Forensic accounting is an emerging field in India that investigates financial crimes and fraud. It helps uncover evidence for legal cases. While it began growing in use after scandals like Satyam, it remains a niche practice in India with few formal education programs. However, demand is rising due to increased white-collar crime. Forensic accountants must have skills in accounting, auditing, and investigation. The document provides an overview of the history and current state of forensic accounting in India.

1. An overview of Forensic Accounting in India
Jashandeep Singh
B.com (Hons.)
Sri Guru Granth Sahib World University
Fatehgarh Sahib.
Introduction:
In the emerging economic scenario, forensic accounting is an essential tool for uncovering or
inquiry of financial crime and the direction of justice, providing decisive information about the
facts found related to financial crime. It is a new area, but in recent years, banks, insurance
companies and even police have increased taking help of forensic accountants. The increase in
white collar crime and the difficulties faced by law enforcement agencies in uncovering fraud have
also contributed to the growth of the profession.Organizations like Indiaforensic, Institute of
Chartered Accountants of India (ICAI) and Association of Chartered Certified Accountants
(ACCA) offer courses on forensic auditing in India.
Meaning of Forensic Accounting:
Forensic accounting is a specific area of accounting which investigates fraud and analyze financial
information which can be utilized in legal trials. Forensic accounting is judicious mix of
accounting, auditing and investigative skills to perform investigations of financial frauds. It is
helpful for legal action andanalytical Accounting.
Definition of Forensic Accounting:
According to the Journal of Forensic Accounting, “Forensic accounting is sufficiently thorough
and complete so that an accountant, in his/ her considered independent professional judgment, can
deliver a finding as to accounts, inventories, or the presentation thereof that is of such quality that

2. it would be sustainable in some adversarial legal proceeding, or within some judicial or
administrative review.” ( Fraud,the unmanaged Risk, 2003)
Historical perspective of Forensic Accounting:
Maurice E. Peloubet first time used the term Forensic Accountant in 1946 in his essay "Forensic
Accounting: Its Place in Today's Economy." Archaeological studies disclose that, during 3300-
3500 BC, accountants of Egypt, were involved in the prevention and detection of fraud. During
18th century close relationship developed between accountancy and legal profession. Many
amendments to financial statement disclosure can be attributed to frauds in the corporate. In 1930s
an American Eliot Ness was credited to bring down gangster Al Capone, but his case was based
on the investigative work done by Elmer Irey, an accountant with the Internal Revenue Service
that ensured Capone’s conviction for tax evasion. He was probably America’s first high-profile
forensic accountant.
Evolution of Forensic Accounting in India
In India, Kautilya was the first person to mention the famous forty ways of misappropriation in his
famous book Kautilya Arthashastra. In India Chartered Accountants are called upon to take up
such investigative assignments.
Wide use of Forensic Accounting developed in India after Enron case, Rajat Gupta case and
Satyam Case. Very few Chartered Accountant firms have fraud examination as a separate practice.
Chartered accountancy firms like Sharad Joshi, S.K. Jain (Xerox Fraud case) are providing this
type of services. However, this this area is by and large dominated by the big four consultancy
firms such as Deloitte, KPMG, Price water House Coopers and Ernst and Young. In India the
formation of Serious Fraud Investigation Office is the landmark creation for the Forensic
Accountants.
Companies Act 2013 paved the way for a special approach to prevent economic fraud and
preserving national wealth in the lines of American law and British Bribery Act. For proper risk
management, reputational risk was to be managed.The occasion of fraud and irregularities and
lapses in compliance culture necessitated proper investigation thereof as well as a strong
preventive environment. Thus forensic accounting was called for to detect planning of the fraud,

