Thesis Abstract

ABSTRACT Fraud continues to be a significant concern for organizations across various industries, leading to financial losses, damaged reputation, and legal implications. In this context, forensic audit has emerged as a crucial tool in the detection and prevention of fraud. This research aims to explore the usefulness of forensic audit in identifying fraudulent activities and enhancing fraud prevention measures. The study employs a mixed-methods approach, combining quantitative analysis of financial data with qualitative investigation techniques to provide a comprehensive understanding of the role of forensic audit in fraud detection. Through in-depth interviews with forensic auditors, fraud examiners, and internal auditors, the research sheds light on the specific techniques and methodologies used in forensic audits to uncover fraudulent schemes. The findings highlight the critical role of forensic audit in uncovering complex financial fraud schemes that may otherwise go undetected through traditional audit methods. By focusing on irregularities, inconsistencies, and anomalies in financial records, forensic auditors can trace the flow of funds, identify fraudulent transactions, and gather evidence for legal proceedings. Moreover, the research underscores the preventive aspect of forensic audit, emphasizing the importance of implementing proactive measures to deter fraudulent activities. By conducting regular forensic audits and implementing robust internal controls, organizations can create a strong deterrent against fraud and misconduct. The study also discusses the challenges and limitations associated with forensic audit, including the need for specialized skills and expertise, potential resistance from employees, and limitations in access to information. Addressing these challenges requires a collaborative effort between management, auditors, and other stakeholders to foster a culture of transparency and accountability. Overall, this research contributes to the existing literature on forensic audit by providing insights into its effectiveness in detecting and preventing fraud. By enhancing our understanding of the role of forensic audit in fraud risk management, organizations can strengthen their anti-fraud measures and safeguard their assets from potential threats. This research underscores the importance of integrating forensic audit as a proactive tool in the fight against fraud, ultimately promoting financial integrity and accountability within organizations.

Thesis Overview

INTRODUCTION1.1 BACKGROUND OF THE STUDYThe incidence of fraud and misappropriation of funds in recent time poses a threat to auditing as a branch of accounting profession because of its perennial nature. This has resulted to questions as to whether auditing actually play any significant role towards the attainment of accountability and prevention of fraud especially that which is currently happening in our major or key financial institutions.Most of our financial institutions today fail to recognize that the phenomenon-fraud” can appear to be more dangerous when compared to other forms of problem like armed robbery attack which can only affect the institution within a short period of time, such may have no long term effect on their operations. However, any significant fraud committed in an institution, not only undermines or shakes up it’s financial stability but can severely affect the reputation of the institution thereby resulting to investor’s loss of confidence.Most times, the directors write off losses of fraud (including money laundering) under the general heading of -bad debt” rather than admitting that there have been a general failure to exercise or implement proper safeguards in the system of internal checks and control or managerial negligence in applying.