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Forensic accounting hdp


Forensic Accounting

Forensic Accounting

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  • 1. HUKMARAM DEVILAL PAWAR [ M.COM, MBA, M.PHIL, NET, SET, (Ph.D. Pursuing)] Head of Accountancy Department and Assistant Professor Smt. S.S.Patel Nootan Science and Commerce College, Visnagar District:- Mehsana Mobile:- +91 9824315606 Email ID:-
  • 2. SOME STATISTICS  Bank Frauds: Reserve Bank of India – Rs.29910.12 Crores  Occupational Frauds: Indiaforensic Research Foundation – Rs.40 Billion  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 financial loss.
  • 4. INTRODUCTION  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. 
  • 5. 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.
  • 6. 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.
  • 7. METHODOLOGY: 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.
  • 8. 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
  • 9.  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.
  • 10.  “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.
  • 11.  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, accountants/article1-373489.aspx
  • 12. 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.
  • 13.  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 continually.
  • 14. FORENSIC ACCOUNTANT’S ROLE IN IMPROVING CORPORATE GOVERNANCE:  Corporate Governance :  Preventing Fraud:  Creating a Positive Work Environment:  Establishing Consequences:  Fraud Investigations:
  • 15. CONCLUSION: 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.
  • 16. 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. Arun Kumar, “Money Laundering “who is the ex- customs officer.  4. Mr.Mayur Joshi, “Occupational Frauds and Money Laundering”, A Certified fraud examiner. The book is published by Snow-White Publications.