The role of forensic accounting in identifying creative accounting practices: A study of MTN Nigeria
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Background of the Study
Creative accounting refers to the use of accounting practices that deviate from standard accounting principles in order to present a more favorable financial position than actually exists. This practice is often legal but may be considered unethical, as it manipulates the financial statements to mislead stakeholders about the financial health of a company (Nwoye & Adebayo, 2024). In Nigeria, creative accounting practices are often employed to meet regulatory requirements, improve financial performance, or secure favorable market valuations, particularly in companies facing intense competitive pressures, such as MTN Nigeria.
MTN Nigeria, as one of the largest telecommunications companies in the country, operates in a highly competitive and regulated environment. The company’s financial statements are closely scrutinized by investors, analysts, and regulators, which may create pressures that encourage creative accounting. Forensic accounting, with its focus on detailed analysis and investigative procedures, plays a critical role in identifying instances of creative accounting and ensuring that financial reporting remains truthful and transparent (Alabi & Idowu, 2023).
The study aims to explore the role of forensic accounting in identifying and addressing creative accounting practices in MTN Nigeria. By applying forensic techniques such as financial statement analysis, data mining, and auditing, forensic accountants can uncover discrepancies and manipulations in financial reporting, providing vital information for investors and regulators. This research will investigate how forensic accounting methods have been applied in MTN Nigeria to detect and prevent creative accounting practices.
Statement of the Problem
Creative accounting practices are a significant concern in the Nigerian corporate landscape, particularly in companies like MTN Nigeria, where there is intense pressure to meet financial targets and satisfy regulatory requirements. Although forensic accounting has been recognized as an effective tool in detecting fraud, its role in identifying and addressing creative accounting practices has not been adequately studied in the Nigerian context. This study seeks to explore the role of forensic accounting in uncovering creative accounting practices within MTN Nigeria, with a view to improving the transparency and accuracy of financial reporting in the Nigerian telecommunications industry.
Objectives of the Study
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To evaluate the role of forensic accounting in identifying creative accounting practices in MTN Nigeria.
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To assess the effectiveness of forensic accounting in curbing creative accounting in MTN Nigeria.
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To propose strategies for enhancing forensic accounting practices in identifying creative accounting in Nigerian companies.
Research Questions
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How effective is forensic accounting in identifying creative accounting practices in MTN Nigeria?
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What forensic accounting techniques are most effective in detecting creative accounting in MTN Nigeria?
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How can forensic accounting be used to reduce or prevent creative accounting practices in MTN Nigeria?
Research Hypotheses
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Forensic accounting techniques significantly improve the detection of creative accounting practices in MTN Nigeria.
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There is a positive relationship between the use of forensic accounting and the reduction of creative accounting in MTN Nigeria.
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The implementation of forensic accounting measures significantly enhances the accuracy and transparency of financial reporting in MTN Nigeria.
Scope and Limitations of the Study
The study will focus on MTN Nigeria, specifically examining the role of forensic accounting in identifying creative accounting practices within the company. The research will explore the forensic techniques applied and assess their impact on financial transparency. Limitations may arise from limited access to internal financial data, especially regarding potentially sensitive information related to creative accounting practices, which may restrict the depth of the analysis.
Definitions of Terms
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Creative Accounting: The use of accounting practices that may comply with legal standards but manipulate financial statements to present a misleading picture of the company’s financial performance (Nwoye & Adebayo, 2024).
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Forensic Accounting: The application of specialized accounting techniques to detect financial fraud, irregularities, and unethical practices, often for legal or regulatory purposes (Alabi & Idowu, 2023).
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Telecommunications Industry: The sector that includes companies engaged in the transmission of data and information through telecommunication technologies, such as mobile networks, internet services, and broadcasting.
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