Fraud prevention initiatives in the Nigerian public sector. Understanding the relationship of fraud incidences and the elements of fraud triangle theory
| DOI | https://doi.org/10.1108/JFC-02-2015-0008 |
| Date | 08 May 2018 |
| Published date | 08 May 2018 |
| Pages | 527-544 |
| Author | Rabiu Abdullahi,Noorhayati Mansor |
| Subject Matter | Accounting & Finance,Financial risk/company failure,Financial crime |
Fraud prevention initiatives in the
Nigerian public sector
Understanding the relationship of fraud
incidences and the elements of fraud
triangle theory
Rabiu Abdullahi and Noorhayati Mansor
Faculty of Law, Accounting and International Relations,
Universiti Sultan Zainal Abidin, Kuala Terengganu, Malaysia
Abstract
Purpose –Detecting and preventing fraudare challenging and risky tasks, especially in a fast developing
economy such as Nigeria.The efforts become crucial in the government sectors, as they involve public’strust
and resources. The purpose of this study is to examine the relationshipsbetween the fraud incidence and the
elements of fraud triangle theory (FTT) with the aim of combating current fraud outrages in the Nigerian
public sector.
Design/methodology/approach –A survey was conducted and302 questionnaires were distributed to
the staff of the departments of accounting, internal auditing and investigation of ten selected ministries,
departments and agencies of Kano State,Nigeria. Structural equation modeling (SEM) was used to analyze
the data.
Findings –The study reveals a significant relationship between three elements of FTT and fraud
incidences in the Nigerian publicsectors ( p-value <0.001 for pressure and opportunityand p-value = 0.024
for rationalization).
Practical implications –The findings of the study are useful for forensic accountantsand the Nigerian
anti-graft bodies to enhance existing control mechanisms in fraud prevention initiatives. The research also
contributesto bridge the gap in academic theory and empirical study related to FTT.
Social implications –Fraud scandals can cause public’sfrustration, damage the reputation and integrity
of the ruling governmentand result in negative image of the public sector.
Originality/value –Accordingly, the study suggests a salary scale reform(SSR) in the Nigerian public
sector and improvement in fringe benefits to increase employees’standard of living. The study concludes
with recommendationsto enhance fraud awareness and trainingprograms to the government employees.
Keywords Accounting, Forensic accountants, Fraud prevention, Fraud scandals,
Nigerian public sector, Fraud triangle theory
Paper type Research paper
1. Introduction
Fraud has become the most viable threat to the global economy that requires maximum
attention of the forensic accountants and traditional auditors, as well as anti-graft bodies
worldwide. Despite the tremendous efforts to eradicate fraudulent activities, it is indeed
discovered that fraud in its various natures continues to grow in frequency and severity
(Wolfe and Hermanson, 2004). Fraud is been considered as a global phenomenon, as it has
universally penetrates both the private and public sectors to the extent that no country is
protected from its taint although developing countries suffer the most (Okoye and Gbegi,
2013). Nowadays, fraud and other fraudulent activitieshave become the order of the day in
Fraud
prevention
initiatives
527
Journalof Financial Crime
Vol.25 No. 2, 2018
pp. 527-544
© Emerald Publishing Limited
1359-0790
DOI 10.1108/JFC-02-2015-0008
The current issue and full text archive of this journal is available on Emerald Insight at:
www.emeraldinsight.com/1359-0790.htm
the Nigerian sectors, especiallyin the public sector where it begins to become a normal way
oflifeinthemidstofcivilservants(Okoye and Akamobi, 2009;Gbegi and Adebisi, 2014).
However, despite the numerous undetected fraud scandals that were perpetrated in the
Nigerian National Petroleum Corporation (NNPC) yet, the country is still suffering a massive
fraudulent action in the hands of the higher government officials. Example it was disclosed by
Oboh (2012) that from 2007 to 2009 the sum of N28.5bn were missed from the oil subsidy fund
while BBC News Africa (2012) reports that the Nigerian senates were debating about an
unreported $6bn for oil subsidy fund from 2010 to 2012. Recently, as revealed by News Punch
(2015) an amount of money to the tune of $700m was allegedly found raw cash in the house of
Nigeria’s Minister of Petroleum. The identified foreign currency was suspected to be defrauded
from the Nigerian oil subsidy. Fraud scam can be found in almost all the Nigerian ministries
where the government officials use the power of their offices to defraud their organizations.
This statement can be justified by the series of fraud perpetrated on the Nigerian pension board
and the department of Nigerian police force as well as the federal higher court of Nigeria. The
Nigerian Police Force was ranked the nation’s most corrupt public institution (Omotoye, 2011).
In 2006, the Inspector General of the police was convicted on eight charges of theft involving
more than $100m of public money while in office. When he was found guilty, he spent only six
months in prison. This example creates a lack of public trust in the government and its
enforcement agencies. Recently, on 17 July, 2014 another case of fraud was made by the police
commissioner of one of the southern state of Nigeria (Sahara report, 2014).
1.1 Statement of the research problem
Increasing rate of frauds (i.e. money laundering and fund embezzlement) in the Nigerian
public sectors has caused grave concern to the public. Hence, the public has been
disappointed in relation to the responsibilities of auditors as they failedto contend with the
issues of fraud (Karwai, 2002;Modugu and Anyaduba, 2013). Ojaide (2000) reveals that
there is a distressing upsurge in the numberof fraudulent activities in Nigeria, stressing the
reflectivity of forensic accounting services. Owojori Subsequently, there is a general
expectation that, forensic accounting will be able to combat the financial malfeasance
witnessed in most of the sectors of the Nigerian economy (Oyejide,2003). In considering the
above series of fraud scandals and scholars’observations it imperative to address this
question: do elements of FTT have an influence towardpreventing fraud fraud incidence in
the Nigerian public sector?
1.2 Research objectives
The primary objective of this study is to examine the influence of the fraud triangletoward
unearthing the factors that causethe occurrences of fraud in the Nigerian public sectors.
The specific objectivesare:
examine the significant relationship between pressure/incentive to commit fraud
and fraud incidences in the Nigerian public sector; and
to determine the significant association between opportunity and rationalization to
commit fraud and fraud occurrences in the Nigerian public sector.
2. Literature review
2.1 Concept of fraud
Fraud has to do with intentional deception. Fraud can be defined as the deliberate use of
trick, deceit or any dishonest action to depriveanother legal right, money of property (Ernst
JFC
25,2
528
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