Skill set, ethical conduct and professional communication for forensic accountant

Skill Set and Ethical Conduct for Forensic Experts
Compiled and Presented
By:
Chief Godwin Emmanuel, Oyedokun
ND (Fin), HND (Acct.), BSc. (Acct. Ed), MBA (Acct. & Fin.), MSc. (Acct.), (MSc. Fin.), MTP (SA), ACA,
FCTI, ACIB, AMNIM, CNA, FCFIP, FCE, CICA, CFA, CFE, CPFA, ABR, CertIFR
Chief Technical Consultant/Managing Partner
OGE Professional Services Ltd
GOE Professional Practice
godwinoye@yahoo.com, +2348033737184, +2348095491026
Chairman, IIFCFIP Nigeria
President, ACFE Lagos Nigeria Chapter
Being a paper presented at
3RD ANNUAL GLOBAL FORENSIC CONFERENCE & EXHIBITION OF IICFIP
•August 9 – 11, 2016

This presentation will cover the following major sub topics as
follows:
 Introduction
 Forensic Accounting - Overview
 Skills set for forensic accountants
 Ethics and ethical conduct
 Theories of Ethics
 Ethical dilemma
 Conclusion
2
Contents

3
 The surge in corruption cases in recent times coupled with highly risky
nature of today’s business has necessitated stern response and
preparedness, in terms of the development of human and other
resources, around the world, on the part of different stakeholders.
 In their survey, McMullen and Sanchez (2010) concluded that the
demand for forensic accountants would increase well into the
foreseeable future, particularly in the area of fraudulent financial
reporting.
 The need for forensic accountants both in the public and private sector is
expected to continue to grow (Harris, 2012).
 The place of ethics and ethical conduct cannot be underestimated when
we talk of forensic accounting, the techniques and skill involved does
guarantee the sound professional opinion when resolving allegation of
fraudulent activities or other related forensic accounting engagements.
Introduction

4
 Forensic accountant must be a good communicators, as a good case
could be lost due to poor presentation while a bad case could be won if
the expert observes the communication and reporting rules.
 This presentation explores the skill set, ethical conduct and professional
communication for forensic accountants.
 The participants/readers would learn these skills and be able to
approach their forensic accounting engagements well prepared and
produce experts’ reports that are suitable for court use in proofing and
disproving facts in issues.
Introduction

 According to Oyedokun (2013), Forensic accounting is a scientific
Accounting method of uncovering, resolving, analyzing and presenting
fraud matters in a manner that is acceptable in the court of law.
 Shanikat and Khan (2013) opines that forensic accounting, given its
peculiar investigative stance, requires a specific skills set on the part of
the forensic accountant, that integrates accounting, auditing and
investigative skills.
 The National Institute of Justice (2007) also in Shanikat and Khan,
(2013) asserts that forensic accountants’ success in terms of objective
evaluation of clients’ work for authenticity and correctness is primarily
dependent upon their expertise in accounting and skills in
investigation and litigation.
 Therefore, demand for forensic accountants with required expertise
has surged over the past decade or so, to deal with a variety of cases and
industries. 5
Forensic Accounting

6
“One of the most fundamental business ethical issues is trust between a
company and its customers”
by Kenneth V. Oster

 Zysman (2004), opined that the integration of accounting,
auditing and investigative skills yields the speciality known as
Forensic Accounting.
 While Enyi (2012) opined that in forensic accounting, a man is
expected to know the trick of the monkey in order to catch it,
but he should ensure that he did not become the monkey in
the process.
 Impeccable character must be weaved around ethical
considerations in forensic accounting for it to succeed.
 This implies that for effective investigation to be carried out,
the investigator must understand the tricks being employed
by the perpetrator, hence forensic accounting skill is required.
7
Forensic Accounting

 Akintoye (2008) said that forensic accounting is accounting that is suitable for
legal review, offering the highest level of assurance, and including the new
generally accepted connotation of having been arrived at in a scientific fashion
and providing the needed findings in settling disputes.

