CHAPTER ONE/INTRODUCTION

The demand for environmental accounting is now being addressed by responsible corporate management and national governments. It rose to the top of governments’ and businesses’ priorities earlier in the 1990s as a result of a number of internal and external causes, particularly on a global scale (Okoye and Ngwakwe:2004:220-235). Nigeria is one of the many nations in the world that have enacted several environmental protection laws and rules. As people became more conscious of the need to protect the environment, laws like the Environmental Impact Assessment Act of 1992 and the Environmental Guidelines and Standards for the Petroleum Industry in Nigeria (EGASPIN: 2002) were enacted. These encourage company managers to consider the environment while making all internal decisions. All organizations under the direction of the Nigerian environmental policy agencies are also urged to give their judgments great consideration. Environmentalists agree that it may be more profitable and cost-effective for firms to invest in clean technology or pollution prevention measures rather than pollution cleaning methods. Additionally, it has been highlighted that market-driven environmental regulations are substituting pollution prevention strategies for ‘command and control’ methods of pollution control. As a result, management may need to make further decisions after choosing the optimum pollution avoidance method. Such choices may entail selecting capital expenditures, according to Shield, Beloff, and Heller (1996:5). For instance, the emergence of markets for emissions permits may force companies to choose between purchasing and selling these allowances based on the cost of avoiding the covered emissions.
Environmental issues for economics and cost accounting have also been a point of contention during the last forty years. This is because there isn’t broad agreement on how to value unmarketed, unmonetized resources and the influence they have on externalities.

Commercial concerns used to be ranked in order of importance by corporate organizations. Businesses also categorize all indirect expenses as overhead without taking the environment into account. Conventional accounting practice does not take into consideration environmental accounting for the usage of materials, water, energy, and other natural resources.
Furthermore, standard accounting does not yet contain such an approach, particularly the accounting for the effect on externalities. B. Field and M. Field (2002) claim that it wasn’t until a few well-intentioned people in industrialized countries realized that it was futile to have large corporate profits and material well-being if they came at the price of a significant portion of the ecology that sustains us. Rapid ecosystem degradation, pollution, biodiversity loss in non-renewable areas, and ecological decline all become clear dangers to human survival. According to Field & Field in 2002, “What once were restricted environmental harms, simply repaired, have now acquired wide implications that may very well turn out to be permanent.”

Globally, there is a need to study, evaluate, and put into practice accounting reporting for raw materials, energy consumption, and use of natural resources that has been slowly destroying the environment. International law has also been developed as a result of the need for governments to protect the environment and the negative consequences that industrial and human activities have on biodiversity. These regulatory environmental standards, however, just mandate the voluntary disclosure of environmental data including industrial emissions, degradations, wastages, and any other activities that have a negative impact on the environment in financial statements. The Niger Delta’s significant ecological impact on the area’s oil and gas producing environment in Nigeria has led to political unrest in the area. According to Owolabi (2007:63), the political unrest in the Niger Delta cannot be solved by wishing away environmental issues from the country’s oil and gas sector planning, management, and decision-making. “Costs and benefits need to be accurately ascribed, a clear contrast made between the creation of income and the drawing down of capital assets through resource depletion or deterioration,” he concludes in regards to environmental costs.

Notable studies in environmental accounting include the Ontario Hydro Full Cost Accounting (1993) and the AT & T Green Accounting of the United States Environmental Protection Agency (1993). Additionally, commercial organizations have been required to carefully consider and take action on their capital projects and investments as a result of the Kyoto Protocol’s (December 1997) penalties and industrial emissions of green substances (carbon dioxide, methane, and hydro fluorocarbons).

In light of growing environmental consciousness and the fact that the production of the oil and gas sectors has a considerable environmental impact, the study explores environmental accounting practices and financial reporting in the oil and gas business.

 

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 ABSTRACT

In the tax administration of any country, in-depth knowledge of tax paying attitude is very pertinent. This is very consistent with this study the determinants of tax payers attitude in Nigeria and whose purpose was to examine the variables that account for the attitudes of tax payers and to ascertain whether or not such determinants allow for the payment compliance, in view of tax assessment. A sample size of 320 taxable adults were selected from four (4) states in Nigeria as representative of the taxpayers population. Chi-square tool of analysis was adopted to test the hypotheses. As a consequence, a significant relationship was revealed between religious beliefs and willingness to honour tax obligation. Also, it as found that family pressure has a relationship with taxpayers’ attitude, while compliance was shown between tax assessment and the Nigeria tax law. On discussion of these findings, it was recommended that government should ensure equitable distribution of the nation’s wealth to justify the money collected from tax and that government should equally provide meaningful social infrastructure to reflect the money paid; moreover, government was expected to give adequate attention to financing education, to eradicate illiteracy and create employment. Finally, an ethical element in tax planning has been suggested for further study to stress the effect of tax avoidance and tax evasion.

