FORENSIC ACCOUNTING PDF

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PDF | On Nov 5, , Stamatios Spyridon Dritsas and others published FORENSIC ACCOUNTING. PDF | The contribution/importance of Professional Forensic Accountant cannot be over emphasized, whether to the public sector or to the. PDF | This paper is a historical review and commentary on the relationship of forensic accounting and auditing. In the early years of the accounting profession, .


Forensic Accounting Pdf

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1. Introduction 2. Fraud This paper reviews the literature on fraud and forensic accounting. For the purpose of this review, forensic accounting involves the THE EFFECT OF FORENSIC ACCOUNTING AS A TOOL FOR FRUAD PREVENTION ON SELECTED NIGERIAN BANKS BY ONOWA SIMON OWIZY. Journal of Forensic & Investigative Accounting Vol. 6, Issue 3, Special International Issue, Forensic Accounting: An Anglo-American Comparison.

Log In Sign Up. The literature review of this study explains the awareness on pervasiveness of and the cause of fraud, exploring methods of fraud detection and investigation and obtaining insight on fraud prevention and identifying weakness in internal objective of the study, a pilot survey conducted showed that fifty-five 55 questionnaires were administered and fifty 50 respondents were received why five 5 respondents were not received.

Based on this, fifty 50 respondents formed sample size of this study and the respondents were drawn from Accounting and Auditing firm, Lawyers, personnel from approved Government Agencies and the general public. The data analyses were done manually using table and simple percentages and the testing of hypothesis was done using Chi-square test method. The research exercise shows that most people are not aware of the concept of forensic analysis, let alone utilizing its services.

The study also revealed that a lot of potentials, opportunities and challenges abound for a forensic accountant in the Nigeria economy.

At the end, I advise that the nation needs more enlightenment on the subject matter.

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Also that accountant should keep their record adequately and work hand in hand to ensure smooth running of the economy as it affects their profession and finally, the concept should be included in the curriculum of our tertiary institutions. Introduction 1. Review of related literature 2.

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FA include: There is at this time, no examination. The next section discusses the corporations that issue the certifications. The Forensic Accounting Industry Although Williams defines the forensic accounting industry in broader terms11, he traces the evolution of the industry and its institutionalization in its current form.

His analysis is limited to Canada, but it has parallels to that of the U. As with the profession, so with the industry.

Forensic accounting corporations12 are not regulated under either Federal or state laws. No state imposes minimum qualifications for incorporators, officers, or directors, to form or operate a forensic accounting corporation. The officers and directors of some of the corporations have neither education, nor experience, in forensic accounting or fraud examination. Furthermore, as discussed below, forensic accounting corporations may be either for-profit or not-for-profit. As a rule, for-profit forensic accounting corporations do not disclose the fact that they are for-profit.

There are at least six corporations in the U. Each of the corporations and their certifications are discussed below, and excerpted from Huber, , c, d, and a. The corporations are not listed in any particular order. It issues several certifications in valuation in addition to the MFFA.

The numbers of certificants is unknown. Private investigation is a licensed profession, and private investigators strongly lobbied their state legislators for laws prohibiting performing the functions or using the title.

This has in some cases limited the ability of forensic accountants and fraud examiners from performing their duties. It was incorporated in Texas in as a for-profit corporation. A second, not-for-profit corporation with the same name was incorporated in Texas in It issues the FCPA. The number of certificants is unknown. It is a group of for-profit corporations and one-not- for-profit corporation. The original for-profit corporation was incorporated in Missouri in It issues also forensic certifications in Survival Mindset, Nursing, and others.

It previously issued certifications in Dentistry and Homeland Security, but those are no longer shown on its webstite. It issues the Cr. The number of Cr. FAs is unknown. ACFEI, It was incorporated in Florida in as a for-profit corporation. It was recently acquired by BAR- BRI, a company that prepares bar review materials for those preparing to sit for the bar exam.

Its membership consists solely of, and is limited to, CPAs. Its origins date back to , prior to the first law was adopted licensing CPAs. It is incorporated in Washington, D. This is the only not-for-profit forensic accounting corporation. Discussion Each of the Big 4 firms, as well as hundreds of other firms, has dedicated divisions focused solely on forensic accounting. With the annual revenue in the U. It also explains the hostility between the corporations Huber, b. Conclusion This paper has reviewed the legal, geographic, political, and economic background of the United States in order to establish the context of the forensic accounting profession and forensic accounting industry.

The purpose is to provide a greater understanding of the current state of the profession and industry compared to the state of the profession and industry in other countries. The forensic accounting profession and forensic accounting industry are both well established in the U. However, due to the nature of the legal and economic systems, they are both unregulated, resulting in a high degree of variability with a corresponding misperception in the market with respect to the status and reputation of the various forensic accounting certifications and the corporations that issue them.