 He said the primary orientation of forensic accounting is explanatory (cause
and effect) analyses of phenomena including the discovery of deception (if
any) and its effects introduced into an accounting system.
 Forensic accounting as defined by Zysman (2004) is "accounting analysis that
can uncover possible fraud that is suitable for presentation in court. Such
analysis will form the basis for discussion, debate, and dispute resolution."
 Forensic accounting, sometimes referred to as investigative accounting, is a
unique career field that combines accounting with information technology.
 A forensic accountant uses his knowledge of accounting, law, investigative
auditing and criminology to uncover fraud, find evidence and present such
evidence in court if required.
8
Forensic Accounting

 Forensic accounting thus provides an accounting analysis that is
suitable to the court which will form the basis for discussion, debate
and ultimately dispute resolution. Forensic Accounting encompasses
both litigation support and investigative accounting (Zysman,
2004).
 Forensic accounting according to Black law dictionary is stated as “used
in or suitable for court of law or public debate”. Zysman (2004) stated
that forensic accountants, utilize accounting, auditing and investigative
skills when conducting an investigation.
 They equally have ability to respond immediately and communicate
financial information clearly and concisely in a courtroom setting while
serving as expert witness.
 Forensic accounting is different from the old debit or credit accounting
as it provides an accounting analysis that is suitable to the organization
which will help in resolving the disputes that arise in the organization
(Owojori and Asaolu, 2009).
10
Forensic Accounting

Qualities and Qualifications of Forensic Accountants
Characteristics
• Curiosity;
• Persistence;
• Creativity;
• Discretion;
• Organization;
• Confidence; and
• Sound professional judgment.
A capable Forensic Accountant should have the following
characteristics (Zysman, 2011):
• A Forensic Accountant must be open to consider all alternatives, scrutinize
the fine details and at the same time see the big picture. In addition, a
Forensic Accountant must be able to listen effectively and communicate
clearly and concisely.
Forensic Accountant
12

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 Forensic accountant must have skills in many areas.
 Some forensic accountants, of course, specialize in certain areas such as
information technology.
 However, all well-trained forensic accountants have at least a minimum
level of knowledge and skills in the following areas:
 Auditing skills are of paramount importance to the forensic accountant
because of the information-collecting and verification nature of forensic
accounting. Well-trained forensic accountants must be able to collect and
analyse relevant information so that the cases on which they are working
will be well supported in court.
 Investigative knowledge and skills, such as surveillance tactics and
interviewing and interrogation skill, assist the forensic accountant beyond
the skills related to auditing and blend the financial and legal aspects of
forensics.
Forensic AccountingSkills

Thursday, August 25, 2016
15
 Criminology, particularly the study of the psychology of criminals, is
important to the forensic accountant because effective investigative skills
often rely on knowledge of the motives and incentives experienced by the
perpetrator.
 Accounting knowledge helps the forensic analyse and interpret the
financial information necessary to build a case in a financial
investigation, whether it is a bankrupt setting, a money-laundering
operation, or an embezzlement scheme.
 This includes knowledge of proper internal controls such as those
related to corporate governance.
Skills Forensic Accounting

16
 Legal knowledge is critical to the success of the forensic accountant.
 Knowledge of laws and court procedures enables the forensic accountant to
identify the type of evidence necessary to meet the legal standards of the
jurisdiction in which the case is to be adjudicated and preserve evidence in
a manner that meets the criteria of the court.
 Information technology (IT) knowledge and skills are necessary tools
of the forensic accountant in word filled with paperless crimes.
 At a minimum, forensic accountants must know the point at which they
should contact an expert in computer hardware or software.
 Forensic accountants use technology skills to quarantine data, extract data
through data mining, design and implement controls over data
manipulation, accumulate baseline information for comparison purpose,
and analyse data.

