The document discusses the role of a forensic accountant as an expert witness in money laundering cases. It provides background on money laundering, defines forensic accounting, and outlines the three stages of money laundering. It describes who forensic accountants are and what they do, including investigating financial information, analyzing records, and presenting expert testimony in court. The document also discusses challenges forensic accountants face working on money laundering cases in Nigeria, such as weak infrastructure, corruption, and lack of transparency.
Forensic accounting is a specialty practice area where accounting, auditing and investigative skills are used to analyze information that is suitable for use in a court of law.
Forensic Accounting is the use of accounting skills to investigate fraud and analyze the financial information that can be useful in legal proceedings. Areas of forensic involvement fall into two categories namely litigation support and investigative accounting. Go through the slides to have a brief idea about Forensic Accounting and the common accounting fraud areas. Also know what exactly forensic accountants do.
Forensic accounting is a specialty practice area where accounting, auditing and investigative skills are used to analyze information that is suitable for use in a court of law.
Forensic Accounting is the use of accounting skills to investigate fraud and analyze the financial information that can be useful in legal proceedings. Areas of forensic involvement fall into two categories namely litigation support and investigative accounting. Go through the slides to have a brief idea about Forensic Accounting and the common accounting fraud areas. Also know what exactly forensic accountants do.
Forensic accountants use many tools to fine tune their fraud investigation process, yielding useable results during any fraud investigation. Learn more here.
An introduction to Forensic Audit is given with its examination with legalities. Time and Reasons which contributes to Forensic Audit, types of Frauds and Constituents of Forensic Audit are also included. We have also examined a distinction between Financial and Forensic Audit. To make it more user-friendly we have prescribed, the manner in which the frauds are detected and how a Forensic Audit is being concluded.
A powerpoint presentation giving basic insights on forensic audit,forensic auditors, how is the engagement conducted, its scope , the famous Satyam Case and the Nirav Modi case along with the RBI guidelines regarding the same. It is a presentation made for educational and awareness purpose and not to be copied or reproduced without prior consent.
Non Financial Evidences (Behavorial Aspects) in a Fraud ExaminationPallavi Vyas
Non-Financial Evidences (Behavorial aspects) are gaining importance in Fraud examination. One can detect lies by analyzing body language, eye language or other behavioral symptoms. Lot of research is being made in this field.
money laundering and corruption
,
what is money laundering
,
suspicious transaction means such transaction:
,
what are some of the challenges
,
why and how to combat money laundering
,
money laundering
,
money laundering process
,
mlpa-2012
,
incentives to launder
Forensic accounting is an emerging discipline which helps in fraud detection and prevention and used as proactive and reactive tool for frauds management
Forensic accountants use many tools to fine tune their fraud investigation process, yielding useable results during any fraud investigation. Learn more here.
An introduction to Forensic Audit is given with its examination with legalities. Time and Reasons which contributes to Forensic Audit, types of Frauds and Constituents of Forensic Audit are also included. We have also examined a distinction between Financial and Forensic Audit. To make it more user-friendly we have prescribed, the manner in which the frauds are detected and how a Forensic Audit is being concluded.
A powerpoint presentation giving basic insights on forensic audit,forensic auditors, how is the engagement conducted, its scope , the famous Satyam Case and the Nirav Modi case along with the RBI guidelines regarding the same. It is a presentation made for educational and awareness purpose and not to be copied or reproduced without prior consent.
Non Financial Evidences (Behavorial Aspects) in a Fraud ExaminationPallavi Vyas
Non-Financial Evidences (Behavorial aspects) are gaining importance in Fraud examination. One can detect lies by analyzing body language, eye language or other behavioral symptoms. Lot of research is being made in this field.
money laundering and corruption
,
what is money laundering
,
suspicious transaction means such transaction:
,
what are some of the challenges
,
why and how to combat money laundering
,
money laundering
,
money laundering process
,
mlpa-2012
,
incentives to launder
Forensic accounting is an emerging discipline which helps in fraud detection and prevention and used as proactive and reactive tool for frauds management
Discus the development of the fraud examinerforensic accounting pro.pdfMALASADHNANI
Discus the development of the fraud examiner/forensic accounting profession since the 2001
Enron fraud. Discuss applicable standards and the core foundation of the profession.
