EFFECT OF FORENSIC AUDIT ON FRAUD DETECTION IN THE FEDERAL MINISTRY OF FINANCE AND ASSOCIATE AGENCIES IN NIGERIA

Abstract

The increasing prevalence of financial fraud in Nigeria's public sector has intensified the need for more robust and investigative audit mechanisms. Forensic auditing, which integrates accounting, auditing, and investigative skills, has emerged as a critical tool in uncovering fraud that traditional audit methods have frequently neglected. This study investigates the effect of forensic audit practices, specifically Forensic Audit Investigation Techniques (FAIT), Computer-Assisted Audit Tools (CAATs), and Forensic Audit Reporting Quality (FARQ) on fraud detection in the Federal Ministry of Finance and its agencies. The main objective of the study was to assess the effect of forensic audit on detection of fraud in public financial management. The research adopted survey research design using primary data collected through structured questionnaires administered to 142 audit and finance professionals. Data were analyzed using multiple regression analysis with the aid of SPSS version 23. The findings revealed that all three variables FAIT, CAATs, and FARQ have a positive and statistically significant effect on fraud detection, with p-values below 0.05. This implies that the implementation of investigative techniques, advanced audit tools, and high- quality reporting substantially enhances the Ministry's ability to detect and respond to fraudulent activities. Based on these results, the study recommends: (i) enhanced training in forensic investigation skills; (ii) expanded deployment of CAATs across all units; and (iii) improvement in the timeliness and evidential quality of forensic audit reports. Strengthening these areas will promote transparency, accountability, and effective fraud control in Nigeria's public sector.

Keywords: Forensic Audit, Fraud Detection, CAATs, Reporting Quality, Public Finance, Nigeria