17
 Communication skills are required of forensic accountants so that the
results of their investigation/analysis can be correctly and clearly conveyed
to users of their services.
 Bronner (2014) concluded that forensic accounting techniques such as
interviewing, computer assisted reviews such as data mining, and
document review techniques are also useful to detect fraud.
 Because of the unique legal aspects of forensic accounting investigations,
there are special auditing protocols that must be followed since the audit’s
conclusions and findings may be subject to challenge in an adjudication
proceeding, or in more formal court proceedings.

18
 Theories related to Forensics:
 Agency Theory - Jensen, and Meckling, (1976)
 Theory of Triangle of Fraud Triangle- Cressey, (1940)
 Theory of Triangle of Fraud diamond- Wolfe & Hermanson (2004)
 Theory of Triangle of Fraud Action- Albrecht et. al (2006)
 Fraud scale theory- (personal integrity” instead of rationalization)- Albrecht,
Howe, and Romney (1984)
 Theory of Triangle of Crime and Corruption- criminogenic- Gross (1963)
 Deterrence theory- ACFE (2015)
 Theory of Ear and Mouth- Oyedokun (2016)
 Theory of profession- Pollock & Amernic, (1981), Larson, (1977), Canning &
O’Dwyer, (2001)

19
 Theory of profession- Framework- Attributes:
 test of competence;
 further study and relevant training;
 a register of qualified members;
 enforcement of a high standard of professional conduct;
and
 organisation within a specific occupation.

20
 Theory of profession- Framework- Attributes
Source: (Canning & O’Dwyer, 2001) and Robust Model of Profession (Candilis 2009)
Source: (Canning & O’Dwyer, 2001) and Robust Model of Profession (Candilis 2009)

21
 Reasoning skills- Let do it together in class

22

23

24

25

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 Take Home- 151, 131, 51

27
 Ethics is defined as a moral philosophy or code of morals practiced by a person or group of people.
 An example of ethics is a code of conduct set by a business.
 Ethics is the study of standards of conduct and moral judgment; moral philosophy, a treatise on this
study, the system or code of morals of a particular person, religion, group, profession, etc. (Webster's
New World College Dictionary)
 Ethics refers to well-founded standards of right and wrong that prescribe what humans ought to do,
usually in terms of rights, obligations, benefits to society, fairness, or specific virtues.
 Ethics, refers to those standards that impose the reasonable obligations to refrain from rape, stealing,
murder, assault, slander, and fraud.
 Ethical standards also include those that enjoin virtues of honesty, compassion, and loyalty.
 Ethical standards include standards relating to rights, such as the right to life, the right to freedom from
injury, and the right to privacy.
 Such standards are adequate standards of ethics because they are supported by consistent and well-
founded reasons.
Ethics and ethical conduct

28
 Ethics refers to the study and development of one's ethical standards.
 As mentioned above, feelings, laws, and social norms can deviate from what is ethical.
 So it is necessary to constantly examine one's standards to ensure that they are reasonable and well-
founded.
 Ethics also means, then, the continuous effort of studying our own moral beliefs and our moral
conduct, and striving to ensure that we, and the institutions we help to shape, live up to standards that
are reasonable and solidly-based. (Velasquez, M., Andre, C., Shanks, T. S.J., and Meyer, J. M., 1987;
2010)
 Being ethical is also not the same as following the law.
 The law often incorporates ethical standards to which most citizens subscribe.
 But laws, like feelings, can deviate from what is ethical. Being ethical is not the same as doing
"whatever society accepts."
 In any society, most people accept standards that are, in fact, ethical.
 But standards of behaviour in society can deviate from what is ethical.
 An entire society can become ethically corrupt.
Ethics and ethical conduct

Theories of Ethics
Ethics evolved as means of applying logic and analysis to
ethical dilemmas (Oduyoye, 2014) viz:
 Divine Command Theory: this has to do with the
resolution of dilemmas based on religious beliefs.
 Ethical Egoism Theory: this holds that everything we do
is determined by self-interest. End result of this theory =
chaos.
 Utilitarian Theory – minimize harms, and resolve ethical
issues by the greatest good to the greatest number of
people. Opposite of EET.