Solution
Forensic accounting has been pivotal in the corporate agenda after the financial reporting
problems which took place in some companies around the world like Enron. These scandals
resulted in the loss of public trust and huge amounts of money. In order to avoid fraud and theft,
and to restore the badly needed public confidence, several companies took the step to improve
the infrastructure of their internal control and accounting systems drastically. It was this
development which increased the importance of accountants who have chosen to specialize in
forensic accounting and who are consequently referred as “forensic accountants.”
Forensic accounting relies on the fraud triangle to identify weak points in the business systems
and find possible suspects in cases of fraud. It consists of three core concepts which together
create a situation ripe for fraud: incentive, opportunity, and rationalization. People must have the
incentive and opportunity to commit financial fraud, as well as the ability to justify it. Recent
analysis has suggested adding a fourth concept to make a diamond—capability. Just because
someone has the opportunity or incentive to steal does not necessarily mean that they have the
capability to do so. For example, if someone does not understand how to make journal or ledger
entries in the books of accounts, they would not know how to manipulate numbers no matter
what the incentive or opportunity is.
The accounting scandals involving Enron, WorldCom, Global Crossing, and other companies
have put accountants in the public spotlight as never before in their history. After these
accounting scandals, public confidence in the accounting profession has been seriously
undermined. However, the scandals have created business for forensic accountants and
developed opportunities for forensic and investigative accounting. Forensic accountants have
been conducting these activities for quite some time in a quiet professional manner. New laws
and regulations resulting from these scandals will make the role of forensic accountants more
important than ever before in the business world.
Forensic accountants, also referred to as forensic auditors or investigative auditors, often have to
give expert evidence at the eventual trial. All of the larger accounting firms as well as many
medium-sized and boutique firms have specialist forensic accounting departments. Forensic
accountants utilize an understanding of business information and financial reporting systems,
accounting and auditing standards and procedures, evidence gathering and investigative
techniques, and litigation processes and procedures to perform their work. Forensic accountants
are also increasingly playing more proactive risk reduction roles by designing and performing
extended procedures as part of stat.
Forensic Accounting An Ex Ante Ex post Evaluation for Indiaijtsrd
"Growing incidences of financial fraud have given rise to the field of forensic accounting, a specialty practice area of accounting that focuses on uncovering fraud, among other things. A forensic accounting engagement often involves a detailed assessment of a company’s accounting system and processes to determine whether or not the numbers that are presented reflect reality. Unlike financial accounting, forensic accounting is not performed on a routine basis, so it’s important for the owner and the executive management team to know when a forensic accountant is needed or should be consulted Incidences of financial fraud have been growing in both frequency and sophistication among businesses in India. Sunil V. Mohite ""Forensic Accounting: An Ex-Ante - Ex-post Evaluation for India"" Published in International Journal of Trend in Scientific Research and Development (ijtsrd), ISSN: 2456-6470, Special Issue | Fostering Innovation, Integration and Inclusion Through Interdisciplinary Practices in Management , March 2019, URL: https://www.ijtsrd.com/papers/ijtsrd23099.pdf
Paper URL: https://www.ijtsrd.com/management/accounting-and-finance/23099/forensic-accounting-an-ex-ante---ex-post-evaluation-for-india/sunil-v-mohite"
1. BY:- RAHUL MAGAN
CHIEF EXECUTIVE OFFICER, TREASURY CONSULTING LLP
COUNTRY DIRECTOR, INTERNATIONAL INSTITUTE OF CERTIFIED FORENSICS INVESTIGATIONS PROFESSIONALS, INC.
