Forensic accountants, auditors and fraud capability and competence requirements in the Nigerian public sector

The foundation of this study is to examine the task performance fraud risk assessment (TPFRA) among forensic accountants and auditors in the Nigerian public sector. Most importantly, the study explored the role of fraud related problem representation (FRPR) as a mediator on the relationship between knowledge, skills and mindset (forensic accountant and auditor) and task performance fraud risk assessment. Importantly, this research employed the second generation statistical analysis tools of PLS-SEM and IBM SPSS. The ten out of fifteen hypotheses were tested through the use of PLS-SEM algorithm and bootstrap techniques on the hypothesized relationships while the remaining five hypotheses of differences among groups were tested using the Mann-Whitney U Test. The results provided verifiable support for the hypothesized relationships of the study. Specifically, knowledge, skills and mindset (forensic accountant and auditor), and fraud related problem representation are significant and positively related to task performance fraud risk assessment. In addition, knowledge, skills and mindset (forensic accountant and auditor) are significantly and positively related to fraud related problem representation. Most gratifying is the significant positive influences of knowledge, skills and mindset and fraud related problem representation indicate that the variables are essential requirements in enhancing task performance fraud risk assessment. The research findings provided support for the differences between groups (forensic accountants and auditors) hypotheses in the area of fraud detection, prevention and response. Importantly, forensic accountants have higher levels of knowledge (KR), skills (SR), mindset (MR), fraud related problem representation (FRPR), and task performance fraud risk assessment (TPFRA) than auditors. Therefore, accountants and auditors in the Nigerian public sector should be encouraged to acquire forensic accounting knowledge, skills, mindset, fraud related problem representation (i.e. capability requirement) to enhance task performance fraud risk assessment (i.e. competences requirement) in the workplace