3. execution of the fraud, consequences of the fraud and book the culprits without much time lag.
(Basu, 2014)
Forensic Accountant:
The authenticity of the results found by Forensic Accountant depends on the knowledge, skills,
and experience of the forensic accountant. A forensic accountant must be capable of integrating
knowledge and skills in the examination, analysis, interpretation, reporting, and testimonial
support of evidence.In court, the forensic accountant can be an expert witness, a consultant, or play
other roles such as trier of fact, special master, court-appointed expert, referee, arbitrator, or
mediator.
Meaning of Forensic Audit:
Investopedia defines - A forensic audit is an examination and evaluation of a firm's or
individual's financial information for use as evidence in court. A forensic audit can be conducted
in order to prosecute a party for fraud, embezzlement or other financial claims.
Objectives of Forensic Auditing:
Following are objectives of Forensic Auditing
• To use the forensic accountant’s conclusions to facilitate a settlement, claim, or jury award by
reducing the financial component as an area of continuing debate
• To avoid fraud and theft
• To restore the downgraded public confidence
• To formulate and establish a comprehensive corporate governance policy
• To create a positive work environment
Techniques and tools of forensic audit
Different tool and techniques used for Forensic Audit are:
1. Benchmarking – comparison of financial result of one period with another or the performance
of one cost centre, or business unit, with another and overall business performance with its pre
decided standards.
2. Ratio analysis – to identify any abnormal trends and changes.

4. 3. System analysis – to examine the systems in place and identifying any weaknesses which could
be opportunities for the fraudsters.
4. Specialist software- like audit tools for data matching analysis.
5. Exception reporting –Generating automatic unchangeable reports that to find out deviation from
the norms.
Problems of Forensic Accounting in India
1) Forensic accounting is developing field of financial fraud detection. There is acute shortage
of qualified accountants with adequate technical knowledge of forensicissues in India.
2) In India, most of the financial fraud cases involved politicians, so it is crucial to find
evidences against them.
3) Indian judicial system still follows age old British judicial system. It is expensive to bring
the matter to court and hire expert advocates.
4) Due to liberalization and fast moving economy, more and more investors from foreign
countries invest in India and so, it is difficult to sue financialfraudster from other countries.
5) Because of continuous adoption of new techniques of Information and Technology by
fraudster, it is difficult to Forensic Accountant to cope up with them.
6) Forensic accounting is an expensive field compared to other investigativefields.
7) It is not mandatory for companies to appoint forensic accountant in companies.
8) There is no specific guideline or act on forensic accounting in India.
Literacy for Forensic Accounting in India:
Forensic Accountants has come to the limelight only recently due to rapid increase in frauds and
white-collar crimes. There is huge requirement for honesty, fairness and transparency in Indian
Corporate reporting. The Institute of Chartered Accountants of India (ICAI) starteda course on
forensic accounting for only its members. It is “Certificate Course on Forensic accounting and
Fraud Detection using IT and CAATs”. At present, very few academic institutions are offering
courses (full time or part time) on forensic accounting. Indian universities are lagging behind in
this area as compared to other foreign universities. Some leading organization such as
Indiaforensic (Pune, Maharastra) started certificate Course in Bank Forensic Accounting (CBFA),
Certified Forensic Accounting Professional (CFAP). Institute of Chartered Financial Analyst of

5. India (ICFAI) University also started Postgraduate Diploma in Forensic Accounting. Although
this is at nascent stage in most of the Indian universities, many college and universities are
providing courses on “Forensic Science”. In the background of increasing levels of frauds and
economic irregularities, it is expected that the prospects of forensic accountants are bound to
increase substantially in the near future. (Saha, 2014)
Conclusion:
Forensic Accounting should not become a matter of specialization and expertise of a chosen few.
It should be made a part of the curriculum at the undergraduate as well as the post-graduate level
across the country. This will help the corporate and the government to keep a check on crime at
the outsetonly. At the same time, requisite amendments in the law should be undertaken to
establish the importance of forensic accounting in general and forensic accountants in specific.
Bibliography:
(2003). Fraud,theunmanaged Risk. EarnestandYoung.
Basu,C. S. (2014, September).FORENSICACCOUNTINGIN THE CYBER WORLD: A NEW CHALLENGE FOR
ACCOUNTANTS. THE MANAGEMENTACCOUNTANT.
business-standard.com. (n.d.).RetrievedJuly2016, fromhttp://www.business-
standard.com/article/management/forensic-auditor-courses-catching-up-in-india-
114042301428_1.html
Saha,C. A. (2014, September).A MULTIDIMENSIONALAPPROACHTOINVESTIGATINGFRAUDSAND
SCAMS: A STUDY IN THE GLOBAL ANDINDIAN CONTEXT. THE MANAGEMENTACCOUNTANT,pp.29-38.