Forensic Accounting in Uncovering Payroll Fraud in Nigerian State Civil Services

This study examines the application of forensic accounting techniques in detecting and investigating payroll fraud in Nigerian state civil services. Ghost worker syndromes, salary overpayments, and unauthorized payroll manipulations have cost Nigerian state governments billions of naira in preventable losses. Several states have conducted payroll verification exercises in recent years, revealing significant discrepancies between nominal and actual staff numbers. This study uses a descriptive survey design and administers questionnaires to 75 forensic accountants, internal auditors, and civil service commission officers who have participated in payroll audit exercises in Ondo, Ogun, and Edo States, South West and South South Nigeria. Forensic accounting tools evaluated include data analytics for anomaly detection, physical verification procedures, biometric identification systems, and documentary examination of employment records. Results indicate that biometric-enhanced payroll verification, combined with data analytics for transaction pattern analysis, is the most effective forensic method for detecting ghost workers and salary manipulation. States that conducted forensic payroll audits reported an average reduction of 12 percent in monthly wage bills following the removal of fraudulent entries. The study concludes that forensic accounting is highly effective in addressing payroll fraud but should be complemented by ongoing biometric-based payroll management systems. It recommends that all state governments mandate annual forensic payroll audits as a condition of budget approval and transition to biometric payroll platforms.

Keywords: forensic accounting, payroll fraud, ghost workers, civil service, biometric verification.