Forensic accounting ppt (2)

Shriya  Gupta
Shriya GuptaBlogger, writer at Deakin University
BY :SHRIYA GUPTA
“Earth provides enough
to satisfy every man's
needs, but not every
man's greed.”
― Mahatma Gandhi
Forensic accounting ppt (2)
The identification, interpretation, and
communication of the evidence of
economic transaction and reporting events
 Forensic accounting is the „speciality‟
practice area of accounting that describe
engagements, which result from actual or
anticipated disputes or litigation.
BIRBAL
KAUTILYA
1
•INVESTIGATIVE
ACCOUNTING
2 •LITIGATION SUPPORT
Investigative Accounting-It deals with
investigation of criminal matters relating to
employee,theft, securities fraud, insurance
fraud etc. it does not end with investigation
but also includes provisions of
suggestions regarding possible courses of
action.
Litigation Support- it involves providing
accounting assistance in litigation
matters. It primarily deals with
quantification of economic damage
•Investigating and analysing financial
Evidence
• Developing computerised applications to
assist in the analysis and presentation of
financial evidence.
•Communicating their findings in the form
of reports, exhibits and collections of
documents.
• Assisting in legal proceedings, including
testifying in courts, as an expert witness
and preparing visual aids to support trial
evidence.
Human nature:
– Hide failures; not admit them.
– Conceal problems; not discuss them.
– Defend wrong decisions; not admit
them.
– Cover up mistakes; not own up.
While Forensic Accounting developed as
early as 1995 in USA,But after the
fiasco, the same has gained proposition in
Indian context also.
FORENSIC ACCOUNTING ORIENTATION
TIMELY PERFORMANCE OF AUDIT
REVIEW TRANSACTIONS
◦ Preliminary investigations examination of
available information
◦ Allows auditors to identify likely trouble
areas and assess the work to be done
◦ Should identify objectives to be achieved
and plan audit methodology to be used
 Collect the Relevant Information
◦ In depth interviews with client‟s staff
◦ Examination of hard-copy & electronic info
 Electronic info is often best source for
forensic auditors
 Specialized computer forensic auditors are
sometimes called in, depending on the
audit
◦ Off-site computers & servers, hard-copy
info, etc. are also examined
◦ Highly dependent on specifics of the engagement
◦ Often involves: calculating economic damages and
sensitivity analysis, tracing of assets
◦ Should contain the details of the engagement, the
scope, any limitations and a detailed summary of the
findings
◦ Reports are generally confidential and often used in court
proceedings
◦ Period in which evidence gathered
◦ Review Process & report to the client.
◦ Identify those involved and quantify amount of fraud.
◦ Present findings to the client and court
◦ Self Study (e.g., ICAI Certificate course started in
2008-09)
◦ On-the-job training
◦ Formal education
Obviously, a combination of at least two of
these approaches will lead to optimal
preparation.
 Revenue in forensic accounting in the United
States is expected to grow 6.8% annually from
$4.3 billion in 2012 to $6.0 billion in
2017, according to a report by IBISWorld.
 A 7.0% increase in forensic accounting
revenue is expected for 2013.
 Large unexpected losses
 Non-compliance with corporate policy or
internal controls
 Employees apparently living beyond their
means
 Inventory shortages remain unexplained
and poorly investigated
 Copies rather than original invoices are
being paid
 Missing and/or altered documentation
 Business valuations
 Divorce proceedings and matrimonial
disputes
 Personal injury and fatal accident claims
 Professional negligence
 Insurance claims evaluations
 Arbitration
 Partnership and corporation disputes
 Shareholder disputes (minority shareholders
claiming
(oppression)
 Central Bureau of Investigation (CBI)
 Insurance Sector (TRAI)
 Securities Exchange Board of India (SEBI)
 Big Corporations and Companies ( Proactive
and Reactive Action)
 Military and Police Department
 State And Central Government.
 Banks and Financial Institutes.
 Serious Fraud Office: SFIO is the dedicated division of the
Department of Company affairs, which looks into the
frauds that involves the violations of multiple laws such
as Income Tax, FEMA and RBI Act etc.
 CBI: Central Beauro of Investigations has its specialized
wing to deal with the financial frauds called as economic
offenses wing.
 CVC: Central vigilance commission is the place, which
handles the crucial part of the occupational frauds ie.
Corruption. It also helps in resolving the bank fraud
cases.
 There is an acute shortage of forensic
accounting skill sets in India. A huge
 demand for forensic accountants has come
up in the wake of the requirements from the
investors after the Satyam fiasco. There are
only about 400 forensic accountants in the
country though India loses approximately
$40 billion because of frauds.
Satyam Computers Ltd.
 Founder Chief Executive Raju charged with
fraud, false corporate reporting and making
false statements to regulators.
 First CEO charged under Criminal offence for
false reporting.
 Satyam Computers case is the first of Its Type
in India.
 It is only through the practice of preventive
rather than reactive auditing that forensic
auditing will become visibly effective and
make auditing credible, once more.
 Awareness of human element, organization‟s
behavior, knowledge of the system, the
technology in use and expected to be
used, knowledge of fraud, evidence are so
called red flags are key issues
Forensic accounting ppt (2)
 CONTACT DETAILS :
 SHRIYA GUPTA
 +91- 7837586206
 shriyagupta137@gmail.com
1 of 25

