EFFECTS AND REMEDIES OF ACCOUNTING FRAUD IN PUBLIC ENTERPRISES (A CASE STUDY OF SOME SELECTED PUBLIC ENTERPRISES PORTHARCOURT)
This research work is targeted on determining the effects and remedies of accounting fraud in public enterprises in Portharcourt Rivers state. The simple random sampling technique was use to draw data from the organization, the primary and secondary data was also used. Under secondary data, some existing documents were collected and under primary data questionnaire design was used to gather relevant information for the statement of the study. Those collected data’s was analyzed using statistical tools such as tables, and simple percentage on hypothesis one and two. The findings of this research work reveals that fraud will continue as long as it not possible to read human minds and also nag as social and economic injustice remains. Some recommendations stated was that the management should install an effective accounting system and also ensure that cash and credit transactions are properly represented in the financial statement. In conclusion, public enterprises should aim at devicing any means of preventing fraud rather than detecting it and rigorous investigations without giving out solution to it.
1.1 BACKGROUND OF THE STUDY
Contemporary theories in public enterprises shows that the question that assumed prominence in the thought of most management philosophers were usually the major issues related to fraud control in public enterprises. In the word of Okezie (2004), fraud is an intentional misstatement or omissions of some amounts or disclosure from an entity’s accounting records or financial statement.
Okpara (1990) sums up “fraud involves the use of deception to obtain an unjust or illegal financial advantage”. The implication of this in the words of Okezie (2004) “fraud is an intentional misstatement”.
Actually, fraud consist of false statement made knowingly or without belief in the truth or recklessly without caring whether they are true or false with the intention that they acted upon to the detriment of persons or organizations that so acted.
Currently, research recognized that the nature and extent of fraud and other irregularities are influenced by societal values, norms and practices. At this our time, the society is not helping matters in the wave of fraud and crimes since criminates and fraudulent well to do persons are conferred with chieftaincy tildes or they are made traditional rulers.
Adeye (1996) captures this changing trend thus fraud may either take the form of manipulation of accounts which may either be accompanied by actual theft of assets or the defalcation of money or money’s worth by employees of an enterprise.
In conclusion, this work therefore attempt to investigate the effects and remedies of fraud in public enterprises focusing on some selected public enterprises in Portharcourt Rivers state.
1.2 STATEMENT OF THE PROBLEM
From the fore-going, it is possible to say that the level of fraud control and transparency with regards to the activities of public enterprises is quite low in Nigeria.
Inspite of all the ideas of a sound and systematic method of accounting record of cash receipts and payments, lack of a sound and systematic method of authorizing receipts and payment still lack in the system.
Some related problems are the simultaneous presence of:
Ineffective means of recording allocated and unallocated stores.
Lack of acceptable definition of the basis of accounting records and functions.
Inappropriate division of accounting responsibilities in an organization.
Lack of a sound and systematic method of adjusting records.
1.3 OBJECTIVES OF THE STUDY
The main objectives of this study is to find out the effects and remedies of accounting fraud in public enterprises.
Some sub-objectives include:
To critically evaluate the financial statement of public enterprises.
To identify the weakness and lapses in internal control system.
To suggest appropriate correction techniques of this internal control system.
To ensure that cash and credit transactions are properly represented in the financial statement.
1.4 RESEARCH QUESTIONS
This research work will address the following questions:
- What are the major causes of fraud in public enterprises?
- To what extent can you access the efficiency of the internal control of the enterprises?
- What solutions can you recommend to resolve these problems?
- Are these problems peculiar to public enterprises in River state?
1.5 RESEARCH HYPOTHESIS
On the basis of the fore-going variables, the following assumptions have been made:
HO: There is no significance relationship between effective fraud management and profitability of public enterprises in Rivers state.
HI: There is significance relationship between effective fraud management and profitability of public enterprises.
HO: There is no significance effect of accounting fraud in public enterprises located at Rivers state.
HI: There is significance effect of accounting fraud in public enterprises located at River state.
1.6 SIGNIFICANCE OF THE STUDY
Inspite of all the criticism and suggestions made by critics in their examination of public enterprises, most of the research evidence are supportive of this guide because it will offer the following benefits:
It will expose the areas where public enterprises have problems in cash management and fraud control.
It will suggest ways of tackling these problems.
It will show the relevance of public enterprises in the Nigerian economy.
Enable us understand the element of public enterprises as well as how to organize it.
Specially, this study will:
Indicate the extent of efficiency of public enterprises in Nigeria.
Reveal the weaknesses of the internal control of public enterprises in Rivers state.
1.7 SCOPE AND DELIMITATIONS OF THE STUDY
The research work is aimed at convening areas of management and fraud control in public enterprises in River state.
The study is to examine the importance and challenges of effective fraud management and credit control of the organization in public enterprises in relation to their performance, management and public relation.
Lastly, this work will be restricted by the following areas:
Organization structure of public enterprises.
Causes of fraud.
Remedies and control of fraud.
Classification of fraud etc.
1.8 LIMITATION OF THE STUDY
Every research study has certain limitations which falls short of the ideals which the research stabilities organized (Baridam 1990). In view of this assertion, the researcher encountered the following problems when carrying out the study:
Lack of adequate capital
Poor attitude of the respondents.
Improper accounting information system.
Lack of adequate text book and records.
Limitations of the study of some of the handicaps that militate against studies of this nature include the following:
As a result of the haphazard nature of Nigerian statistical, adequate statistical data back up the finding of this study usually posses some sort of problems.
In carrying out researches in this country, questionnaires administered are usually not taken seriously by respondents. Sometimes a low rate is usually recorded. However the pain the researcher took in waiting, going and coming in a bid to measure the questionnaires are retrieval promptly and accordingly cannot be over emphasized.
A major factor concerning the study was finance. There was need to visit several places, libraries, organizations in order to obtain information for study.
1.9 DEFINITION OF TERMS
The researcher succinctly used the following terms:
Objectives: These are specific results that a person aims to achieve within a time frame and with available resources.
Fraud: This is the use of deception to obtain an unjust financial advantage. It can also be seen as an international concealment, omission or perversion of truth to gain unlawful or unfair financial advantage.
Public enterprise: This is company whose shares are available and traded on the stock market or other over-the-counter market.
Financial statement: Is a summary report that shows how a firm has used the funds entrusted to it by its stockholders.
Cost: This is an amount that has to be paid or given up in order to get something you want.
Management: This is the process of dealing with or controlling things or people. It is also seen as the organization and coordination of the activities of a business inorder to achieve its aim.