Preface to the third issue of Indian-Pacific Journal of Accounting and Finance

I have the honour and privilege to welcome you to the Vol. 1 Issue 3 of Indian-Pacific Journal of Accounting and Finance. In this Issue 3, the journal emphasises on accounting information system, corporate governance and risk management, accounting regulation and financial reporting, and accounting. In the first paper with the caption “Examining AIS Software and Co-operatives Performance in Malaysia”, Mr Mohd Hadzrami Harun Rasit (Tunku Puteri Intan Safinaz School of Accountancy, Universiti Utara Malaysia) and Dr Mohammad Azhar Ibrahim (Tunku Puteri Intan Safinaz School of Accountancy, Universiti Utara Malaysia) examine the use of Accounting Information System (AIS) software in the context of Malaysian co-operatives. The objectives of this paper are categorised into two, namely: to document the types of AIS software used by co-operatives, and to examine the relationship between the types of AIS software used and performance of the co-operatives. Furthermore, the paper draws on the resource-based view (RBV) to examine the gap issue. Findings from this study suggest that commercial and developed-in-house AIS software are mostly used by co-operatives. Also, the results reveal that co-operatives performance is not associated with the types of AIS software used by the co-operatives. The research provides valuable insights into the implementation of AIS among Malaysian co-operatives, which has received little attention thus far from academic, governmental and professional bodies.In the second paper with the title “A Review of Financial Distress Prediction Models: Logistic Regression and Multivariate Discriminant Analysis”, Mr Ehsan ul Hassan (School of Economics, Finance and Banking, Universiti Utara Malaysia), Dr Zaemah Zainuddin (School of Economics, Finance and Banking, Universiti Utara Malaysia), Dr Sabariah Nordin (School of Economics, Finance and Banking, Universiti Utara Malaysia) present a review of literature for early prediction of financial bankruptcy. The study contributes to the formation of a systematic review of the literature regarding previous studies done in the field of bankruptcy. It addresses two most commonly used financial distress prediction models, that is, multivariate discriminant analysis and logit regression. Models are discussed with their advantages and disadvantages. After methodological review, the authors advance that logit regression model (LRM) might perhaps have more advantages than multivariate discriminant analysis (MDA) for better prediction of financial bankruptcy. However, accurate prediction of bankruptcy is beneficial to improve the regulation of companies, to form policies for companies and to take any precautionary measures if any crisis is about to come in future.In the third paper captioned “Accounting Regulation and Financial Reporting Quality: Pre-and-Post IFRS Nigeria Evidence”, Philip Jehu (Federal University Kashere, Gombe, Nigeria) and Dr Mohammad Azhar Ibrahim (Tunku Puteri Intan Safinaz School of Accountancy, Universiti Utara Malaysia) examine whether accounting regulation is associated with financial reporting quality in Nigeria. The authors use accrual-based earnings management construct – abnormal accruals as a proxy for financial reporting quality. The study reveals some significant variation in abnormal accruals with the implementation of International financial reporting standards (IFRS) to regulate accounting practice. Similarly, the research finds that the control variables - firm size, leverage, and return on asset have significant effects on financial reporting quality. This study aligns and consistent with previous studies indicating the effectiveness of IFRS adoption in improving financial reporting quality. The study contributes to the discussion on IFRS adoption across reporting environments. Regulatory agencies in Nigeria might need to consider the combined effect of other corporate governance laws to ensure quality reporting. The study is limited by our sample (2009 - 2014), and by the proxies for both accounting regulation and financial reporting quality, the data of which was in most part handpicked. The authors recommend future research to consider perhaps testing the combined effect of other corporate governance variables like audit committees and board characteristics.In the fourth paper entitled “Investigating Ownership Structure, Company Characteristics and Online Environmental Disclosure in Malaysia”, Dr. Ali Saleh Ahmed Al_arussi (Xiamen University Malaysia) and Dr. Redhwan Ahmed Al_dhamari (Tunku Puteri Intan Safinaz School of Accountancy, Universiti Utara Malaysia) focus on environmental disclosure on the Internet and examine whether ownership structure and company characteristics have a significant association with the level of Internet environmental disclosure (IED) amongst Malaysian companies. Six variables – management ownership, government ownership, firm size, level of technology, industry type, and profitability – have been chosen to be examined in this study. Multiple regression analysis is used to test these relationships by analysing the data of 201 online annual reports on the websites of Malaysian companies. The results indicate that government ownership, firm size, level of technology and industry type are positively and significantly associated with IED; management ownership is negatively and significantly associated with IED, and profitability did not show a significant relationship. The results of this paper can be used by regulators to enhance and regulate online environmental reports as it is still voluntary based. In the fifth paper with the title “Examining the Livelihood Assets and Sustainable Livelihoods among the Vulnerability Groups in Malaysia”, Dr Ahmad Zubir Ibrahim (School of Government, Universiti Utara Malaysia), Dr Kalthum Hassan (School of Government, Universiti Utara Malaysia), Dr Roslina Kamaruddin (School of Economics, Finance and Banking, Universiti Utara Malaysia), and Associate Prof. Dr. Abdul Rahim Anuar (School of International Studies, Universiti Utara Malaysia) investigate the relationship between livelihood assets and sustainable livelihoods. The study is in response to the livelihood vulnerability group such as paddy farmers, coastal fishers and rubber tappers in rural areas, which are susceptible to economic shock and climate change such as flood and drought. This condition will, no doubt, jeopardise the livelihoods of this group and hence the research gap. This study adopts quantitative study with stratified sampling method to select a total of 600 respondents from rural areas in Kedah and Kelantan. The findings confirm that physical asset, natural asset and social asset are significantly related to the achievement of sustainable livelihoods. Some recommendations have been highlighted to assist the concerned parties in improving sustainable livelihoods among the vulnerable group in rural areas. As you read through this Vol. 1 Issue 3 of IPJAF, I would like to summarise that the success of the journal depends on your active participation and those of your colleagues and friends through submission of high-quality articles within the journal scope for review and publication.I beseech our revered authors to enjoy the benefits IPJAF provides about mentoring nature of the unique review process that offers high quality and helpful reviews tailored to improving their manuscripts. I acknowledge your support as we endeavour to make IPJAF the most authoritative journal on accounting and finance for the community of academic, professional, industry, society and government

