Abstract
The need to address the issue of tax fraud has increasingly caught the attention of government, policymakers and researchers in recent times. Although several efforts have been put in place to mitigate tax fraud for effective revenue generation, mobilisation via taxation is still very low in Nigeria. Consequently, this study examined the relationship between Forensic Audit Services and Tax Fraud in Nigeria.
A cross-sectional research design using a survey research strategy was adopted with responses obtained through a well-structured questionnaire administered to staff of the Federal Inland Revenue Service in South-South, Nigeria (n = 228 ). The Robust Least Square Estimation technique was applied to test the hypotheses of the study.
Findings from the study revealed that forensic audit investigation services in the form of a Background Investigation, Investigative Interview, and Analytical Procedures exert a negative significant effect on Tax Fraud. It was also revealed that the explanatory power of Litigation Support Services in the form of Pretrial Support and Expert Witnessing negatively and significantly affect Tax Fraud. The implication of these findings suggests that forensic audit services can mitigate the occurrence of tax fraud in Nigeria, thereby improving compliance and tax revenue generation. Hence, it was recommended among others that tax investigating agencies should employ background investigation techniques including surveillance, undercover operations and database searches as a routine procedure to proactively search for indicators of fraud. Also, Tax officials should be well trained on the usefulness and application of analytical procedures ranging from simple ratio analysis, data mining techniques, Benford’s Law and Beneish model during an investigation as this leads to audit efficiency.
