Page 41 - November December 2016 Issue Updated 2nd
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Importance of Forensic Accounting in Countries of Business Opacity: A Means to End Fraud
interviewing skills, and testifying in court as an expert witness.
In conclusion, the base of forensic accounting is a knowledge in accounting,
auditing, internal controls, risk assessment and fraud detection, a basic
understanding of the legal environment since the legal environment is essential
D in order to support the litigation, acknowledging their competence, obtaining a
diploma specialized in forensic accounting which could be given by educational
E institutions that grant certiications such as DIFA. These formal certiicates can
C deepen the students’ knowledge and sharpen their skills in forensic accounting.
E
P C. Forensic Accounting in Management:
T
I Poor corporate governance will lead a certain individual or a group of people with
O the same interest to act upon it to commit fraudulent activities in the company. This
N can be reinforced by the fact that top-level management should follow the policies
of the irm, which will help the company to perform better.
Even if a company applies good internal control systems, the management will still
be the major factor inluencing the implementation. Companies should look towards
new approaches rather than follow the traditional approach, as forensic accounting
may be the next best alternative in resolving problems.
Loebbecke and Willingham (1998) conclude that the probability of material
inancial misstatements due to fraud is a function of three factors. The factors
include the degree to which those in authority in an entity have reason to commit
management fraud, the degree to which conditions allow managerial fraud to
be committed, and the extent to which those in authority have comply to ethical
values that would facilitate fraud commitment. These three factors show that the
management could simply commit fraudulent activities since the public including
shareholders are unaware of the countermeasure to be taken to prevent inancial
crimes. It argues that there should be a set of guidelines created for the public
and management to ensure that actions should be taken when inancial fraudulent
activities occur.
The main problem or issue is the constant misunderstanding of the role and
responsibility of the auditor as the public expects auditors to detect inancial
41
interviewing skills, and testifying in court as an expert witness.
In conclusion, the base of forensic accounting is a knowledge in accounting,
auditing, internal controls, risk assessment and fraud detection, a basic
understanding of the legal environment since the legal environment is essential
D in order to support the litigation, acknowledging their competence, obtaining a
diploma specialized in forensic accounting which could be given by educational
E institutions that grant certiications such as DIFA. These formal certiicates can
C deepen the students’ knowledge and sharpen their skills in forensic accounting.
E
P C. Forensic Accounting in Management:
T
I Poor corporate governance will lead a certain individual or a group of people with
O the same interest to act upon it to commit fraudulent activities in the company. This
N can be reinforced by the fact that top-level management should follow the policies
of the irm, which will help the company to perform better.
Even if a company applies good internal control systems, the management will still
be the major factor inluencing the implementation. Companies should look towards
new approaches rather than follow the traditional approach, as forensic accounting
may be the next best alternative in resolving problems.
Loebbecke and Willingham (1998) conclude that the probability of material
inancial misstatements due to fraud is a function of three factors. The factors
include the degree to which those in authority in an entity have reason to commit
management fraud, the degree to which conditions allow managerial fraud to
be committed, and the extent to which those in authority have comply to ethical
values that would facilitate fraud commitment. These three factors show that the
management could simply commit fraudulent activities since the public including
shareholders are unaware of the countermeasure to be taken to prevent inancial
crimes. It argues that there should be a set of guidelines created for the public
and management to ensure that actions should be taken when inancial fraudulent
activities occur.
The main problem or issue is the constant misunderstanding of the role and
responsibility of the auditor as the public expects auditors to detect inancial
41