Preface to the fourth issue of Indian-Pacific Journal of Accounting and Finance

I welcome you with most significant pleasure and honour to the Volume 1 Issue 4 of Indian-Pacific Journal of Accounting and Finance. In this Issue 4, the emphasis is placed on accounting, taxation, business administration, corporate governance and risk management, accounting regulation and financial reporting, and accounting.In the first paper entitled “Board Characteristics, Corporate Performance and CEO Turnover Decisions: An empirical study of listed Non-financial Companies”, Mr Yahya Uthman Abdullahi (Tunku Puteri Intan Safinaz School of Accountancy, Universiti Utara Malaysia), Dr. Rokiah Ishak (Tunku Puteri Intan Safinaz School of Accountancy, Universiti Utara Malaysia) and Dr. Norfaiezah Sawandi (Tunku Puteri Intan Safinaz School of Accountancy, Universiti Utara Malaysia) examine the influence of board characteristics and corporate performance on CEO turnover decisions using a sample of 144 firms from non-financial companies listed on the Nigerian Stock exchange between the periods of 2011 to 2015. The study adopts agency and resource dependency theories to support its objectives and applies a logistic regression statistical technique to analyse the results. The results show that board nominating committee has a significant positive relationship with CEO turnover and board gender diversity has a negative influence on CEO turnover. Also, the study also finds that poor corporate performance leads to CEO turnover. In concurring with the findings, the study suggests to the government to enact legislation on gender quota for more women appointment on the board of the corporation to better the performance of the firm, and as well to enhance the monitoring role of the board. In the second paper with the caption “Factors affecting the productivity of IRBM Field Tax Auditor: A Case Study in Malaysia”, Mr Sabin Samitah (Tunku Puteri Intan Safinaz School of Accountancy, Universiti Utara Malaysia), Prof Dr Kamil Md Idris (Tunku Puteri Intan Safinaz School of Accountancy, Universiti Utara Malaysia) and Dr Saliza Abdul Aziz (Tunku Puteri Intan Safinaz School of Accountancy, Universiti Utara Malaysia) explore the idea of factors affecting the productivity of field tax auditors in the Inland Revenue Board of Malaysia (IRBM). This study is significant because IRBM has not yet implemented a systematic method of deploying officers to the field tax audit unit throughout Malaysia. The factors identified could be used as a reference in designing future human development programme in IRBM with particular emphasis on field tax auditors. Several variables have been defined, which broadly classified into individual characteristics and external factors. Data for the analysis are sourced from IRBM’s internal database, unpublished records and direct questionnaire of all respondents engaged in the field audit in Klang Valley. The proposed idea would analyse the relationship between auditors’ productivity and various variables based on the initial assumption that all variables are influencing the productivity through direct impact. This is, however, merely an initial expectation and subject to further data analysis once the data collection is implemented and completed.In the third paper with the title “Knowledge sharing and barriers in Organisations: A conceptual paper on Knowledge-Management Strategy”, Mr Saravanan Nadason (School of Business Management, Universiti Utara Malaysia), Associate Prof Dr Ram Al-Jaffri Saad (Tunku Puteri Intan Safinaz School of Accountancy, Universiti Utara Malaysia) and Dr Aidi Ahmi (Tunku Puteri Intan Safinaz School of Accountancy, Universiti Utara Malaysia) investigates the barriers that give impact towards the knowledge sharing among individuals in organisations. Knowledge sharing becomes the significant part of many organisations’ knowledge-management strategy. Even though the knowledge sharing is signifying practice for organisations’ competitiveness directly and market performance indirectly, several barriers make it difficult for knowledge management to achieve the goals and deliver a positive return on investment (ROI). The barriers were identified through