European Journal of Accounting, Finance and Investment

Forensic Accounting Practices And Profitability In The Banking Sector In Rivers State, Nigeria

WOFURU-NYENKE Oroma King PhD

Department of Accounting, Faculty of Administration and Management, Rivers State University, Nkpolu Port Harcourt Rivers State, Nigeria.

Keywords: Forensic Accounting, Fraud Detection, Internal Control, Risk Assessment, Bank Profitability, Rivers State, Nigeria

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Abstract

This study examined the effect of forensic accounting practices on the profitability of banks in Rivers State, Nigeria. The research specifically focused on two dimensions of forensic accounting, fraud detection and investigation, internal control and risk assessment, while profitability was measured using Return on Assets (ROA) and Net Profit Margin (NPM). The study adopted a descriptive and explanatory research design, targeting employees and management staff of commercial banks in Rivers State. A sample of 410 respondents was selected using stratified random sampling, and data were collected through structured questionnaires and secondary financial reports. Descriptive statistics, correlation analysis, and multiple regression analysis were used to analyze the data. The findings revealed that banks in Rivers State have implemented robust forensic accounting practices, with employees acknowledging regular fraud detection, investigations, and strong internal control systems. Regression results showed a positive and significant effect of forensic accounting practices on profitability (R² = 0.659, F = 123.45, p < 0.001). Specifically, fraud detection & investigation (B = 0.42, p < 0.001) and internal control & risk assessment (B = 0.38, p < 0.001) were significant predictors of bank profitability, with fraud detection showing a slightly stronger influence. The study concludes that forensic accounting practices are critical for enhancing bank profitability, reducing financial losses, and ensuring operational efficiency. It recommends that banks invest in advanced fraud detection technologies, continuous staff training, effective internal controls, and risk assessment frameworks, while regulators should encourage and enforce the integration of forensic accounting into banking operations.

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