Theories of Ethics
 Kantian Theory – it was proposed by Immanuel Kant -
ethical dilemmas should not be resolved at the risk of other
less-endowed human beings e.g. min. wage, slavery, etc. Be
fair for only the right reasons.
 Rights Theory – a) everyone has a set of rights, b)
governments must protect those rights.
 Moral Relativism – ethical dilemmas resolved depending on
time and place. Adoption of lesser of two evils e.g. steal to
solve a school fees problem, commit arson to drive away drug
dealers, etc.

36
Ethical Dilemmas
 Ethics means different things to different people, but it generally boils down to a
basic sense of societal right and wrong.
 Within the business and professional context, ethics involves making decisions
that align with that sense of right and wrong, as well as with the law.

37
Ethical Dilemmas
 Discrimination
 You are the boss in a predominantly male environment.
 The presence of a new female employee stirs up conflict because your company has
not had a chance to conduct sensitivity training. Some of your male employees
make inappropriate remarks to your new employee. She complains to you; in
response, you sanction those responsible for the conduct.
 You also wonder if it would be wise to move your new female employee to another
position where she would be less likely to draw attention.
 Treating your female employee differently based on her gender or in response to a
harassment complaint may be considered discriminatory and unethical conduct.

38
Ethical Dilemmas
Partners
 You are a partner in a business and see a great deal of profitability on the
horizon.
 You don't believe that your partner deserves to profit from the business'
future success, because you don't like his personality.
 You may wonder if you could simply take his name off the bank accounts,
change the locks and continue without him.
 If you proceed with this course of action, you would likely be in violation of
your ethical and legal obligation to act in good faith concerning your partner.
 The better course of action may be to simply buy out his interest in the
business.

39
Ethical Dilemmas
Gross Negligence
 You are on the board of directors for a publicly traded corporation.
 You and your fellow board members, in hopes of heading off early for the
holidays, rush through the investigatory process involved in a much-
anticipated merger.
 As a board member, you have a duty to exercise the utmost care respecting
decisions that affect the corporation and its shareholders.
 Failing to properly investigate a matter that affects their interests could be
viewed as gross negligence supporting a breach of your ethical and legal duty
of care.

40
Examples of Ethical Dilemmas
 Accounting
 Your supervisor enters your office and asks you for a check for $150.00 for
expenses he tells you he incurred entertaining a client last night. He submits
receipts from a restaurant and lounge.
 At lunch your supervisor’s girlfriend stops by to pick him up for lunch and
you overhear her telling the receptionist what a great time she had at dinner
and dancing with your supervisor the night before.
 What will you do?

41
 Bank Teller
 You have worked as a bank teller for several months when one of the other
tellers who has become a good friend tells you that her daughter is extremely
ill and that she must have an operation to survive.
 She also tells you that she has no insurance and the operation will cost
$10,000. Sometime later you ask her about her daughter and she tells you she
is just fine now.
 She then confides in you that she took $10,000.00 from a dormant account at
the bank to pay for the operation.
 She assures you that she has already started paying it back and will continue
to do so until it is all returned.

42
 Computers
 In your spare time at work, you have developed a new spreadsheet program
on the personal computer in your office. It is even more powerful, yet easier to
sue than anything on the market.
 You share your new program with a friend who encourages you to market it on
your own because you could probably make an incredible profit in a very
short time.
 This is a very attractive option, yet you developed it using company
equipment and during time that you were at work.

43
 Journalism/Advertising
 Your newspaper has published a report on a national study, which concluded
that bottled water has virtually no health advantages over the tap water in
more cities, including yours.
 The study included comments from local health storeowners and water
distributors challenging the study.
 The AquaPure Bottled Water Company, advertising account worth over
$75,000. a year, has threatened to pull its account with your newspaper unless
you run another story of equal prominence, focusing on the benefits of
bottled water.

