and the p value of the coefficient showed that the relationship is statistically insignificant. The results showed that investigative accounting negatively impacted on accrual quality. In model 2, the independent variable explains 61.6 percent of the variations in value relevance. The F-statistics validated the model's significance, while the p value of the coefficient indicated that the relationship is statistically insignificant. The findings also revealed that investigative accounting had a negative impact on value relevance. In model 3, the independent variable explains 59.2 percent of variations on audit time lag. The F-statistics validated that the model is significant while the p values of the coefficient indicated that the effect are statistically insignificant. The beta coefficient further showed that litigation support services had a negative effect on audit time lag. The study concludes that there is an urgent need to engage the services of forensic accountants and urgent need to publish audited accounts on timely basis to enhance timely investment decision. It recommends that forensic accountants should implement the application and required skills of investigative accounting in order to strengthen quality of financial or monetary reporting and build stakeholders’ confidence. It also recommends that appropriate law enforcement agencies take action against banks that fail to publish their annual accounts within the stipulated timeframe. This would involve forensic accountants in litigation support services, instill consciousness among top management, improve financial reporting quality, and create stakeholder confidence.