literature reviews. The findings of previous studies revealed that several factors affect the knowledge sharing in organisations. This paper provides the analysis of significant factors that influence knowledge sharing in organisations, which comprise the individuals, culture, technology and organisation.In the fourth paper entitled “Ownership Structure and Earnings Management of listed Conglomerates in Nigeria”, Dr Musa Adeiza Farouk (Department of Accounting, Ahmadu Bello University) and Dr Nafiu Muhammad Bashir (Department of Business Administration, Ahmadu Bello University) examine the effect of ownership structure on earnings management of listed conglomerates in Nigeria. Ownership structure is represented with managerial ownership, institutional ownership, block ownership and foreign ownership, while earnings management is measured using modified Jones model by Dechow, Sloan and Sweeney (1995). Data were obtained from the six listed conglomerates on the Nigerian Stock Exchange covering the period 2008-2014 through their annual reports and accounts. The findings show that managerial ownership and ownership concentration have a significant and adverse effect on earnings management of listed conglomerates in Nigeria, while foreign ownership recorded positive and significant impact on earnings management of firms, institutional ownership was however reported to have an insignificant but negative influence on earnings management. The study, therefore, recommends that management should be encouraged to have more interest through shares in the organisation as it enables them to have more sense of belonging, which in turn will help mitigate their opportunistic tendencies. Also, the institutional ownership should be improved upon through allotment of more shares as these categories of investors are well informed and could be more vigilant over their stake in the organisation thereby performing monitoring role to mitigate earnings management.In the fifth paper with the title “Corporate Governance Structure and Firm Performance: A Case Study of Malaysian University Holdings Companies”, Prof Dr Wan Nordin Wan Hussina (Othman Yeop Abdullah Graduate, College of Business, Universiti Utara Malaysia), Dr. Norfaiezah Sawandi (Tunku Puteri Intan Safinaz School of Accountancy, College of Business, Universiti Utara Malaysia), and Dr Hasnah Shaari (Tunku Puteri Intan Safinaz School of Accountancy, College of Business, Universiti Utara Malaysia) analyse the corporate governance structure and performance of Malaysian public university holding companies from 2010 to 2014. The sample comprises eight public university holding companies. Data were obtained by using three methods, namely: survey, semi-structured interview, and documentation review. The board structure and board sub-committees practices of these case organisations were evaluated against the best practice recommendation of (i) the Malaysian Code on Corporate Governance (MCCG) 2012, (ii) the Green Book 2006, and (iii) other relevant acts. The firm performance is measured using four indicators which are sales, profit before tax, net profit margin and return on equity. Overall, their study finds that the practice and structure of corporate governance of the holding companies are excellent. However, their study reveals non-compliance by companies about certain aspects of the recommendations of Malaysian Code on Corporate Governance 2012 (MCCG) and the Green Book. The study also observed that the practice of governance between the university companies is not uniform. The findings provide an insight into the competence of the ministry of higher education as the shareholder to improve the monitoring of the public university holding companies.As you read through this Vol. 1 Issue 4 of IPJAF, I would like to reiterate that the success of the journal depends on your active participation and those of your colleagues and friends through submission of high-quality articles within the journal scope for review and publication.I acknowledge your support as we endeavour to make IPJAF the most authoritative journal on accounting and finance for the community of academic, professional, industry, society and government