44
 Law Enforcement
 You are a rookie officer assigned to a training officer for the first six months of
your employment.
 The training officer is a 20-year veteran and is a close friend of the Assistant
Chief of Police and the brother-in-law of the Watch Commander.
 The third day that you are working with him you respond to a burglary call at
a local convenience store. It is 2:30 am and the manager has been notified.
 You are directed to wait 30-35 minutes for his arrival.
 A short time later you observe your partner take a soda, candy and a bag of
chips. He consumes the soda and chips.

45
 Personnel
 Your company has a firm policy regarding cases of theft of company
property.
 Used company equipment is on a table to be sold by bid each month.
You see a valued employee who is 2 months from retirement slip an
electric drill from the table and put it in his car before the day of the
sale.

46
 Teacher
 You have a student who is from a single parent family.
 The student must work to attend college.
 However, the job is interfering with the student’s performance and
several assignments have not been turned in.
 You have determined that a “D” is all the student can make when a
counsellor informs you that the student needs a “C” to qualify for an
academic scholarship.’
 What do you do?

47
 Any Video?
Communication

48
 Any Video?
Communication

49
 Any Video?
Communication

50
 Any Video?
Communication

51
Communication

52
 While effective communication is a learned skill, it is more effective
when it’s spontaneous rather than formulaic.
 A speech that is read, for example, rarely has the same impact as a
speech that’s delivered (or appears to be delivered) spontaneously.
 Of course, it takes time and effort to develop these skills and become an
effective communicator.
 The more effort and practice you put in, the more instinctive and
spontaneous your communication skills will become.
Communication

53
Communication

56
Barriers to effective interpersonal communication

Improving communication skills
57

 Communication sounds so simple: say what you mean. But
all too often, what we try to communicate gets lost in
translation despite our best intentions.
 We say one thing, the other person hears something else,
and misunderstandings, frustration, and conflicts ensue.
 Fortunately, you can learn how to communicate more
clearly and effectively.
 Whether you’re trying to improve communication with
your spouse, kids, boss, or coworkers, you can improve the
communication skills that enable you to effectively connect
with others, build trust and respect, and feel heard and
understood.
58
Conclusion

59
 Forensic accounting techniques are useful in prevention, detection, and
deterrence in the area of fraud, money laundering, investigations, crime
and terrorist financing.
 These techniques includes, investigative skills, audit skills, legal skill etc.
 It is now clear that audit, investigation and forensic accounting are much
related but they cannot be used interchangeably.
 It is hereby recommended that all would be forensic
accountants/investigators, fraud/forensic auditors, statutory auditors,
and investigative accountants, should be well equipped with forensic
accounting techniques in obtaining admissible evidence suitable for
litigation purposes.
Conclusion

62
• Albrecht W. S (2006), Fraud Examination, Thomson South-Western Publishing, 2006.
• Association of Certified Fraud Examiners’ Manual, (2012)
• Association of Certified Fraud Examiners, www.acfe.com
• America institute of CPAs :
http://www.cpa2biz.com/Content/media/PRODUCER_CONTENT/Newsletters/Articles_2008/CPA/June/R
ole.jsp
• Crubley, Heiger and Smith (2003),Forensic and Investigative Accounting, CC Publishing
• Enyi, E. P. (2012). Ethical conduct for forensic accountants. Being a lecture delivered at the Institute of
Chartered Accountants of Nigeria (ICAN) forensic accounting certification programme
• Hopwood, Leiner and Young (2009); Forensic Accounting, McGraw-Hill International.
• New Frontiers: Training Certified Fraud Examiners within the Accounting Program; Journal of College of
Teaching & Learning – September, 2007.
• Owojori, A.A & T. O. Asaolu (2009) European Journal of Scientific Research ISSN 1450-216X Vol.29 No.2
(2009), pp.183-187 http://www.eurojournals.com/ejsr.htm
• Owolabi ‘Doyin, (2013). Annual Report. Being 48th ICAN President speech delivered on 31st Dec. 2013 on
the Institute of Chartered Accountants of Nigeria’s forensic accounting certification programme
• Oyedokun, G.E (2012). Audit, investigation and forensic accounting: Similarities and differences. Being a
lecture delivered at the Institute of Chartered Accountants of Nigeria’s forensic accounting certification
programme
• Oyedokun, G.E (2012). Emergence of Forensic Accounting and the Role in Nigeria Economy. Being a
lecture delivered at the Annual NUASA Week 2012 of Nigerian Universities Accounting Students'
Association Obafemi Awolowo University Ile-Ife, Osun State.
• Oyedokun, G.E (2012). Emergence of Forensic Accounting and the Place of Chartered Accountants .
Being a lecture delivered at the Monthly General Meeting of all Members of the ICAN Lagos Mainland
District & Society
References

