Forensic accounting hdp

Forensic Accounting

1. HUKMARAM DEVILAL PAWAR
[ M.COM, MBA, M.PHIL, NET, SET, (Ph.D. Pursuing)]
Head of Accountancy Department and
Assistant Professor
Smt. S.S.PatelNootanScience and Commerce College, Visnagar
District:-Mehsana
Mobile:-[phone]
Email ID:[email protected]

3. SOME STATISTICS
Bank Frauds: Reserve Bank of India –Rs.29910.12 Crores
Occupational Frauds: IndiaforensicResearch Foundation –
Rs.40 Billion
Corruption in India : Transparency International –India
ranks 94
th
amongst the 176 countries surveyed in this year.
RiteshChopra, Country Sales Manager, Norton said seven
per cent of the estimated global price tag of cyber crimes
are being carried out every year in India. The estimated
price tag in India is US $ 8 billion whereas the global bill
is US $ 110 billion. Eighty-five per cent of the total
financial cost of the cyber crimes are the result of fraud,
theft and loss. Fraud constitutes 42 per cent of the total
financial loss.

4. FORENSIC ACCOUNTING
A GREAT WEAPON AGAINST
ACCOUNTING FRAUDS AND
MALPRACTICES IN CORPORATE
WORLD

5. INTRODUCTION
India'simageontacklingcorruptionhasnotimprovedwith
TransparencyInternational'sCorruptionPerceptionIndex(CPI)
placingitat94
th
rankoutof176nationsthisyear.Inrecent
times,therehavebeenanincreasingnumberoffraudsand
whitecollarcrimesinallthesectorsoftheworldeconomy.In
India,numberofinfamouscorporatescandalslikeHarshad
Mehta(1992),KingfisherAirlinescreditcardfraud(2007),
KetanParekh(2008)andSatyamComputers(2009)etc.have
adverselyaffectedthedevelopmentofthecorporateandnon-
corporatesectors.Frauds,inthedifferentsectorslikebank,
insurance,stockmarket,cyberworldetc.,needasharp
scientifictool,forinvestigationandsettlementofdisputes.
TheresearcherhopesthatForensicAccountingwillproveas
“Brahmastra”(infallibleweapon)againstaccountingfrauds,
malpracticesandthewhitecollarcrimeworld.
http://www.indianexpress.com

6. CONCEPT OF FORENSIC ACCOUNTING:
AccordingtotheWebster’s,Dictionary“forensic”
means“belongingto,usedinorsuitabletocourtsof
judicatureortopublicdiscussionanddebate”.
Forensicaccountingistheapplicationofa
specializedknowledgeandspecificskillstoactupon
theevidenceoffraudulenteconomictransactions.
Forensic Accounting utilizes accounting, auditing, and
investigative skills to conduct an examination into a
company's financial statements. Thus it provides an
accounting analysis that is suitable for court.
http://www.investopedia.com/terms/f/forensicaccounting.asp

7. OBJECTIVES OF STUDY :
The Main objectives of this paper are as below:
To Know and discuss the concept of Forensic
Accounting.
To explore the need and role of forensic
accounting in solving financial problems like
frauds and malpractice in corporate world.
To Understanding and utilizing Forensic
accounting as a weapon against accounting frauds
and malpractices.
To describe the role of forensic accountant.

8. METHODOLOGY:
Thestudybasedonatheoreticalanalysis
oftheroleofforensicaccountantinsolvingthe
financialproblemofcorporateworld,itusedthe
secondarysourceofdatacollectionbymaking
useofavailableliteratureonforensicaccounting
anditsapplicationinmoderncorporateworld.

9. NEED OF FORENSIC ACCOUNTING:
39%
28%
18%
15%
Kessler International Study
Need for a forensic accountant
within the past
Already sought help from a
forensic accountant
No assistance required
Unsure of whom or where they
should turn to for help

10. Forensicaccountantsarenowinapositiontoturn
theSatyamscandalintoanopportunityduring
toughtimesforgettingjobs,asthecountryneeds
morethan6,000suchprofessionalstocheck
corporatefraudsinIndia,alatestreportsuggests.
“Thereisanacuteshortageofforensicaccounting
skillsetsinIndia.Atleast6,000forensic
accountantsarerequiredtofightcorporatefrauds
inthecountryeffectively,”saidalatestreportby
IndiaforensicConsultancyServicesonforensic
accountinginIndia.