Investigating socially sustainable behaviour of local players in the supply chain of shea butter in rural Borgu, Nigeria: from a role theory perspective

The Shea butter industry in Nigeria is fragmented, private-driven and less regulated. This paper explores the roles, practices, and behaviour of local supply chain stakeholders who mainly consist of rural women entrepreneurs that engage in Shea nut picking and Shea butter processing. Also, the research examines the local buying agents (LBA) who serve as the middlemen between the rural women and the exporters of Shea butter. This study deploys qualitative research design, guided by the Role theory. The study reveals that the rural women and the local buying agents are the key stakeholders who participate in the agricultural supply chain. Granting the fundamental principle of the sustainable supply chain, the findings indicate that the present active engagement and practices of these local stakeholders do not align with the principles of the sustainable supply chain. The study also exposes that factors such as gender disparity, weak access to financial support, and information asymmetry are major contributors to the present roles, practices, and behaviour of the local actors. The current study, therefore, put forward several recommendations to the Nigerian Government to encourage the construction of sustainable engagement and sustainable supply chain in the rural supply chain network

An Investigation of Socially Sustainable Behaviour of Local Players in the Supply Chain of Shea Butter in Rural Borgu Nigeria: From a Role Theory Perspective

The Shea butter industry in Nigeria is fragmented, private-driven and less regulated. This paper explores the roles, practices, and behaviour of local supply chain stakeholders who mainly consist of rural women entrepreneurs that engage in Shea nut picking and Shea butter processing. Also, the research examines the local buying agents (LBA) who serve as the middlemen between the rural women and the exporters of Shea butter. This study deploys qualitative research design, guided by the Role theory. The study reveals that the rural women and the local buying agents are the key stakeholders who participate in the agricultural supply chain. Granting the fundamental principle of the sustainable supply chain, the findings indicate that the present active engagement and practices of these local stakeholders do not align with the principles of the sustainable supply chain. The study also exposes that factors such as gender disparity, weak access to financial support, and information asymmetry are major contributors to the present roles, practices, and behaviour of the local actors. The current study, therefore, put forward several recommendations to the Nigerian Government to encourage the construction of sustainable engagement and sustainable supply chain in the rural supply chain networ

Fraud and forensic accounting: knowledge and risk assessment task performance in Malaysian public sector – conceptual study

The PwC’s 2011 Global economic crime survey confirms the fact that loss due to economic crime in Malaysia is on the increase and requires immediate intervention. The Malaysian government vision 2020 to be a developed nation with the drive: “People first, performance now” [1] will require high level acquisition and adoption of technology as a business facilitator, new legislation, and increase in the activities of government offer new opportunities for fraud perpetrators and forensic accountants. In anticipation of these challenges, this paper discusses the need for a forensic accountant knowledge on task performance fraud risk assessment in the Malaysian public sector. It also creates awareness to stakeholders fighting fraud in the public sector to the understanding of fraud mechanism and how to deal with fraudsters. The objective of the study is to examine the relationship between knowledge and fraud risk assessment task performance in the office of the Accountant general and Auditor general of Malaysia which has the potential to usher in the best global practices in fighting fraud in the Malaysian public sector

Impact of task performance fraud risk assessment on forensic skills and mindsets: experience from Nigeria

This paper discusses the impact of task performance, fraud risk assessment and forensic accountants and auditors’ skills and mindsets in the Nigerian public sector. It also draws the attention of the users of public sector accountants and auditors such as the Economic and Financial Crimes Commission, the Independent Corrupt Practices Commission, Special Control Unit of Money Laundering, Terrorism Financing and White collar crimes. The objective of the study is to enhance the fraud risk assessment task performance in the Office of both Auditor General for the Federation and Accountant General of the Federation through the effective use of skills and mindsets (forensic accountant and auditor), which will usher in the best corporate governance practices in the Nigerian public sector. Thus, the study suggests performance measurement can be improved considering the impact of forensic accountant skills and mindsets on fraud risk assessment in the Nigerian public secto

Forensic accounting knowledge and skills on task performance fraud risk assessment: Nigerian public sector experience

The Public company accounting oversight board (PCAOB) standing advisory group (2008) highlights several challenges that relate to fraud and therefore tasks accounting researchers to determine whether forensic accountants are more capable than auditors in fraud detection, prevention and response. This paper discusses forensic accountant knowledge and skills and auditor knowledge and skills on task performance fraud risk assessment in the Nigerian public sector. It also draws the attention of the users of public sector accountants and auditors such as the regulatory and enforcement agencies, courts and ministries, departments and agencies. The objective of the study is to investigate the fraud risk assessment task performance in the office of the Auditor general for the Federation and Accountant general of the Federation through the effective use of knowledge and skills (forensic accountant versus auditor), which has the potential to usher in the best global practices in fighting fraud in the Nigerian public sector