63
• Oyedokun, G.E (2012). Emergence of Forensic Accounting and the Place of Chartered
Accountants . Being a lecture delivered at the Monthly General Meeting of all Members of
the ICAN Lagos Mainland District & Society. Being a lecture delivered at the Monthly
General Meeting of all Members of the ICAN Lagos Mainland District & Society
• Oyedokun, G.E (2012). Emergence of Forensic Accounting in Nigeria: The Role of Certified
Fraud Examiners. Being a paper presented at the Continue Professional Development
Training of Association of Certified Fraud Examiners (ACFE- Nigerian Chapter)
• Oyedokun, G.E (2013). Taking your Professional Practice beyond Statutory Auditing: Fraud
& Forensic Accounting Perspective, Being a paper presented at the Entrepreneurship
Development Training Programme of ICAN Professional Forum at Lagos Airport Hotel,
Lagos
• http://blog.rpc.co.uk/tax-law/criminal-guidance/note-9-the-role-of-the-forensic-accountant
• http://www.dolmanbateman.com.au/1323/the-role-of-forensic-accountants/
• Litigation Support - Accounting for Damages, A Framework for Litigation
• Mark Warshavsky (2013) The Forensic Accountant’s Role in Litigation
http://www.accountingtoday.com/news/Forensic-Accountant-Role-Litigation-66287-1.html
donloaded on May 21, 2013
• Nobes C. and Parker R. (2008) ‘Comparative International Accounting’: (10th ed). Prentice
Hall, FT
• Support by Ronald T. Smith and Cynthia R.C. Sefton published by Carswell (ISBN 0-459-
55789-0) available at 1-800-387-5164.
• Zysman, A., (2004). Forensic accounting demystified. World investigators network standard
practice for investigative and forensic accounting engagement? Canadian Institute of
Chartered Accountants.
References

64
Lawrence R, Jeanne S, and Melinda S, M.A. (2015). Effective Communication
http://www.helpguide.org/articles/relationships/effective-communication.htm
http://grammar.about.com/od/pq/g/Professional-Communication.htm
http://www.ncbi.nlm.nih.gov/books/NBK2637/
http://en.wikipedia.org/wiki/Professional_communication Developed by Manuel Velasquez,
Claire Andre, Thomas Shanks, S.J., and Michael J. Meyer (1987, 2010)
http://www.scu.edu/ethics/practicing/decision/whatisethics.html#sthash.SuEUWHl8.dpuf
http://www.skillsyouneed.com/ips/improving-communication.html#ixzz3ZyEnJa5l
http://www.skillsyouneed.com/ips/improving-communication.html
http://www.skillsyouneed.com/ips/improving-communication.html#ixzz3ZyEMppXg
http://www.skillsyouneed.com/ips/improving-communication.html#ixzz3ZyEiCEjb
http://www.scu.edu/ethics/practicing/decision/whatisethics.html
Sophia Lopen Examples of Ethical Issues in Business
http://smallbusiness.chron.com/examples-ethical-issues-business-24464.html
Kenneth V. Oster List of Ethical Issues in Business: http://smallbusiness.chron.com/list-ethical-
issues-business-55223.html
References

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