COUNTRY DIRECTOR, ASSOCIATION OF CERTIFIED ACCOUNTING PROFESSIONALS
91-9899242978 , SKYPE ~ RAHUL5327 , TWITTER @ RAHULMAGAN8
EMAIL:- INFO@TREASURYCONSULTING.IN , RAHUL.MAGAN@TREASURYCONSULTING.IN
1
MONEY LAUNDERING: THE ROLE
OF A FORENSIC ACCOUNTANT AS
AN EXPERT WITNESS
2. HISTORICAL PERSPECTIVE
2
Financial Action Task Force (FATF)
1. Formed by a group of seven industrialized nations in 1989 in
Paris.
2. In 1990 established and issued its 40 recommendations.
3. Revised in 1996 and 2003.
4. Additional nine recommendations dealing mostly on measures
to counter terrorism.
3. HISTORICAL PERSPECTIVE (Cont’d)
3
Recommendation 26 and the evolution of the
Economic and Financial Crimes Commission
(EFCC). – Nigeria.
Called Financial Crimes Enforcement Network
(FinCEN in USA), Financial Transactions Reports
Analysis Centre of Canada (FINTRAC), Australian
Transaction Reports and Analysis Centre. Many
other countries have different names for it.
4. HISTORICAL PERSPECTIVE (Cont’d)
4
Independent Corrupt Practices And Other Related
Offences Commission (ICPC) Establishment Act of
2000
The Money Laundering (Prohibition) Act of 2004.
The Economic and Financial Crimes Commission
Act of 2004
5. What is Money Laundering
5
Process of concealing Illegal source
Application of income derived from criminal or
illegitimate activity
Subsequent disguising of the source of that income
to make it appear legitimate
Source: Association of Certified Anti-Money
Laundering Specialists - ACAMS.
6. What is Money Laundering (Cont’d)
6
Laundered money is like water, it seeks the path of
least resistance (ACAMS). Initially, money
laundering was associated with drug trafficking and
organized crime, however, it has been expanded to
include extortion, terrorism, official bribery and
corruption, arms smuggling, white collar crime and
many other crimes.
7. The Three Stages: Placement, Layering and
Integration.
7
Placement
Placement involves physically placing illegally
obtained money into the financial system or the
retail economy. "Dirty" money is most vulnerable to
detection and seizure during placement. (U.S.
Financial Crimes Enforcement Network)
8. The Three Stages: Placement, Layering and
Integration (Cont’d).
8
Layering
Layering is the separation of illegally obtained
money from its source through a series of financial
transactions that makes it difficult to trace the
origin.
During the layering phase of money laundering,
criminals often take advantage of legitimate
financial mechanisms in attempts to hide the
source of their funds.
9. The Three Stages: Placement, Layering and
Integration (Cont’d).
9
Layering (Cont’d)
A few of the many mechanisms that may be
misused during layering are currency exchanges,
wire transmitting services, prepaid cards that offer
global access to cash via automated teller machines
and goods at point of sale, casino services and
domestic shell corporations lacking real assets and
business activity that are set up to hold and move
illicit funds. (U.S. Financial Crimes Enforcement
Network)
10. The Three Stages: Placement, Layering and
Integration (Cont’d).
10
Integration
Integration means converting the illicit funds into a
seemingly legitimate form. Integration may include
the purchase of businesses, automobiles, real estate
and other assets. (U.S. Financial Crimes
Enforcement Network)
11. What is Forensic Accounting?
11
Forensic accounting is the specialty practice area
of accountancy that describes engagements that
result from actual or anticipated disputes or
litigation.
"Forensic" means "suitable for use in a court of
law", and it is to that standard and potential
outcome that forensic accountants generally have
to work.
Forensic accountants, also referred to as forensic
auditors or investigative auditors, often have to
give expert evidence at the eventual trial.
12. What is Forensic Accounting? (Cont’d)
12
All of the larger accounting firms, as well as many medium-
sized and boutique firms, have specialist forensic
accounting departments. Within these groups, there may be
further sub-specializations: some forensic accountants may,
for example, just specialize in insurance claims,
personal injury claims, fraud, construction, or royalty
audits. (Source Wikipedia).