CHAPTER ONE

INTRODUCTION

 

 

• BACKGROUND OF THE STUDY

 

          In developed economies of the world, taxation provides the bulk of government revenue for administration and development. Some goods and services that are consumed by private sector cannot be equal amount. These include social and economic infrastructures like health services, basic education, motorable roads, the maintenance of law and order and the provision of public utilities. These are goods which structure is such that the consumption of the products by various individuals is non-rival in the sense that one person’s partaking of the benefits does not reduce the benefit available to another (Musgrave:1985:10). That is, the benefit derived by one person is externalized, in that. It becomes available to another person at the same time (Umoh:1997:24).

The private sector cannot provide these types of goods (social goods), the structure of the goods provided by them is internalized, and the benefit of consumption excludes consumption by another… “the market mechanism is well suited for the provision of private goods” Musgrave (1985:10). It is based on exchange and this can occur only where there is an exclusive title to property, which is to be exchanged. It furnishes a signaling system where by procedures are guided by consumer demands.

On the other hand, it is inefficient to exclude any consumer from partaking of the benefit of social goods when it is quite obvious that participation would not reduce consumption by another regardless of earning differential. However, the provision of these social and economic infrastructures and other complementary facilities obviously requires financial resources and supply of which is from the imposition of tax.

Inspite of the multiple benefits of taxation creation amongst the populace, taxable persons are still cajoled and compelled to pay their taxes. They seem to put up resistance that create the impression that they are not happy paying the tax or that they are paying more than they are receiving in terms of social amenities.

As a further measure to reduce the assumed tax burden and motivate the people to be tax-active, the Federal Government in the 1998 budget announced tax relied and allowances packages whose entitlement does not discriminate against gender, provided there is no two allowance claim by husband and wife on the same child for children allowance; exemption of the capital gains tax on gains from worker whose total annual income is below N30,000 from paying tax, abrogation of disposal of the scope of graduate rates; taxing gas development projects under companies income tax Act of petroleum profit tax act; the extension of gas utilization down stream operations to industrial projects, extension of the initial tax holiday period of three years to five years; transmission of gas at zero percent Petroleum Profit Tax (PPT) and zero percent royalty etc.

These fiscal measures enunciated have not only the potential of reducing tax burden but also to stimulate production and generate employment thereby fostering economic advancement. But this requires the voluntary compliance, no matter how reduced the burden is whether at the individual or at the corporate level.

Most people take pleasure in evading tax, others exhibit recalcitrant disposition when it comes to fulfilling their tax obligation, a situation which Naiyeru in his article titled “Taxation and Economic Development” attributed to value orientation (Naiyeru 1988). According to Brain and Paul (1996:269-287) “the lack of adequate and imperfect information process is responsible for this situation (i.e. Tax agent, tax payer of conflict). He further asserts that the tax agent is ignorant of what the taxpayer is to pay, since he or she cannot capture a complete and accurate assessment of what he owed. Corporate taxpayers have elaborate records which are simply too voluminous to analyze completely and individual taxpayer may have no records at all. Situations like this compel the revenue agent to look beyond the superficial appearance as presented in the tax forms and the supporting documentation. Records can be forged and books can be cooked, so the revenue agent must adopt a skeptical stance that gives to the informal motto of the tax examination division (Audit the taxpayers not the return” Brain (1996:15).

Inspite of the aforementioned and bearing in mind several investigations already conduct on issues relating to taxation in Nigeria, a missing link which is very conspicuous has been a complete lack of an empirical perception or study on the determinants of tax payers behaviour. It is based on this premise that the study anchors. Therefore, attempts shall be made to adequately delve into these determinants to unravel how they influence attitudes of taxpayers’ payments.

 

• STATEMENT OF THE PROBLEM

The provision of social and economic infrastructure and other complementary facilities requires financial resources, the supply of which is from tax imposition (which is a compulsory levy on persons residing in a country). But a baffling situation is revealed in the attitude of most people to tax payment. Inspite of the obvious benefit, some people’s actions tend to imply that they do not believe in the reasons for tax imposition. But if we may ask, is it that the government is not doing enough to reassure the masses on the use to which tax is put? Or that the government is biased in its application? Why? Could it be that it is an inherent desire to be fraudulent? Some commentaries appear to allude the instinct to evade or avoid tax to be attributed to either individual or situational pressures on the tax payer and not on the degree of business specialization, investment or capitalization of the taxpayers, neither is it caused by the weakness of the law (Buba and Oyedele 1994:4). The general outcry is that the problem or attitudinal problems associated with payment of tax might be conjectured on: family pressure, peer group pressure, financial status, religious beliefs, educational level, and willingness to comply to tax law. What we are not sure however is which of these reasons explain the prevailing attitude to tax by persons, residing in Enugu, Imo, Anambra and Ebonyi State of Nigeria. The need arises for a fact-finding activity in this respect.

