SOURCE:

Faculty: Management Sciences
Department: Accountancy

CONTRIBUTORS:

Egolum, Priscilla Uchenna
Okoye, E. I.

ABSTRACT:

The main objective of this study is to examinethe effectof the Fraud Pentagon Model on fraud assessment in deposit money banks in Nigeria from 2005-2014. The specific objectives are todetermine the extent to which financial pressure (FP), opportunity (OPP), rationalization (RAT), management capability (CAP), behavioural trait (BET) andcorporate governance (COPG) affect fraud risk in the financial statement of commercial banks inNigerian.The research design employed in this study was the expo-facto research design. The population of the study was centred on the performance indices of the fifteen (15) banks that are currently listed on the Nigerian Stock Exchange from 2005 to 2014. Data were obtained from the published financial statements of the fifteen (15) banks for a ten (10) year period spanning from 2005-2014, using Panel sampling method. Pearson correlation and Multiple Regression Analysis were the statistical tools used for the study. In order to verify the quality of the data used, Variance Inflation Factor (VIF) was employed to test for multicollinearity among the variables. In addition, the auto regressive method was employed to correct the problem of Auto Correlation while White Heteroskedasticity test was carried out for a result free of heteroskedasticity. The study concluded Fraud Behavioural Pentagon model for the Nigerian deposit money banks as: FRDit= 5.168522 + 7.936986FPίι+ 0.729682OPRίι- 0.001285RATίι+ 2.756188CAPίι + 0.287336COPGίι+ 2.273622BETίι +μ. The coefficients of determination (R-Squared adjusted) obtained was 0.7011; meaning that 70% of the systematic variations on the dependent variables can be jointly predicted by all the independent variables. The F-statistic (74.30) was also significant at 0.05 level; showingthat the fitness of the model used for this study was adequate. The coefficients of the effects of individual variables (FR, OPP, RAT, CA, CORP, BET) were all positive and significant at the 0.05. The fraud pentagon model offers an effective means of assessing fraud in the financial statement by incorporating the fifth element –‘the behavioural trait’ as one of the fraud risk factors. This would effectively enhance auditors’ detection of material misstatement in the financial statement ofdeposit money banks in Nigeria.