Recently Forensic accountants have started to develop
expertise in tracking laundered money. Nigerian Forensic
accountants should lead the rest of the world in developing
expertise in tracking laundered money. This has urgency
written all over it since Nigeria’s economic growth has been
hampered by corruption which is a form of money
laundering.
14. Who are Forensic Accountants?
14
Forensic accountants may be involved in recovering
proceeds of crime and in relation to confiscation
proceedings concerning actual or assumed proceeds of
crime or money laundering. Some forensic accountants are
also Certified Fraud Examiners, Certified Public
Accountants, Certified Money Laundering Specialists, or
Chartered Accountants.
Forensic accountants utilize an understanding of
business information and financial reporting systems,
accounting and auditing standards and procedures,
evidence gathering and investigative techniques, and
litigation processes and procedures to perform their work.
15. Are There Differences?
15
The major difference lies in the focus. While some
may focus on fraud, others may focus on money
laundering.
No matter the differences, adequate training and
hands on experience will determine the level of
expertise.
16. Who are Forensic Accountants? (Cont’d)
16
Forensic accountants are also increasingly playing
more proactive risk reduction roles by designing and
performing extended procedures as part of the
statutory audit, acting as advisers to audit
committees, fraud deterrence engagements, and
assisting in investment analyst research. (Source
Wikipedia)
18. Who is an Expert Witness? (Cont’d)
18
An expert witness is a witness, who by virtue of
education, training, skill, or experience, is believed to have
knowledge in a particular subject beyond that of the
average person, sufficient that others may officially (and
legally) rely upon the witness's specialized (scientific,
technical or other) opinion about an evidence or fact issue
within the scope of their expertise, referred to as the
expert opinion, as an assistance to the fact-finder. Expert
witnesses may also deliver expert evidence about facts
from the domain of their expertise. At times, their
testimony may be rebutted with a learned treatise,
sometimes to the detriment of their reputations.
19. The Role of a Forensic Accountant as an Expert
Witness
19
The principal role of a Forensic Accountant is to
Analyze, Interpret, Summarize and Present Complex
Business and Financial deals in a logical,
understandable manner supported with facts.
As an Expert Witness, the Forensic Accountant must
(a) Investigate and Analyze Financial information. (b)
Develop Computerized applications (if applicable) to
Assist in the Analysis and Presentation of Financial
information.
20. The Role of a Forensic Accountant as an Expert
Witness (Cont’d)
20
Attend the Examination for Discovery to review the
testimony, assist with understanding the financial issues
and to formulate additional questions to be asked.
Review of the opposing expert's damages report and
reporting on both the strengths and weaknesses of the
positions taken.
Assist with settlement discussions and negotiations.
Attend trial to hear the testimony of the opposing expert
and to provide assistance with cross-examination.
21. Steps that the Forensic Accountant Should Follow
21
Meet with key individuals
Discuss expectations
Discuss fees and reimbursable costs
Gather Evidence after meeting with key
individuals
Research
Discuss with key individuals on information that
was obtained after research
Make any necessary adjustment to the facts, if
any, after discussion with key individuals
Write a formal report supported by evidence.
22. The Nigerian Factor Affecting the Role of a
Forensic Accountant as an Expert Witness:
22
Environment
Very weak infrastructure
Weak judicial system
Weak educational system
Indiscipline
Retards development
Creates chaotic social or work environment
Creates mistrust
Retards spiritual growth
23. The Nigerian Factor Affecting the Role of a Forensic
Accountant as an Expert Witness: (Cont’d)
23
Corrupting Tendencies
Willingness to compromise
Abuse of office
Abuse of power
Rule of Law
Insincerity in application
Justice delayed is justice denied
Abuse of office
Abuse of power
24. The Nigerian Factor Affecting the Role of a Forensic
Accountant as an Expert Witness: (Cont’d)
24
The Nigerian Factor
Lack of continuity
Too much centralization of authority
Too many Chiefs and not enough Indians
Fiscal indiscipline
Lack of transparency
Institutionalized corruption
Institutionalized money laundering
Abuse of office
Abuse of power