 

1.3    OBJECTIVES OF THE STUDY

The aim of this study is to analyze the determinants of taxpayer’s in some selected states and also to analysis the situational and individual variables like income, education level etc. more specifically, we scruntize or examine the relative effects of the situational variables and individual variables on an individual behaviour (or attitude) and how it can mingles to spur them to be tax complaint or not.

 

1.4    RELEVANT RESEARCH QUESTIONS

In order to give direction to and shed more light on the study, the following research questions were formulated:

1. Does family pressure affect attitude to pay tax?
2. How does income level influence attitudes to pay tax?
3. Does the level of Education determine pay attitude?
4. To what extent do religious beliefs attitude to pay tax?
5. What is the procedure of tax assessment in Nigeria?
6. What are attitudinal problems of taxpayers?

 

1.5    STATEMENT OF HYPOTHESES

The following hypotheses have been tested in the course of this research work.

Ho₁:  There is no significant relationship between religious beliefs

and   willingness to honour tax obligation.

Ho₂:  There is no significant relationship between tax paying attitude

and   the level of education attained by taxpayers.

Ho₃:  There is no significant relationship between family pressures

and   attitude to tax.

 

1.6    SCOPE AND LIMITATIONS OF THE STUDY

The determinants of taxpayers attitude is wide and therefore cannot be covered in this research. Because of this, this research is going to restrict itself to some selected states in Nigeria.

Time constraints dearth of data and financial constraints to enable the research extent beyond the aforementioned will limit the extend of this research.

 

1.7    SIGNIFICNACE OF THE STUDY

This work will be of much significance to the Federal Inland Revenue Services Staff, the entire taxpayers and to employers. It is also of much relevance to scholars, academics and students.

All companies would want to be adjudged as tax complaint and therefore would persuade their employees by whatever incentive to see that they comply so as to enhance their image. This study would therefore help them to know how to relate more with their staff and the limit within which they could persuade their staff to be tax complaint.

 

1.8    ORGANIZATION OF THE STUDY

This research is arranged into five parts or chapter. Chapter one contains introduction to the research work, made up of Background of the study, statement of the problems, objective of the study, relevant research questions, statement of hypotheses, scope and limitations of the study, significance of the study and organization of the study. Chapter two contains the Review of related literature.

Chapter three provides a conceptual framework of the entire research design, sampling procedure/sample size determination, data collection methods, and operational measures of the variables and data analysis techniques.

Chapter four deals with presentation and analysis of data. Finally chapter focuses on findings, discussion of findings, conclusions and recommendations.

 

1.9    DEFINITION OF TERMS 

Tax Audit:  Is the examination of and investigation of the field company tax return to ascertain the truth in the amount asserted.

Tax Avoidance: It is defined as a deliberate and legal act of the taxpayer to pay less than the ought to pay.

Tax Delinquency:  This refers to a failure to pay taxes on the due date.

Tax Evasion:  This is usually a fraudulent effort by a taxpayer to escape his legal tax obligations.

Tax Capacity: Is the extent to which the tax basis can bear the burden of taxation without a rupture of the fiscal symbiosis.

Tax Compliance:  Is the act or process of subjecting oneself, one’s incomes, business asset or expenditure to the demands of the tax law.

Tax Consultant:  Are private agent contracted by the government to collect taxes.

Tax Incentive:  Is all the measures adopted by government to motivate taxpayers to respond favourably to their obligations.

Tax Policy Strategy: Is the Pathway to the achievement of maximum tax compliance from taxpayer.

Best of Judgement (BOJ):  This is the use of tax agent initiatives in

determining the estimated amount of tax payable.

 

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ABSTRACT:

This study examined the effect of forensic auditing on financial fraud in Nigerian (DMBs). The study adopted cross sectional survey design. The population of the study comprised the staff of banks and audit firms in Abeokuta, Ogun State. The study used purposive sampling technique for questionnaire administration while logistic regression analysis was used for data analysis. The results of the study revealed that forensic audit has significant effect on financial fraud control in Nigerian (DMBs) with P value (0.007) which is less than 0.05 and that forensic audit report significantly enhances court adjudication on financial fraud in Nigeria with P value (0.000) which is less than 0.05. The study concluded that the application of forensic audit to tackle financial fraud in Nigerian (DMBs) is still at the infant stage. The study recommended that organisations should have a strong internal control system in place to reduce the occurrence of fraud.