Forensic accountant and auditor knowledge and skills requirements for task performance fraud risk assessment in the Nigerian public sector

Despite the Nigerian government efforts at reducing the incidence of fraud and corruption through measures, such as establishing and strengthening organs of accountability and promoting the global best corporate practices, fraud and financial crimes in the public sector continue to be on the increase. This paper examines the capability and competence requirements – Knowledge (KR), Skills (SR) and Task performance fraud risk assessment (TPFRA) of a forensic accountant and auditor in the Nigerian public sector. Also, this study determines whether the forensic accountant has higher levels of SR, KR and TPFRA requirements than the auditor in an emergent area of fraud prevention, detection and response. The study employed cross-sectional design and a survey method. Of the 550 questionnaires distributed, 422 questionnaires were returned and out ofwhich 328 questionnaires retained for analysis. The variables are considered a between-subject factor and measured at two levels with a total of 29 observable items (including demography information). The study used PLS-SEM (SmartPLS 2.0 M3) and IBM SPSS ver. 20.0 as the primary statistical analysis tools. The results of the study confirm the significant positive relationship of SR on TPFRA and KR on TPFRA. Also, the findings revealed that the forensic accountant has significant higher levels of KR, SR and TPFRA than auditor in respect of fraud prevention, detection and response. The implication of this study might result in the overall reduction of fraud and fraudulent acts, promote institutional, regulatory and legal framework, and create awareness amongst the accounting and auditing institutions in the Nigerian public sector

An empirical investigation of fraud risk assessment and knowledge requirement on fraud related problem representation in Nigeria

Purpose: The paper investigates Fraud Risk Assessment Task Performance (TPFRA) and Knowledge Requirement (KR) of the forensic accountant and auditor on Fraud Related Problem Representation (FRPR) in the Nigerian public sector. Design/Methodology/Approach: The study used cross-sectional design and 400 Survey questionnaires. The respondents are real professional people (auditors and forensic accountants in the Nigerian public sector) as true representatives to enhance the generalisation of the outcomes. A total of 36 indicator items was measured on 5-point Likert Scale from 1 (strongly disagree) to 5 (strongly agree). PLS-SEM 2.0 3M and IBM SPSS Statistics 20.0 were employed as the primary statistical analysis tool for the study. Findings: The results of the present study confirm the positive relationship between KR on TPFRA, positive relationship of KR on FRPR, and positive relationship of FRPR and TPFRA. Specifically, the results revealed that FRPR positively mediates the relationship between TPFRA and KR (forensic accountant and auditor) in the areas of fraud prevention, detection and response. Research limitations/Implications: The first limitation deals with fraud and corrupt practices in a developing country, Nigeria. Examining the mediating influence of FRPR on KR and TPFRA in the public sector could be considered as sensitive and raise the issue of bias. The second limitation is the adoption of cross-sectional design in which data are collected at one point in time. Researchers are encouraged to use a longitudinal design to explore interactions between KR, FRPR and TPFRA. Practical Implication: This empirical study has revealed the value of KR (forensic accountant and auditor) as a significant capability requirement in the workplace. In addition, it shows the importance of FRPR as an important mental state in decision-making or judgement and also the significance of FRPR as an important mediating variable on KR and TPFRA Originality/Value: No nation is immune to fraud and loss due to fraud in the public sector is enormous and costly, the result of this research will improve the KR of auditors and forensic accountants in the areas of fraud detection, prevention and response. It will also contribute to the regulatory, legal and institutional frameworks in accounting and auditing systems in Nigeria and portend an increase in demand for forensic accountants