The growth in forensic accounting revenue is greater than overall GDP growth. There is thus an incentive for new entrants into the market which, absent regulation, can add to market misperception. The potential for misperception and confusion is greater for citizens of other countries who obtain U. Although there are ancillary institutions, there has been relatively little research into the profession and industry.

Available from http: Davis, C. CIA Factbook. Available from https: Drew, J. Private-investigator licensing emerges as potential threat to CPAs.

Journal of Accountancy, March 5, Available from http: Fogarty, T. Reconsidering specialization in the accounting profession: A model for constructive recognition. Journal of Theoretical Accounting Research, 5, Beasley finds that the perpetrator.

Such review may take the form of document reviews, proportion of independent members on the board of directors is interviews, examination of electronic documents, etc. From the perspective of an attorney or a Rationalization is the third component of the fraud triangle.

When litigator, forensic accounting involves gathering, interpreting, fraud perpetrators have some incentive and find an opportunity to summarizing and presenting complex financial issues in a clear, commit fraud, the perpetrator will seek explanations to justify succinct and factual manner often in a court of law as an expert their actions. Some justification includes claiming that: Ozkul law and be presented in a manner that will be accepted by a court and Pamukcu, ; Overall, in the literature there is a consensus that there are some From the perspective of a fraud examiner, forensic accounting is relation between incentives, opportunities, and rationalization.

Davis et al undertook a survey involving respondents 4. Skills and Education of the Forensic Inves- from forensic professionals and fraud examiners to identify core tigator skills of a forensic accountant or investigator.

Their result was divided into three categories: Skills practitioners CPAs and attorneys; enhanced skills and profes- sional skills. According to Davis et al , the top five core In this section, I classify the skills of the forensic investigator into skills for the academics include: This categorization auditing skills, investigative ability, synthesis of results and think- is similar to Davis et al.

For example, Messmer identified strong analytical abilities, written and verbal communication skills, crea- tive mind-set and business acumen. Grippo and Ibex argue that the most important skills of forensic accountants come In Davis et al , the top enhanced skills for the forensic aca- from experience in accounting, auditing, taxation, business opera- demic, practitioner and attorney, include: Ramaswamy suggests skills such as: As shown in table, the relative im- Other studies such as Curtis and Digabriele observe portance of enhanced skills for each industry practice academia that academics and practitioners agree on the importance of a and practice differs according to the need of the practice.

Education Further, there are concerns that teaching the younger generation the techniques to detect fraud may not necessarily deter them from Prior studies show evidence that forensic accounting practice ap- fraud but could teach them how to commit fraud without leaving pears to be gaining importance within academic institutions e.

I argue that in- Rezaee et al. The study of institutions could witness the emergence of a new breed of orga- forensic accounting, as a branch of accounting, requires broad nized fraud perpetrators that do not leave traces of fraud because multi-disciplinary knowledge, particularly, in the knowledge of they know how to clean up the traces of fraud through their business activities, human behaviour psychology , working knowledge of fraud detection strategies taught in the university.

Difference Between Forensic Accounting And Forensic Auditing Pdf

There appear to be some con- The difficulty that regulators or forensic expert face is to deal with sensus on the broad nature of forensic accounting e. Enofe et al. To avoid this unintended A broad focus to forensic accounting among tertiary insti- consequence, a balance is needed between teaching students to tutions has some benefits to educational stakeholders.

Specifically, detect fraud and how to de-motivate them from engaging in fraud- Buckhoff and Schrader argue that incorporating forensic ulent practices.

In response to this, it is tempting to advocate for accounting as a course of study in the accounting curriculum bene- the case that the skills of fraud detection should only be taught to fits three major stakeholders in accounting education-academic fraud investigators, potential forensic analyst and external auditors institutions, students and employers of accounting graduates. In a at professional institutions rather than equipping university stu- survey on the importance of forensic accounting among tertiary dents with skills of fraud detection.

Future research can be relied institutions, Peterson and Reider report that accounting upon to find ways to balance the need to educate the younger gen- instructors in universities acknowledge the importance of forensic eration on fraud detect strategies while at the same time ensuring accounting. Groomer and Heinz investigated whether forensic related 5.

Practical Issues: Research and Policy topics were taught in universities. They found evidence that fraud- related topics were taught in internal auditing courses. Rezaee et al. Detecting Fraud: Academics vs Regulators forensic accounting. Hogan et al important for inclusion in the accounting curriculum. The presence of one or more fraud symptom is often perceived as evidence or signals In contrast, some studies document diverging views on whether indicating fraud, particularly, when supported with evidence from forensic accounting courses should be incorporated into the aca- sophisticated statistical models such as logistic regression, data demic curricula.

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Rezaee and Burtin found that forensic mining techniques. While academic research continue to maintain accountants prefer to have forensic accounting as a stand-alone the symptom-based empirical statistical approach to detect fraud, course while academics prefer to integrate forensic accounting regulators, on the other hand, do not necessarily maintain this into existing accounting courses.