KEYWORDS: Forensic Audit, Nigerian DMBs, Financial Fraud, Litigation and Organisations’ Failure

CHAPTER 1

INTRODUCTION

Corporate organisations like banks are essentially social-technical devices made up of people and physical actors who process inputs and at the same time execute some functions and / or tasks that lead to the accomplishment of certain goals and these stakeholders who are probably within and / or outside the organisations may for various reasons have engaged in fraudulent financial activities (Akenbor and Oghoghomeh, 2013). The Nigerian banking sector is one of the most controlled and regulated sectors. In spite of this, fraud has continued to rear its ugly head in the sector. Fraudulent financial activities are illicit activities committed with the purpose of acquiring riches either individually, in group or organised manner thereby violating existing legislation or accounting policies governing the economic activities and administration of the organisation (Yio and Cheng, 2004).

Globally, the occurrence of fraud in corporate organisations is becoming rampant and this can be shown in the large number of reported cases of bribery, corruption, embezzlement, money laundering, racketeering, fraudulent financial reporting, tax evasion, forgery and other means through which both financial and economic dishonesty are being perpetrated (Ofiafoh and Otalor, 2013). The accounting profession had already undergone radical changes as a result of the Enron and WorldCom debacles as well as other accounting scandals (Cotton, 2000). Hence, with the spotlight on the accounting profession, a new market with a new breed of accountants (forensic accountants) has emerged. Today, the occurrence of fraud and other financial crimes have gone sophisticated and even the advent of computerisation together with the introduction of internet facilities have enhanced the problem of financial crimes. The detection and / or reduction of these fraudulent activities are made more difficult and committing these crimes much easier. Hence, Onodi, Okafor and Onyali (2015) are of the opinion that forensic investigative skills are required to uncover and establish the occurrence of financial crimes.

The Centre for Forensic Studies (2010) states that if well applied, forensic auditing could be utilised to reverse the leakages that cause corporate failures. This can be attributed to the fact that proactive forensic auditing practice seeks out errors, operational vagaries and deviant transactions before they crystallise into fraud. This study focused on both management and employees frauds. The management fraud include fraudulent disbursements, window dressing, creative accounting and soon while employees fraud include asset / cash theft, teeming and lading (roll over fraud) and soon. The problem of fraud in banking industry is not limited to any economy, nation, continent or an environment; it is a general phenomenon. The origin of bank failure in Nigeria can be traced to the 1930s bank failure and crises (Owolabi, 2010). Nwankwo (1992) writes that “the crises of confidence in Nigerian banking industry is not a new one, it has been with us for quite a long time. In Nigeria now, the level of fraud in Deposit Money Banks has reached an alarming peak. The Nigerian Deposit Insurance Corporation (NDIC) annual report for the year 2014 revealed that the increase in expected/actual loss in fraud and forgeries was mainly due to the astronomical increase in the occurrence of web-based (online banking)/ATM and fraudulent transfer/withdrawal of deposit frauds.

The incidence of fraud and misappropriation of funds in recent time pose a threat to traditional auditing as a branch of accounting profession because of its perennial nature and this has resulted

to the question as to whether the statutory auditing actually play a significant role towards the attainment of accountability and prevention of fraud especially that which was recently witnessed in our commercial banks. Statutory audit appears to have shown a lack of concern and reflective attitude towards fraud fighting, thereby failing to offer the public desirable assurance to handle corruption and fraud (Akhidime and Ugbale-Ekatah, 2014) cited in (Okolie and Taiwo, 2014). The gap identified by this present study is the failure of traditional auditing to combat the occurrence of fraud and other financial crimes in the Nigerian banking industry. Hence, this study examined the effect of forensic auditing on financial fraud in Nigerian Deposit Money Banks (DMBs) using logistic regression analysis and with particular focus on DMBs, audit firms and the Abeokuta zonal branch of the Central Bank of Nigeria (CBN) all in Abeokuta, Ogun State, Nigeria.

Objectives of the study

The core objective of this study is to ascertain the effect of forensic auditing on financial fraud in Nigerian DMBs. Hence, from the study’s main objective, the following specific objectives are addressed;

• To ascertain the effect of forensic audit on financial fraud in Nigerian DMBs.
• To find out whether forensic audit report can enhance court adjudication on financial fraud in Nigeria.

Research questions

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