Analyzing Methods And Ethics Of Forensic Accounting In Resolving Business Essay.

Contemporary Business Activity and the Need for Forensic Accountants

Analyse how forensic accounting and accountants help any business sector in resolving the issues with the implementation of various methods and techniques along with the process in Australia.

The objective of the research is to analyse the methods that are used by the forensic accounting and also the accountants in order to help the business sector in resolving the issues. It is considered that the forensic accountants does the same with the help of various methods and techniques. The problem that arises in this context is while helping the business sector, the accountants have to control over the frauds and the scandals that might arise in the organizations. The department is required to examine the legal frameworks through investigation and audit that might create some inconvenience.

The contemporary business activity requires a proper security of their financial information. This is the reason they need to seek help from a forensic accountant. It is not possible for the large-scale organizations to deal the frauds from the past and the beginnings of the century. The frauds have disrupted the trust of numerous users in the financial information that usually included the financial statement. In the past the greatest fraud have been presented in the form of presenting false financial statements. This is the responsibility of the organization to detect the fraud cases, investigate about the cases and take measures to prevent the fraud cases. It can be controlled by other institutions as well. This can be done through internal control, internal auditing (Dorminey et al. 2012). They can control the disputes like preventing the property misuse cases as well as those cases that use the financial statements as the biggest tool of fraud. In the last few years and even in the current business practice the accountants are called the forensic investigators or the forensic accountants. Their primary purpose is to investigate and record the financial frauds or to detect those information that are inaccurate. This is important for the forensic accountant to have the knowledge of accounting and auditing. The person should have a good skill of communication. The communication consist of the verbal communication as well as the written communication. In order to deal the case of fraud a considerable degree of knowledge is required (Coope, Dacin and Palmer 2013).

The paper would deal with the causes of the inaccuracy and the role of the accountant in dealing the issues. The fraud mostly include the false presentation of the facts and the figures that include the improper character. It consists of the negligence of the committer. The person who receives the information considers it to be true and he blindly relies on the information and makes decision based on the information. This is the situation when the need of the forensic accountant is felt the most. They investigate the illegal cases and they also assist the lawyers, courts and the regulatory bodies and other institutions in conducting the investigations of the financial frauds. The role of the forensic accountants under the contemporary situations is extremely important (Bhasin 2013). The attention of the auditors are not directed towards the financial statements as a final products as this is the job of the external auditor. The job of the forensic auditor should be to check and regulate the transactions, the people and the environment in order to establish the indications about the frauds. However, this should be kept in mind that all the transactions does not require investigation (Özkul and Pamukçu 2012). After the investigation the accountant is supposed to make a report of the same and to provide the organization with the report. It required dedication and immense amount of hard work to make the report. The quality of the report should be such that the accurate decisions and estimations can be made based on that (Bhasin 2015).

Causes of Inaccuracy and the Role of Accountants in Dealing with the Issues

Ethics are the consideration of the standards and the principles that is responsible for controlling the behaviour of the individuals or any groups inside the organization. It has become a necessary aspect for the accountants to maintain the ethics while conducting the research. Similarly the researcher should maintain few ethics while conducting the research. If a person is not ethically correct he might land up in doing something wrong. He might produce wrong information or he might not make enough effort to conduct a responsible research. Some of the ethics that will be considered in the following study are, the deception that should be avoided at any cost, the risk or the harm that can be caused should be avoided (Hammersley and Traianou 2012). The harm might include the mental harm as well as the physical harm. The maintenance of the ethics might include the maintenance of the decorum that can be obtained by having a full consent. In this case while collecting the data the consent of the participant should be taken. It should be taken on a consent form and they should not collect the data forcefully from the participants. In many case it has been observed that the paper has been released without taking the full consent of the responsible person. It can treated as an ill manner which is not healthy for a research (Mealer and Jones 2014).

However, the most important aspect of the ethical consideration is maintaining the confidentiality at an adequate level. The identity if the participants should be kept confidential. Even the reports should not be shown to the persons who is not related with the research. The leakage of the information can be considered guilty in the grounds of ethical consideration. The final thing that should be taken into consideration is the objectivity should be maintained at high level (Haggerty 2016). The objective of the research should be clear. The questions of the research should be based on the objective of the research and not on other topics. There should be honesty and transparency. The research should be conducted with honesty or else the purpose of the research will not be accomplished. The collection of the data and the analysis the data has to be done using the genuine methods (Greaney et al. 2012).

