Appraisal of Forensic Investigation and Auditors' Liability: Empirical Evidence from Nigeria

Abstract

The evidentiary nature of forensic investigation is indispensable in detecting irregularity and ensuring quality audit and compliance. It will be hard to discern whether the auditor was negligent or duped by a tightly-knit conspiracy of insiders. This is because the procedures followed by an auditor may neither be inappropriate nor the audit client is mischievous. The polarity of auditors' liability to third party and audit quality was also an issue of contention. In view of these, the survey research design was adopted and data were collected from 509 respondents of selected Banks in Nigeria. Hypotheses were tested using Spearman's Correlations Coefficient and OLS. It was discovered that forensic investigation is significantly associated with auditor's liability; and that auditor's liability to the third party could improve audit quality. It was therefore recommended that forensic investigation should be carried out occasional not only when there is a suspicion of fraud or irregularity.