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Forensic accounting ppt (2)

  • 2. “Earth provides enough to satisfy every man's needs, but not every man's greed.” ― Mahatma Gandhi
  • 4. The identification, interpretation, and communication of the evidence of economic transaction and reporting events  Forensic accounting is the „speciality‟ practice area of accounting that describe engagements, which result from actual or anticipated disputes or litigation.
  • 7. Investigative Accounting-It deals with investigation of criminal matters relating to employee,theft, securities fraud, insurance fraud etc. it does not end with investigation but also includes provisions of suggestions regarding possible courses of action.
  • 8. Litigation Support- it involves providing accounting assistance in litigation matters. It primarily deals with quantification of economic damage
  • 9. •Investigating and analysing financial Evidence • Developing computerised applications to assist in the analysis and presentation of financial evidence. •Communicating their findings in the form of reports, exhibits and collections of documents. • Assisting in legal proceedings, including testifying in courts, as an expert witness and preparing visual aids to support trial evidence.
  • 10. Human nature: – Hide failures; not admit them. – Conceal problems; not discuss them. – Defend wrong decisions; not admit them. – Cover up mistakes; not own up. While Forensic Accounting developed as early as 1995 in USA,But after the fiasco, the same has gained proposition in Indian context also.
  • 11. FORENSIC ACCOUNTING ORIENTATION TIMELY PERFORMANCE OF AUDIT REVIEW TRANSACTIONS
  • 12. ◦ Preliminary investigations examination of available information ◦ Allows auditors to identify likely trouble areas and assess the work to be done ◦ Should identify objectives to be achieved and plan audit methodology to be used
  • 13.  Collect the Relevant Information ◦ In depth interviews with client‟s staff ◦ Examination of hard-copy & electronic info  Electronic info is often best source for forensic auditors  Specialized computer forensic auditors are sometimes called in, depending on the audit ◦ Off-site computers & servers, hard-copy info, etc. are also examined
  • 14. ◦ Highly dependent on specifics of the engagement ◦ Often involves: calculating economic damages and sensitivity analysis, tracing of assets ◦ Should contain the details of the engagement, the scope, any limitations and a detailed summary of the findings ◦ Reports are generally confidential and often used in court proceedings ◦ Period in which evidence gathered ◦ Review Process & report to the client. ◦ Identify those involved and quantify amount of fraud. ◦ Present findings to the client and court
  • 15. ◦ Self Study (e.g., ICAI Certificate course started in 2008-09) ◦ On-the-job training ◦ Formal education Obviously, a combination of at least two of these approaches will lead to optimal preparation.
  • 16.  Revenue in forensic accounting in the United States is expected to grow 6.8% annually from $4.3 billion in 2012 to $6.0 billion in 2017, according to a report by IBISWorld.  A 7.0% increase in forensic accounting revenue is expected for 2013.
  • 17.  Large unexpected losses  Non-compliance with corporate policy or internal controls  Employees apparently living beyond their means  Inventory shortages remain unexplained and poorly investigated  Copies rather than original invoices are being paid  Missing and/or altered documentation
  • 18.  Business valuations  Divorce proceedings and matrimonial disputes  Personal injury and fatal accident claims  Professional negligence  Insurance claims evaluations  Arbitration  Partnership and corporation disputes  Shareholder disputes (minority shareholders claiming (oppression)
  • 19.  Central Bureau of Investigation (CBI)  Insurance Sector (TRAI)  Securities Exchange Board of India (SEBI)  Big Corporations and Companies ( Proactive and Reactive Action)  Military and Police Department  State And Central Government.  Banks and Financial Institutes.
  • 20.  Serious Fraud Office: SFIO is the dedicated division of the Department of Company affairs, which looks into the frauds that involves the violations of multiple laws such as Income Tax, FEMA and RBI Act etc.  CBI: Central Beauro of Investigations has its specialized wing to deal with the financial frauds called as economic offenses wing.  CVC: Central vigilance commission is the place, which handles the crucial part of the occupational frauds ie. Corruption. It also helps in resolving the bank fraud cases.
  • 21.  There is an acute shortage of forensic accounting skill sets in India. A huge  demand for forensic accountants has come up in the wake of the requirements from the investors after the Satyam fiasco. There are only about 400 forensic accountants in the country though India loses approximately $40 billion because of frauds.
  • 22. Satyam Computers Ltd.  Founder Chief Executive Raju charged with fraud, false corporate reporting and making false statements to regulators.  First CEO charged under Criminal offence for false reporting.  Satyam Computers case is the first of Its Type in India.
  • 23.  It is only through the practice of preventive rather than reactive auditing that forensic auditing will become visibly effective and make auditing credible, once more.  Awareness of human element, organization‟s behavior, knowledge of the system, the technology in use and expected to be used, knowledge of fraud, evidence are so called red flags are key issues
  • 25.  CONTACT DETAILS :  SHRIYA GUPTA  +91- 7837586206  shriyagupta137@gmail.com