The presence of a separate department that is designed to deal the frauds and the gaps have helped the organizations to maintain a transparency within the organizations. In the earlier times the organizations did not paid much attention on the research of the fraud of the financial accounts that sometimes occurred inside the organization. They had an accountant who took care of the financial records. It is relevant even today in the small-scale organizations. The large-scale organizations have a separate forensic accounting department. According to Pedneault et al. (2012), this makes the system more organized and it prevents the organization from the misconduct. The operations of the organization is made smoother with the formation of a special forensic department. It has prevented the organization from any kinds of disputes. The theory of the forensic accounting remained to be the specialty practice sector. The activities of the forensic department helps in the professional intelligence (Bhasin 2013). It enables the accountants to access the casualty in the fraud case and it also enables them to comment on the duty of other professionals. In all the counties the forensic accountants are held to be the most important sector as it is responsible for delivering the social corporate responsibility. They manage the threats of poor governance that might remain in all the organizations. The audit and the investigations in the organizations enables in meeting the corporate responsibilities with honesty and transparency.  This section will analyse the views of different critics and will try to compare and contrast the views of those critics (Bhasin 2013).

Ethical Considerations in Conducting Forensic Accounting Research

Scholars like Bodnar and Hopwood (2012), have argued that there are various definitions of forensic accounting. Zadeh and Ramazani (2012), have defined the forensic accounting as the duty of collecting data and the analysis of those data in the field of litigation support consultation, expert witnessing and fraud examination. On the other hand Imoniana, Antunes and Formigoni (2013), argues that the forensic investigation included the determination and the establishment of the fact taking help from the legal cases. This the forensic techniques can be used to detect and investigate a crime in order to expose the culprits. Efiong (2012), have presented a different view in which he mentioned that the technique is exhaustive, that the accountant can deliver a findings as to accounts, inventories or the presentation. It includes the summarising of the complex financial issues concisely in the court of law as an expert.

It has been argued by Pedneault et al. (2012), that the forensic accounting is the mixing of the concepts of the accounting, auditing and the investigative skills. He described the concept as the concept that is related to the legal problems. The report where the fraud has been detected can be presented in the court of law. The report is so strong that it can be presented as an evidence. It is recognized as a particular form of professional expertise and it is gifted with specific attributes. It serves as a serious facts that is important in the business litigation. On the contrary Dada, Owolabi and Okwu (2013), argues that this department does not deal with only the facts and the figures. This department is relevant with the dealings of the situations of a business. The department requires to analyse, interpret and summarise the complex financial scenario of a business organization. He further comments that the role of the forensic accounting is to present report of the financial evidence and to communicate the findings of the report. It includes the assistance of the accountant in the legal proceedings. It would expect the accountant to present a visual aid in order to support the trail evidence. Huber (2012), adds to it that the forensic accounting is the service where the application of the specialised knowledge is required. The knowledge of tax, economics, accounting, auditing and other skills related to this is mandatory in this. Through the application of these skills the fraud can be avoided (Bhasin 2013). This is a different view compared to the previous view. According to this view, before the act of fraud commits the forensic department can form strategies to avoid it. This is the first and foremost responsibility of the forensic accountant. The scholar commented that there is a difference between the forensic accounting and fraud auditing. In the case where the auditor does not immense knowledge of proper communication and skills that is required for auditing the report generated will not be genuine and the organization might suffer from the threat of fraud.

Importance of a Forensic Accounting Department in Organizations

According to Imoniana, Antunes and Formigoni (2013), a fraud auditor is an accountant who is especially skilled in auditing. The job of a forensic accountant is basically to indulge in the accounting consulting and the execution of the legal skills in broader engagements. The participation in the fraud auditing can be done by him but his priority is not that. Bhasin (2013), stated that forensic accounting is the science of gathering and presenting the information in a form that will be accepted by a court of jurisdiction against the perpetrators of economic crime. The research made by the department should be such that it meets the standards of the court of law. The failure in the understanding the roles and the responsibility of the auditor and the accountant might lead to different scandals inside the organization. This might serve as the biggest gap.

