RATIONALISATION RED FLAGS AND LIKELIHOOD OF FRAUD DETECTION IN NIGERIA

The broad objective of this study is to ascertain the impact of rationalisation red flags as prescribed by SAS.99 in relation to the fraud triangle on the likelihood of fraud detection in Nigeria. The specific objectives of this study are to determine the effects of rationalisation red flags proxies: quality of earnings; and effective cash tax rate on the likelihood of fraud detection in Nigeria. This study used secondary data sourced from audited annual reports of quoted companies in the Nigeria Stock Exchange and a sample size of sixty-five (65) companies were used for a six-year period of 2009-2014. The variables were derived by making necessary computations using information reflected on the face of financial statements to derive our figures not explicitly stated on the face of the financial statements. The probit regression estimation analyses on the pooled data shows that Rationalization red flags such as quality of earnings and effective cash tax rate on the average cannot aid the likelihood of fraud detection in Nigeria. It is however recommended that forensic accountants should as a matter of necessity pay close attention to our findings in this study and make use of SAS.99 qualitative and quantitative proxies red flags when carrying fraud examination.