For this reason, highly debated and remains a fruitful area for future research. Implication dence of actual fraud. Such supplementary evidence may include interrogations, expert witness, interviews, etc.

Although there appear to be a weak consensus on the skill-set of the forensic investigator, the importance of each skill at a particu- 5. This means that the presence of quences of further broadening the scope of forensic accounting fraud symptoms does not necessarily imply that there is actual education among tertiary institutions.

First, it leads to questions on fraud. The literature highlights some symptoms of fraud, for ex- whether forensic accounting students should cover a wide range of ample, Albrecht and Albrecht identified: Second, a broad focus to forensic account- behaviours, etc. While there appear to be some consensus that ing education implies that in-depth forensic education is unlikely statistical models significantly improves the fraud detection pro- to be adequately covered during the yearly or termly syllabus cess, it is arguable that statistical-based fraud symptoms always within academic institutions either as a stand-alone course or as an lead to real fraud cases.

In reality, it is unlikely that fraud symp- integrated course. Thus, there is a need to define the core content toms indicates evidence of actual fraud. Individuals who should focus on core auditing and financial reporting content of have a personal history of living extravagantly tend to maintain forensic accounting education while professional institutions that kind of lifestyle when they find themselves in top manage- should focus on the legal and investigative content of forensic ment.

In this case, the existence of fraud may not be associated education, is highly critical because it is difficult to distinguish with extravagant lifestyle. Only few studies raise this concern that between core and non-core areas of forensic accounting. Also, it fraud symptoms do not often lead to actual fraud cases e. Al- raises more questions such as: Notably, Albrecht excluded from the accounting curriculum? These issues remain a and Romney investigated some fraud symptom and ob- fruitful area of future research.

International Journal of Accounting and Economics Studies 67 5. Soft fraud may be defined as any fraudulent practice by a firm that is considered to be legitimate by industry standards and Investigation into every reported fraud case is costly to regulators practice or regulatory rules but is perceived as illegitimate out- investigators. For this reason, it is unlikely that all reported fraud side the context of the industry.

This kind of fraudulent practices cases will receive full and equal investigative priority. Also, if includes, but not limited to, accrual expense and revenue manipu- each case is considered for investigation, significant resources will lations, earnings management.

On the other hand, hard fraud is not be channelled proportionately to all fraud cases. There are any fraudulent practice by a firm that is considered to be illegiti- good reasons for this. First, investigating potential fraud cases mate within and outside the context of the industry. This kind of involve committing significant amount of resources into the inves- fraudulent practices includes, but not limited to, creating fictitious tigation with the aim to detect actual fraud.

This activity is reward- debtors, suppliers, etc.

Global Trends in Financial Crimes in the New Economies

This type of fraud requires strict regulatory ing to investigators if the investigation leads to the identification disciplinary actions. In this case, the perpetrators firms would be penalized and fined which allows regulators investigators to 6. Conclusion recover significant resources monetary equivalent committed into the investigation.

On the other hand, when investigation does not lead to identifying real fraud cases, significant amount of in- In this review, we have examined several issues: This loss of resources committed to fraud, forensic accounting, core and enhanced skills of the foren- investigation affect the way regulators respond to fraud cases or sic investigators as well as issues with forensic education. This events. The cost associated with fraud investigation deters regula- review discussed some practical and policy issues.

In conclusion, tors from giving every reported fraud case equal investigative it is important to note that while forensic accounting is gaining priority. On the other hand, academics stress that each reported significant research interests among academics, progress in foren- fraud case should be taken seriously. This is unlikely to be the sic accounting research will continue will depend on the extent to case in reality in reality because just as medical doctors do not which fraud perpetrators leave traces.

This is because fraud perpe- consider all illnesses to be life-threatening and thus do not commit trators do leave traces after performing the act. However, in the significant resources to this category of illness, it is easy to under- coming years, regulators will be more concerned about fraud per- stand why regulators react differently to some reported fraud cases. This will pose a Therefore, the cost and benefit of fraud investigation provides problem for regulators if perpetrators have thorough knowledge of another explanation for the diverging views between an academic accounting standards, auditing techniques and investigative skills.

This knowledge will help perpetrators to eliminate a possible trace of fraud. This will remain a supervisory and policy issue in the coming years.

4.Essentials of Forensic Accounting.pdf - AUDITING...

Finally, the progress in the forensic accounting 5. Research and Policy Gap: Forensic accounting research should play an important role to inform practice audit and policy. The future of forensic account- References ing research will depend on its ability to inform policy.The domains of the Cr. Also, if includes, but not limited to, accrual expense and revenue manipu- each case is considered for investigation, significant resources will lations, earnings management.

Further, I present some rich set of questions and identify a number of important directions for future research in forensic accounting.

To this day, that type of scheme is referred to as a Ponzi scheme. Aroki- e. Although there appear to be a weak consensus on the skill-set of the forensic investigator, the importance of each skill at a particu- 5.

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