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Financial statements reflect the financial position of business transactions and events on such business entity, internal control system, if adequate, it will help in reducing the activities of fraudulent stakeholders. Forensic accounting’s focus is on both evidence of economic transactions and reporting which is as contained within an accounting system. Cases of financial statement misrepresentation have been reported, affected companies and their auditors have gone down while shareholders were greatly affected. This study examined the relevance of forensic accounting techniques in internal control functions of business organisations and how it can ensure the integrity of the financial statements. The dependent variable of this study is “Integrity of financial statement” with internal control system; sound ethical culture; competent management and staff as proxies. While forensic accounting techniques is the independent variable with the following proxies: fraud prevention, detection and deterrence skills; forensic audit, investigation, and interviewing skills; litigation, mediation and arbitration skills; computer assisted reviews and document reviews. Integrity of financial statements is important when bridging the communication and performance expectation gaps in the work of auditors of financial statement while expressing their audit opinion. Stakeholders who are members of the Institute of Chartered Accountants of Nigeria (ICAN) were requested to answer the research questions. This study adopts survey research method with the use of primary data and purposive random sampling techniques. Sample size was calculated with the formula by Krejceie and Morgan (1970). 350 copies of questionnaires were administered and 321 questionnaires were returned, representing 92% of the entire questionnaire. Nominal scale method was used in the demographic section while Likert scale was used in other sections of the questionnaire. Hypotheses were formulated, tested, and analysed using multiple regression analysis. It was found that forensic accounting techniques “FAT” (FPDDS, FAIIS, LMAS, and CARDR) have positive influence on the integrity of financial statements (IFS) of business organisations, as evidenced from the individual level of significance of 0.006, 0.045, 0.000, and 0.047 which are less than the 5% acceptable level of significance and the coefficient of determination of the main model of 0.23 meaning that about 23% variation of the IFS is attributable to FAT while the remaining 77% change in the IFS can be attributed to other factors not covered in the model. It was also found that the inclusion of forensic accounting techniques will strengthen the activities of internal control functions. This is also evidenced in the sign and size of the coefficients, that is β4 - 7 are +0.203, +0.256, +0.270, and +0.134 respectively > 0. In conclusion, this study established that forensic accounting techniques are; fraud prevention, detection and deterrence skills, forensic audit, forensic investigation, and forensic interviewing skills, litigation, mediation and arbitration skills, and computer assisted reviews and document reviews. The key recommendation is that business organisations should consider setting up forensic accounting unit within the internal control department; this will lend credence to the integrity of financial statement of business organisations.
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The need for fraud detection, risk management, corporate investigations, due diligence and forensic accounting are rising in the world. As a result, there is a need for courses to be offered to acquaint and prepare students to meet the needs of business, government and non-profits. This paper will describe and discuss the development and delivery of a course in Fraud Examination, through the joint efforts of the Business Administration and Criminal Justice Departments. It is hoped that the cross-listed course to be offered, will consist of 12 Business majors and 12 Criminal Justice majors. Teaching will be shared by Criminal Justice and Business Administration faculty who focus on both investigative techniques and accounting approaches. In this case, both professors are “Pracademics” meaning that, faculty with academic credentials and practical experience to facilitate the course.
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Fraud is not a new subject. Fraud basically involves any crime committed by a perpetrator that uses deception in order to gain something as the element of opportunity, pressure and rationalization exist. Thus, it is important to prevent and detect fraud before it causes the business to collapse. Fraud detection is an evolving discipline. Statistical methods and data mining are said to be among the best techniques to detect fraud. Computer-based fraud detection revolves the usage of Benford's Law while Beneish model which is based on ratio analysis can also be utilised in discovering anomalies and detecting fraud. This paper, therefore, aim to focus on analysing the usage, process and application of Benford's Law and Beneish Model in detecting accounting fraud. Comparisons were made to conclude that both techniques appear to have its own benefit in the quest of detecting and preventing fraud occurrence.
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Global Perspectives on Accounting Education
Accounting programs around the world have been revising their curricula to include courses in fraud/forensic accounting. Yet, an initial review of these courses indicates there may be divergent approaches to their development. This article identifies .
