ACCY902 Accounting Essay Sample

ACCY902 Accounting Essay Sample

 Assessment Brief

Solution

Abstract

Forensic accounting is a straightforward application of accounting principles and methods to legal situations. The need is brought on the prevalence of financial crimes such as money laundering, terrorist fraud and other financial crimes. In today's business, forensic accounting is becoming more important due to the enormous volume and complexity of data generated by modern organisation, making it impractical to manually monitor transactions. According to the MBA Assignment Experts overview, In different sectors, according to the norms of evidence, forensic accounting is the practice of using financial expertise and an investigative mindset to address unsolved problems. The application of specialized technical knowledge based on the certain evidences. By identifying the individuals and techniques used to conduct a financial crime, forensic accountants support investigations. The results of these financial inquiries might result in convictions and the eventual return of all dues earned via the financial crime. Additionally, in order to prevent future crimes from happening, knowing how financial crimes are perpetrated is crucial.  In the fields of personal legal consulting, expert testimony, and fraud examination, it is the activity of meticulously collecting and analyzing data. 

There are both quantitative and qualitative forensic accounting methods. The qualitative approach looks at the character qualities of persons who carry out financial fraud schemes. A popular notion of fraud is the "fraud triangle," which divides fraud into three categories: perceived possibility, perceived need (pressures), and rationalization. In detecting fraud, application of accounting methods and theories is done and majorly in organisation monitoring of financial activities is done such as billing, cash management, refunds, payrolls, etc. 

The essay examines the role of forensic accounting in preventing and detecting the financial crimes happening in the industry. The essay mainly concludes that forensic accounting incorporates all of the other subfields of accounting's investigative application theories, facts and principles to detect and prevent financial fraud. 

Introduction

Forensic accounting is the application of financial and investigative abilities to settle disputes in civil and criminal cases (Akinbowale et al., 2020). In investigation, the accountants applies the principles, theories and discipline to facts to handle any kind of financial dispute but a relevant process is followed for crime detection. The essay focuses on role of forensic accounting in financial fraud detection and prevention. 

Body 

Forensic accounting includes the role of skilled auditors, accountants, and researchers of legal and financial records who are engaged by businesses to look into any potential indications of fraud or to simply stop fraud from happening (Utomwen and Danjuma, 2015). There is increasing problem of financial fraud such as money laundering, finances provided to terrorist, etc (Mc kinsey and Company, 2019). Considering example of Enron Accounting Scandal in 2001, company had biggest accounting scandal of $70. The full extent of Enron's wrongdoing was only discovered when the accountants looked beyond the inflated numbers (not like auditors going through all financial statements). In the end, Enron was accused with disguising debt agreements, manipulating stock prices and debt ratings, and making false statements about its financial position and earnings (The financial cell, 2021). Due to the fact that there will be a public jury in the fraud case, this is critical. However, internal auditors may not be able to provide the evidence required by a court or regulatory agency. Risks of consultant negligence and legal liability may arise if checklists are utilized in lieu of consulting an internal auditor (Tiwari and Debnath, 2017).

The process of forensic accounting starts with obtaining as much information as possible from customers, suppliers, stakeholders, and anybody else associated with the organisation (Enofe et al., 2015). Next to this, accountants perform a study of any background information that is been provided, as well as a review of any financial statements is been given, in order to find any flaws or faults in the reporting of those financial statements (Okpako and Atube, 2013.). The next step is to talk to employees to see if they can provide any light on where the fraud is taking place. Among the many things accountant will look at the foundational ideas of the business, employee evaluations, management styles, and the overall structure of the firm (Akinbowale et al., 2020). The forensic accountant will next attempt to draw conclusions from the data they have gathered when this stage is complete. Therefore, it is important to incorporate forensic accounting in financial operation so that future risk is avoided (Utomwen and Danjuma, 2015). 

Conclusion

The essay concludes that to detect and prevent fraud organisation require an integration of specialized knowledge, auditing, data collection and analysis and taking a certain action. Organisation require a role of an expert accountant as it looks towards the financial operations and it regularly search for errors and it also monitors the poorly documented transactions. 

References

Anuolam, O.M., Onyema, T.E. and Ekeke, U., 2017. Forensic accounting and financial crisis in Nigeria. West African Journal of Industrial and Academic Research, 17(1), pp.120-125. https://www.ajol.info/index.php/wajiar/article/view/156648/146255 

Enofe, A.O., Ekpulu, G.A. and Ajala, T.O., 2015. Forensic accounting and corporate crime mitigation. European Scientific Journal, 11(7). https://core.ac.uk/download/pdf/236414338.pdf 

Mc Kinsey and Company, 2019 Financial crime and fraud in the age of cybersecurity [Online] https://www.mckinsey.com/business-functions/risk-and-resilience/our-insights/financial-crime-and-fraud-in-the-age-of-cybersecurity  [Accessed on 19th July, 2022]

The financial cell, 2021 Forensic Accounting - Jan 2021 https://www.finomenonnmims.com/post/forensic-accounting-jan-2021 [Accessed on 19th July, 2022]

Okpako, A.E.P. and Atube, E.N., 2013. The impact of forensic accounting on fraud detection. European Journal of Business and Management, 5(26), pp.61-70. https://www.academia.edu/download/54136239/8063-10599-1-PB.pdf 

Tiwari, R.K. and Debnath, J., 2017. Forensic accounting: a blend of knowledge. Journal of Financial Regulation and Compliance. https://www.emerald.com/insight/content/doi/10.1108/JFRC-05-2016-0043/full/html?fullSc=1&mbSc=1&fullSc=1 

Utomwen, O. and Danjuma, E., 2015. The role of forensic accounting in mitigating financial crimes. International Journal of Commerce and Management research, 1(1), pp.40-47. https://www.ijaar.org/articles/volume1-Number2/The_Role_Of_Forensic_Accounting_In_Mitigating_Financial_Crimes.pdf