11. “Hugedemandforforensicaccountantshascome
upinthewakeoftherequirementsfromthe
investorsaftertheSatyamfiasco,”saidMayur
Joshi,CEOofIndiaforensicConsultancy
Services,aPune-basedanti-fraudeducationand
consultancyserviceprovider.
Accordingtothereport,thereareonly400
forensicaccountantsinthecountrythoughIndia
losesapproximately$40billionbecauseoffrauds.
“Thereisoneforensicaccountanttohandlethe
fraudworth$0.1billion(Rs480crore).Ifthe
shortagecontinuesthenIndiamightwitnesssome
reallyseriousfrauds,"Joshisaid.

12. Forensicaccountantsaretrainedtodetect
evidenceoffraudsinfinancialstatements.
“Forensicaccountantsgobeyondthenumbers
andtrytoanalyse100percentofthedataas
againstthesamplingproceduresusedby
auditors.Whentheextendedproceduresare
invoked,casesliketheovervaluationofthe
salesordebtorsbecomeeasytoinvestigate,”he
saidthattheyhave10CFEs(certifiedfraud
examiners)andaround30forensicconsultants
todetectandprotectcompaniesfromfrauds.
Hindustantimes reports, http://www.hindustantimes.com/business-news/sectorsinfotech/india-needs-6-000-forensic-
accountants/article1-373489.aspx

13. THE ROLE OF FORENSIC ACCOUNTANT:
A forensic accountant is often retained to analyze
interpret summarize and present complex financial
and business in a manner, which is both
understandable and properly supported.
A forensic accountant is time and again involved
in the investigating and analyzing financial
evidence, development computerized application to
assist in the analysis and presentation of financial
evidence communicating their finding in the firm of
reports exhibits and collection of document and
assisting in legal proceedings, including testifying in
court as all expert witness and preparing visual aids
to support trial evidence.

14. Givingpreliminaryadviceasaninitialappraisalofthepleadingand
evidenceavailableatthestartofproceedings.
Identifyingthekeydocumentswhichshouldbemadeavailableas
evidence.Thisisimportantwhentheforensicaccountantisactingfor
thedefenseandlawyersarepreparinglistsdocumentstotenderincourt.
Preparingadetailedbalancedreportonquantumofevidence,writtenin
alanguagereadilyunderstoodbyanon-accountantanddealingwithall
issue,irrespectiveofwhetheronottheyarefavorabletotheclient.
Reviewingexpertaccountingreportssubmittedbytheotherparty
whichmayhaveimpactonthequantumofevidenceandadvising
lawyersonthesereports.
Briefinglegalcounselsonthefinancialandaccountingaspectsofthe
caseduringpre-trialpreparation.
Theotherplaneoftheforensicaccountantcaninitiatemeasurefor
introductionofenvironmentaccountingtohighlightthedamagedoneto
theenvironmentbythepossiblerecoupmentofsuchdamagesor
replenishmentoflostpropertiesthroughenvironmentalmanagement
continually.

15. FORENSIC ACCOUNTANT’S ROLE IN
IMPROVING CORPORATE GOVERNANCE:
Corporate Governance:
Preventing Fraud:
Creating a Positive Work Environment:
Establishing Consequences:
Fraud Investigations:

16. CONCLUSION:
Ifanorganisation/companyisconcernedabout
financialdiscrepanciesandfinancialfraud,itneedsmore
thananaccountant.Forensicaccountingisthe
combinationoftheAccounting,Auditingand
Investigationskillswhichisthebestevergrowingareas
accountingthatenablesinenhancingthechancesof
successindaytodaylifeofcorporatefirmbyprevailing
allthevexingandfinancialproblemsofcorporatefieldas
solution.SotheresearchercansaythatForensic
Accountingisagreatweaponagainstcorporatefrauds
andmalpracticeincorporateworld.Forensicaccounting
alsoveryimportantinimprovingtheroleofcorporate
governanceaswellashelpsinformulatingand
establishinganefficientcontrolsystems.

17. BOOKS ON FRAUDS
It becomes the permanent reference.
1. B.R.Sharma: “Bank Frauds” is the book
published by universal publications and is available
in all the Indian law books.
2. R.P. Nainta, “The Banking System, Frauds and
Legal Control”.
3. ArunKumar, “Money Laundering “who is the ex-
customs officer.
4. Mr.MayurJoshi, “Occupational Frauds and
Money Laundering”, A Certified fraud examiner.
The book is published by Snow-White Publications.