FORENSIC AUDIT AND FINANCIAL STATEMENT MANIPULATION IN NIGERIAN BEVERAGE COMPANIES

Abstract

This study examined the relationship between forensic audit and financial statement manipulation in Nigerian beverage companies. The study specifically examined the relationship between planning and scoping and premature revenue recognition, as well as the relationship between evidence collection and preservation and premature revenue recognition. The study was motivated by concerns over the reliability of financial statements and the possibility that inappropriate revenue recognition may be used to present an improved financial position or performance. The study adopted an ex-post facto research design and relied on secondary data obtained from the annual reports and financial statements of selected Nigerian beverage companies. The study covered five listed beverage companies and utilised company-year observations for the period under review. Data were analysed using descriptive statistics and multiple regression analysis with the aid of the Statistical Package for the Social Sciences (SPSS). The regression results showed that planning and scoping had a significant negative relationship with premature revenue recognition, with a coefficient of -0.381 and a probability value of 0.011. Evidence collection and preservation also had a significant negative relationship with premature revenue recognition, with a coefficient of -0.447 and a probability value of 0.008. The model produced an R-value of 0.731 and an R-squared value of 0.534, indicating that the two dimensions of forensic audit jointly explained 53.4% of the variation in premature revenue recognition. The overall regression model was statistically significant, with an F-statistic of 12.614 and a probability value of 0.000. Based on the findings, the study rejected both null hypotheses and concluded that effective forensic audit practices are significantly associated with reduced premature revenue recognition in Nigerian beverage companies. The study recommends that beverage companies strengthen forensic audit planning and scoping, improve the systematic collection and preservation of financial evidence, and subject revenue transactions to rigorous verification before financial statements are finalised.