Forensic Accounting In Fraud Prevention: Themes And Findings Essay.

Introduction to Forensic Accounting

Discuss about the Structured Literature Review on Forensic Accounting for Prospects.

According to Bhasin (2018) forensic accounting can be observed to use accounting, auditing along with investigative skills for carrying out an analysis of an organization’s financial statements. Forensic accounting is observed to conduct an accounting evaluation that is suitable for the court. Henry and Ganiyu (2018) stated that forensic accounting is particularly an accounting practice area that explains engagements which results from real and estimated litigation or disputes. “Forensic” can be termed as suitable to be used in court and it is to that standard along with likely outcome which forensic accountants generally need to work. Forensic accounting theossry explanation can be deemed as specialty practice area within accounting which explains the types of crimes those are investigated by the forensic accountants such as “crimes against property”. Forensic accountants are also considered as fraud investigators, investigative accountants along with forensic and fraud auditors. Imedpub.com. (2018) stated that forensic accounting theory is a type pf investigative accounting that investigates financial records for revealing lawsuit or criminal prosecution evidence. In analyzing forensic accounting as an effective tool in fraud prevention within Australian retail companies four articles are selected. This includes “Effect of Forensic Accounting Services on Fraud Reduction in The Nigerian Banking Industry”, “The Impact of Forensic Accounting on Fraud Detection”, “Corporate Governance and Forensic Accountants' role: Global Regulatory Action Scenario” and “Communion of Corporate Governance and Forensic Accounting: A Study of an Asian Country”.

The common themes along with findings those are gathered from the selected four articles are explained under:

From analysis of the four articles it has been gathered that the symptoms of fraud are generally observed in certain mistakes carried out within proper accounting techniques by the organizations (Henry and Ganiyu 2018). The articles also indicated that the fraud is not simply proven as they remain in at a safe line in which authority could not convict them. This indicates that the fraud defaulters are turning out to be smarter because of likely mistakes caused by humans. This has made proving and detecting fraud as a hard work for the forensic accountant. Four of the articles revealed that there is a requirement for deeper understanding on the ways in which the defaulters carry out their defaulter act. Without regular improvement of public along with forensic accounting, fraud cases will be difficult to get detected. Pdfs.semanticscholar.org. (2018) indicated that this can result in increased success within financial fraud that can also turn into a failure for addressing the expectations of public along with shareholders. The article revealed findings regarding accountants’ perception of forensic accounting. This elaborates low accountants’ perception extent regarding forensic accounting.

Selected Articles on Forensic Accounting in Fraud Prevention

Four articles selected in this paper explained the fact that the forensic accountants were employed by the government agencies such as FBI, CIA and IRS for investigating the major accountancy frauds (Williams 2014). However, findings gathered from these articles indicated that within the recent reporting environment, forensic accountants are in increased demand for their auditing, accounting, investigative and legal capabilities. This can have an important function in linking organizations efforts for maintaining a cohesive policy of ethical behavior in the companies. These articles indicated that this includes two major aspects such as litigation services which recognizes the function of accountant as an expert consultant along with investigating services that uses skills of forensic accountants. This also implies that the financial accountants must be skilled in financial accounting as well as organizational internal control systems, law and institutional needs. All the four articles gathered findings that to deal with the frauds an active support of the government is required (Seda and Kramer 2015). Certain government authorities have taken initiatives in developing guidelines along with procurements concerned with investigative accounting. Along with formal certificate, one can sharpen his knowledge along with sharpening individual skills within forensic accounting through undergoing training under experienced forensic accountant (Seda and Kramer 2015).

The different themes along with findings those are gathered from the selected four articles are explained under:

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  Theme 1: Forensic accountants role in improving corporate governance

The article “Corporate Governance and Forensic Accountants' role: Global Regulatory Action Scenario” revealed findings about the fact that organizations require centralized program along with established system for monitoring and measuring internal controls effectiveness. This article also revealed that there is an alignment along corporate governance, internal control along with external reporting activities. Awolowo and Clark (2017) revealed that with a better background knowledge of the legal along with institutional needs of corporate governance. In such scenario a forensic accountant can facilitate in developing and maintaining a comprehensive governance policy. The article “Communion of Corporate Governance and Forensic Accounting: A Study of an Asian Country” gathered findings regarding the fact that an effective fraud prevention program develops a positive work surrounding in which increasing motivated employees those are not attempted to address their responsibilities (Smith 2015). Forensic accountants can make sure that policies of corporate governance are developed in dealing with high risk environments in which management is pathetic is necessary. Findings from the article was also gathered that it is vital to have properly defined bring policies that results in quailed and honest employees (Seda and Kramer 2015).