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According to Simmons, M. R., 1997, fraud is a relevant issue worthy of discussion particularly in today’s economy. He further stated that as the standards of living and the adjustable interest rates on certain home mortgages continue to raise, employment stability and incentive compensation pay-outs will continue to decline. The dichotomy can increase the pressure and incentives for individuals to concoct fraud schemes. These individuals often rationalize their fraudulent actions by assuming that, their current salary is below market rate. Internal control is the method put in place by a company to ensure the integrity of financial and accounting information to meet operational and profitability targets and transmit management policies throughout the organisation. Fraud is define as an intentional act by one or individuals among management, those charged with governance (management fraud), employees (employee fraud) or third parties involving the use of deception to obtain an unjust or illegal advantage. (ACCA, 2007) Unfortunately, fraud is inevitable in many organizations and need to be curtailed by internal control systems. Internal controls can deteriorate over time, either because of technological advances or human intervention (management override or collusion).The successful implementation of antifraud controls is not a guarantee that fraud will not occur. Nonetheless, adding effective internal control systems to an organization can play a significant role in deterring individuals from perpetrating fraud because they often send the message that senior management is committed to preventing and detecting fraud committed against the organization. (Bishops, 1991) The primary responsibility for the development and maintenance of internal control rests with an organization’s management. With increased significance placed on the control environment, the focus of internal control has changed from policies and procedures to an overriding philosophy and operating style within the organization. Emphasis on these intangible aspects highlights the importance top management involvement in the internal control system. If internal control is not a priority for management, then it will not be one for people within the organization either. Internal control must be evaluated in order to provide management with some assurance regarding its effectiveness. Internal control evaluation involves everything management does to control the organization in the effort to achieve its objectives. Internal control would be judged as effective if its components are present effectively for operations, financial reporting, and compliance. The board and it audit committee has responsibility for making sure the internal control system within the organization is adequate. This responsibility includes determining the extent to which internal controls are evaluated. Two parties involved in the evaluation of internal control are the organizations internal auditors and their external auditors. The National Health Insurance Scheme was designed to offer affordable medical care, especially to the poor and vulnerable in Ghana. The scheme is the solution for the health care sector and has been the only viable alternative to the out-dated and rigid system of “cash and carry” which has existed since 1985(IRIN–March 2004) The National Health Insurance Scheme is to be restructured to respond to the needs of the population and improve upon the issue of claims management. This, among other things, will help to resolve the problem of portability to make it national in coverage. It will also pursue the policy on de-linking children from their parents and improve the registration and the provision of free maternal care. National Health Insurance Authority (NHIA) have established a clinical audit to look at the procedures used for diagnosis, care and treatment, examining how associated resources are used and investigating how effective care has on the outcome and quality of life for the patient; and to undertake claims verification at accredited health provider sites to ensure compliance. Even though clinical audit is in place, reports reaching National Health Insurance Authority indicate that there are many wrong things happening at the various district offices and some approved health centres such as financial fraud, bribes, processing cards to beneficiaries without regard to the regulations governing the implementation of the Scheme, over billing and non-adherences to tariffs. This study is therefore set to research further into related contributions and issues that could help prevent fraud and embezzlement among most businesses and corporate institutions a case of Ghana National Health Insurance Authority.
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Abstract The numerous cases of financial fraud reporting in recent times have precipitated the outcry of most stakeholders in the business environment for the need to critically examine the parties responsible for the preparation of such reports in pursuance of their interest. This paper studied the complicity of Public Company Auditors in Financial Statement fraud. To achieve this objective, the responsibilities and obligation of the Auditor to detect and report financial statement fraud before their perpetration was reviewed. The study revealed that, apart from the numerous financial statement fraud cases committed by other stakeholders in corporate governance, 23 percent of Auditors were involved in financial fraud cases, implying that some auditors are complicit in financial statement fraud. As a result, this phenomenon corroborates the need for International Reporting Agencies such as an International Accounting Standard Board (IASB) to develop more creative measures in identifying and reporting fraud. Keywords: Complicity, Fraud, Stakeholders, Auditors, Agencies, financial statement.
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The increase in the number of cases of financial fraud due to failure of statutory audit to detect and prevent fraudulent activities has given rise for the services of forensic accountants. This paper highlights how forensic accountants can be employed to resolve this challenge. The study was a theoretical research which considered the roles of forensic accountants in combating fraudulent activities, differences between a forensic accountant and traditional accountant, features of a forensic accountant and the impact of forensic accountants to detect and prevent fraud. From the research, it was found out amongst others that their services will assist audit committee members in carrying out their oversight functions by providing them assurance on internal audit report. Some of the recommendations proffered is for government to ameliorate the cost of hiring the services of forensic accountants and to treat culprits equally without any favoritism.
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