HUKMARAM DEVILAL PAWAR
[ M.COM, MBA, M.PHIL, NET, SET, (Ph.D. Pursuing)]
Head of Accountancy Department and
Smt. S.S.Patel Nootan Science and Commerce College, Visnagar
Mobile:- +91 9824315606
Email ID:- Hukmarampawar@ymail.com
Bank Frauds: Reserve Bank of India – Rs.29910.12 Crores
Occupational Frauds: Indiaforensic Research Foundation –
Corruption in India : Transparency International – India
ranks 94th amongst the 176 countries surveyed in this year.
Ritesh Chopra, 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
A GREAT WEAPON AGAINST
ACCOUNTING FRAUDS AND
MALPRACTICES IN CORPORATE
India's image on tackling corruption has not improved with
Transparency International's Corruption Perception Index (CPI)
placing it at 94th rank out of 176 nations this year. In recent
times, there have been an increasing number of frauds and
white collar crimes in all the sectors of the world economy. In
India, number of infamous corporate scandals like Harshad
Mehta (1992), Kingfisher Airlines credit card fraud (2007),
Ketan Parekh (2008) and Satyam Computers (2009) etc. have
adversely affected the development of the corporate and non-
corporate sectors. Frauds, in the different sectors like bank,
insurance, stock market, cyber world etc., need a sharp
scientific tool, for investigation and settlement of disputes.
The researcher hopes that Forensic Accounting will prove as
“Brahmastra” (infallible weapon) against accounting frauds,
malpractices and the white collar crime world.
CONCEPT OF FORENSIC ACCOUNTING:
According to the Webster’s, Dictionary “forensic”
means “belonging to, used in or suitable to courts of
judicature or to public discussion and debate”.
Forensic accounting is the application of a
specialized knowledge and specific skills to act upon
the evidence of fraudulent economic transactions.
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.
OBJECTIVES OF STUDY:
The Main objectives of this paper are as below:
To Know and discuss the concept of Forensic
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
To describe the role of forensic accountant.
The study based on a theoretical analysis
of the role of forensic accountant in solving the
financial problem of corporate world, it used the
secondary source of data collection by making
use of available literature on forensic accounting
and its application in modern corporate world.
NEED OF FORENSIC ACCOUNTING:
Kessler International Study
Need for a forensic accountant
within the past
Already sought help from a
No assistance required
Unsure of whom or where they
should turn to for help
Forensic accountants are now in a position to turn
the Satyam scandal into an opportunity during
tough times for getting jobs, as the country needs
more than 6,000 such professionals to check
corporate frauds in India, a latest report suggests.
“There is an acute shortage of forensic accounting
skill sets in India. At least 6,000 forensic
accountants are required to fight corporate frauds
in the country effectively,” said a latest report by
India forensic Consultancy Services on forensic
accounting in India.
“Huge demand for forensic accountants has come
up in the wake of the requirements from the
investors after the Satyam fiasco,” said Mayur
Joshi, CEO of India forensic Consultancy
Services, a Pune-based anti-fraud education and
consultancy service provider.
According to the report, there are only 400
forensic accountants in the country though India
loses approximately $40 billion because of frauds.
“There is one forensic accountant to handle the
fraud worth $0.1 billion (Rs 480 crore). If the
shortage continues then India might witness some
really serious frauds," Joshi said.
Forensic accountants are trained to detect
evidence of frauds in financial statements.
“Forensic accountants go beyond the numbers
and try to analyse 100 per cent of the data as
against the sampling procedures used by
auditors. When the extended procedures are
invoked, cases like the overvaluation of the
sales or debtors become easy to investigate,” he
said that they have 10 CFEs (certified fraud
examiners) and around 30 forensic consultants
to detect and protect companies from frauds.
Hindustantimes reports, http://www.hindustantimes.com/business-news/sectorsinfotech/india-needs-6-000-forensic-
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.
Giving preliminary advice as an initial appraisal of the pleading and
evidence available at the start of proceedings.
Identifying the key documents which should be made available as
evidence. This is important when the forensic accountant is acting for
the defense and lawyers are preparing lists documents to tender in court.
Preparing a detailed balanced report on quantum of evidence, written in
a language readily understood by a non-accountant and dealing with all
issue, irrespective of whether o not they are favorable to the client.
Reviewing expert accounting reports submitted by the other party
which may have impact on the quantum of evidence and advising
lawyers on these reports.
Briefing legal counsels on the financial and accounting aspects of the
case during pre-trial preparation.
The other plane of the forensic accountant can initiate measure for
introduction of environment accounting to highlight the damage done to
the environment by the possible recoupment of such damages or
replenishment of lost properties through environmental management
FORENSIC ACCOUNTANT’S ROLE IN
IMPROVING CORPORATE GOVERNANCE:
Corporate Governance :
Creating a Positive Work Environment:
If an organisation/company is concerned about
financial discrepancies and financial fraud, it needs more
than an accountant. Forensic accounting is the
combination of the Accounting, Auditing and
Investigation skills which is the best ever growing areas
accounting that enables in enhancing the chances of
success in day to day life of corporate firm by prevailing
all the vexing and financial problems of corporate field as
solution .So the researcher can say that Forensic
Accounting is a great weapon against corporate frauds
and malpractice in corporate world. Forensic accounting
also very important in improving the role of corporate
governance as well as helps in formulating and
establishing an efficient control systems.
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
3. Arun Kumar, “Money Laundering “who is the ex-
4. Mr.Mayur Joshi, “Occupational Frauds and
Money Laundering”, A Certified fraud examiner.
The book is published by Snow-White Publications.