FORENSIC ACCOUNTING TECHNIQUES AND SHADOW ECONOMY IN THE PUBLIC SECTOR OF SOUTH-WEST, NIGERIA

Abstract

Shadow economy of every country and the society suffer greatly from corruption and other fraudulent activities, which has resulted into a global threat. Shadow economy has been the focus of ongoing discussions in literature as the reason for the current stagnation of developing economies in places like Africa, Latin America, and Asia. Based on this, the studies have shown that not many countries have integrated forensic accounting techniques in resolving the problem of shadow economy. The study therefore, examined the effect of forensic accounting technique on shadow economy in the public sector of South-West, Nigeria. The study adopted a survey research design. The population of the study comprised 395 staff working in the Anti-graft agencies and ministry and departmental agencies in South-West, Nigeria. A sample of 254 respondents was determined using the Krejcie and Morgan formula. The result of Cronbach's alpha was greater than 0.70 and the AVE was greater than 0.5, the adapted questionnaire was deemed reliable and valid to proceed for analysis. The paper used the two methods of statistics (descriptive statistics and inferential statistics) to analyse the data. Forensic accounting techniques had significant effect on shadow economy (Adj.R2 = 0.29, F (5, 220) = 19.78, p < 0.05). Audit quality and quality of governance significantly controlled the effect of forensic accounting techniques on shadow economy (Adj.R2 = 0.29, F (7, 218) = 14.2; p < 0.05). The study concluded that forensic accounting technique affected shadow economy in the public sector of the South West, Nigeria. Therefore, the study recommended that the government of South-West, Nigeria should establish forensic accounting units in the ministries and department to ensure proper monitor of their daily transactions.