Themes and Findings from the Selected Articles

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  Theme 2: Link between forensic accounting and corporate governance

The article “Communion of Corporate Governance and Forensic Accounting: A Study of an Asian Country” has explained the link between forensic accounting and corporate governance. It has been found that the literature on forensic ccount8ng along with its implementation is less in the finance curriculum (Awolowo and Clark 2017). In contrast, “The Impact of Forensic Accounting on Fraud Detection” article reveled that forensic accountants realizes the best way in dealing with fraud and maintain an effective control system which includes a better control government explained by management’s ethical behavior policy along with better corporate governance policies. Bhasin (2016) indicated that fraud deterrence must also encompass a punishment expectation. Considering the same, a forensic accountant can facilitate in developing policies which clearly indicate the organizations intention to take actions against all criminal conducts. Moreover, the article also gathered findings that forensic accountants can ensure financial statements integrity through actively investigating fraud along with recognizing risk areas and fraud symptoms (Awolowo and Clark 2017).

Analysis of the selected four articles also facilitated on identifying the managerial implications associated with the. from evaluating these four articles, it is gathered that the forensic acquainting services offers companies with vital tools for analyzing fraudulent activities but does not curb such activities (Durtschi and Rufus 2017). Certain implication was also gathered regarding the fact that forensic accounting can offer litigation support service with suitable professional services provision within the retail sector. In addition to that, forensic accounting can also facilitate in offering litigation support service that can institute better corporate governance within retail industry. This can further instill public confidence within the government along with the overall system (Durtschi and Rufus 2017). The articles also indicated that the fraud is not simply proven as they remain in at a safe line in which authority could not convict them. This indicates that the fraud defaulters are turning out to be smarter because of likely mistakes caused by humans. This has made proving and detecting fraud as a hard work for the forensic accountant. Prevention along with detection of corruption has resulted in the increase of the forensic accounting profession. Due to this fact, the most vital aspects are that the retail organizations are focused on fraud detection in order to deal with crime from taking pace n the companies and from accountants’ behalf. Vital managerial implications were also provided concerning that the government along with regulatory authorities makes sure of the provision regarding accounting standards. These also includes relevant guidelines regarding regulation of forensic accounting activities within the retail firms in Australia (Durtschi and Rufus 2017).

Managerial Implications

Through analyzing the prior researchers explained in the selected four articles, it has been gathered that previous researchers failed to investigate the expertise of “Forensic Accounting” to enhancing companies corporate governance (Awolowo and Clark 2017). The current research had certain limitations as it just focuses on explaining the barriers in using forensic accounting services that has resulted in the failure and collapse of several organizations in Australia. It did not consider explaining existing researchers on explaining the effectiveness of corporate governance mechanisms. It also did not consider explaining the growth in the areas of forensics particularly in computer forensics that is driven by the increased technology use along with cyber security crimes (DiGabriele and Huber 2015). As very less research is available in such area, the future research will be exploratory in nature. The future research will address such gap through carrying out investigation on necessary skills along with educational and training needs of Forensic accounting to enhance organizations corporate governance system (Awolowo and Clark 2017).

References

Awolowo, I.F. and Clark, M.C., 2017. Towards a Forensic Accounting Paradigm: A Neo-Empiricist Research Agenda.

Bhasin, M. (2018). Corporate Governance and Forensic Accountants' role:Global Regulatory action Scenario. [online] OMICS International. Available at: https://www.omicsonline.org/open-access/corporate-governance-and-forensic-accountants-roleglobal-regulatory-action-scenario-.php?aid=16285 [Accessed 26 Apr. 2018].

Bhasin, M., 2016. Forensic Accounting in Asia: Perspectives and Prospects. International Journal of Management and Social.

Bhasin, M.L., 2015. Contribution of Forensic Accounting to Corporate Governance: An Exploratory Study of an Asian Country.

DiGabriele, J.A. and Huber, W.D., 2015. Topics and methods in forensic accounting research. Accounting Research Journal, 28(1), pp.98-114.

Durtschi, C. and Rufus, R.J., 2017. Arson or Accident: A Forensic Accounting Case Requiring Critical Thinking and Expert Communication. Issues in Accounting Education Teaching Notes, 32(1), pp.89-105.

Henry, A.W. and Ganiyu, A. B. (2018). Effect Of Forensic Accounting Services On Fraud Reduction In The Nigerian Banking Industry. Advances in Social Sciences Research Journal, 4(12), pp.53-64.

Imedpub.com. (2018). [online] Available at: https://www.imedpub.com/articles/communion-of-corporate-governance-and-forensic-accounting-a-study-of-an-asian-country.pdf [Accessed 26 Apr. 2018].

Pdfs.semanticscholar.org. (2018). [online] Available at: https://pdfs.semanticscholar.org/25ac/a2a4f0eefc0b9ac4fc4457513b9af788521d.pdf [Accessed 26 Apr. 2018].

Seda, M. and Kramer, B., 2015. An examination of the availability and composition of forensic accounting education in the United States and other countries. Journal of Forensic & Investigative Accounting, 6(1), pp.1-46.

Smith, G.S., 2015. The past, present, and future of forensic accounting. The CPA Journal, 85(3), p.16.

Williams, J.W., 2014. The private eyes of corporate culture: The forensic accounting and corporate investigation industry and the production of corporate financial security. In Corporate Security in the 21st Century (pp. 56-77). Palgrave Macmillan, London.