In order to understand the study it is important to understand the definition of the financial fraud. It can be defined as the crime of cheating someone in order to get money or goods in an illegal manner. This can be crime against the property, this sometimes even include bribe, cronyism, nepotism, political donation, kickbacks, artificial pricing and the activities related to this. It has been countered by Fiia (2013), by commenting that there are three basic kinds of frauds, they are external, internal and mixed. The former one is committed by the member who are a part of the organization. The second one is committed by the ones who are not the part of the organization and the mixed fraud is the collision between the outsider and the members of the organization. In case the organization does not recruit a separate department to manage this frauds the organization might face the threat of illegal activities (Fiia 2013).

The aim of the research is to establish a connection between the knowledge and skills of the forensic accountants and the role they play in controlling the illegal and the fraud activities that might take place in an organization. The objective of the research is analyse the gaps that might develop if the auditor or the accounting does not perform his duty. The study further understands and analyses the definitions of the fraud activity and the ways to tackle those. The report focuses on the way the forensic accounting benefits the detection of the fraud.

References

Bhasin, M.L., 2013. Corporate accounting scandal at Satyam: A case study of India’s enron. European Journal of Business and Social Sciences, 1(12), pp.25-47.

Views of Different Critics on Forensic Accounting

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Bhasin, M.L., 2015. Corporate accounting fraud: A case study of Satyam Computers Limited.

Bodnar, G.H. and Hopwood, W.S., 2012. Accounting information systems. Upper Saddle River: Pearson.

Cooper, D.J., Dacin, T. and Palmer, D.A., 2013. Fraud in accounting, organizations and society: Extending the boundaries of research.

Dada, S.O., Owolabi, S.A. and Okwu, A.T., 2013. Forensic accounting a panacea to alleviation of fraudulent practices in Nigeria. Int. J. Buss. Mgt. Eco. Res, 4(5), pp.787-792.

De Leeuw, E.D., Hox, J. and Dillman, D., 2012. International handbook of survey methodology. Routledge.

Dorminey, J., Fleming, A.S., Kranacher, M.J. and Riley Jr, R.A., 2012. The evolution of fraud theory. Issues in Accounting Education, 27(2), pp.555-579.

Efiong, E.J., 2012. Forensic accounting education: An exploration of level of awareness in developing economies-Nigeria as a case study. International Journal of business and management, 7(4), p.26.

Fiia, F., 2013. Forensic accounting: A tool for fraud detection and prevention in the public sector.(A study of selected ministries in Kogi state). International Journal of Academic Research in Business and social sciences, 3(3), p.1.

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Hammersley, M. and Traianou, A., 2012. Ethics and educational research. London: British Educational Research Association.

Hippler, H.J., Schwarz, N. and Sudman, S. eds., 2012. Social information processing and survey methodology. Springer Science & Business Media.

Huber, W., 2012. Is forensic accounting in the United States becoming a profession?.

Huber, W., 2013. Forensic accountants, forensic accounting certifications, and due diligence.

Imoniana, J.O., Antunes, M.T.P. and Formigoni, H., 2013. The forensic accounting and corporate fraud. JISTEM-Journal of Information Systems and Technology Management, 10(1), pp.119-144.

Mealer, M. and Jones, J., 2014. Methodological and ethical issues related to qualitative telephone interviews on sensitive topics. Nurse Researcher (2014+), 21(4), p.32.

Özkul, F.U. and Pamukçu, A., 2012. Fraud detection and forensic accounting. In Emerging fraud (pp. 19-41). Springer, Berlin, Heidelberg.

Panneerselvam, R., 2014. Research methodology. PHI Learning Pvt. Ltd..

Pedneault, S., Silverstone, H., Rudewicz, F. and Sheetz, M., 2012. Forensic accounting and fraud investigation for non-experts. John Wiley & Sons.

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Recker, J., 2012. Ethical considerations in research. In Scientific Research in Information Systems (pp. 141-147). Springer, Berlin, Heidelberg.

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Zadeh, H. and Ramazani, M., 2012. Accountant's Perception of Forensic Accounting (Case Study of Iran). Islamic Azad University, Zanjan, Iran.