MITIGATING CREATIVE ACCOUNTING: THE EFFICACY OF FORENSIC ACCOUNTING INTERVENTIONS IN THE NIGERIAN PRIVATE SECTOR ORGANIZATIONS

Abstract

The need for the mitigation of creative accounting practice in Nigeria’s public sector induces the need for this study owing to the attended consequences of lapse in creative accounting mitigation. As a result, this study assesses forensic accounting as a mechanism for mitigating creative accounting in Nigeria. Structured questionnaires were distributed to 226 respondents which include accounting professionals, auditors, forensic accountants, financial managers, and internal control officers of private firms, a valid response rate of 219 was obtained resulting in a response rate of approximately 97%, indicating a high level of engagement from participants. Descriptive and inferential statistics of Structural Equation Modelling (SEM) were applied for this study’s analysis. The result showed that forensic accounting techniques exert a statistically significant negative effect on creative accounting practices (β = −0.41, t = 6.82, p < 0.001), forensic accounting expertise demonstrated a significant mitigating influence (β = −0.29, t = 4.97, p < 0.001), while forensic accounting engagement also exhibited a significant negative effect (β = −0.34, t = 5.61, p < 0.001). Collectively, the forensic accounting dimensions explained 68% of the variance in creative accounting practices (R² = 0.68), indicating robust empirical evidence that forensic accounting mechanisms significantly constrain creative accounting practices within the accounting operation of the Nigerian firms. This study concluded that forensic accounting represents a statistically validated governance instrument for enhancing financial reporting credibility, strengthening corporate accountability, and improving investor confidence in emerging economies. This study recommended that it is essential to institutionalize forensic accounting practices, since most Nigerian private companies are explicitly including forensic accounting processes into their corporate governance and internal control system.