Effects of Forensic Accounting in Detecting and Preventing Fraud

RUNNING HEAD: FORENSIC ACCOUNTING 1
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Executive Summary
The purpose of this research paper is to determine the effects of forensic
accounting in detecting and preventing fraud in any organization. The key
requirement for this study to be successful was the data which was acquired from
primary sources. These first hand information were obtained using various
techniques. The main method used was well-structured questionnaire applied to
a number of organizations. The primary data which was collected were examined
keenly with descriptive statistics in aid of Chi-squire and linear regression. The
study divulges that the use of forensic accounting on organizations greatly affect
the extent of fraudulent activities.

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Table of Contents
Introduction.......................................................................................................................4
Rationale............................................................................................................................4
Research Objectives..........................................................................................................5
Research Questions...........................................................................................................6
Literature Review..............................................................................................................6
Benefits of forensic accounting.........................................................................................6
Fraud Detection.................................................................................................................8
1.Planning the investigation..............................................................................................8
Forensic procedures...........................................................................................................8
Data mining through use of computers.............................................................................9
Reviewing other documents..............................................................................................9
Conducting interviews.....................................................................................................10
Possible information on the subject matter.....................................................................10
Forensic Accounting and Fraud Detection......................................................................14
Methodology....................................................................................................................16
Analysis and interpretation of Data.................................................................................16
Table 1: Coefficients.......................................................................................................17
Table 2: The Anova.........................................................................................................18
Table 3: Model Summary................................................................................................19
Conclusion.......................................................................................................................19
Recommendation for Future Research............................................................................19
References.......................................................................................................................20

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Introduction
The continue accelerated demand for the accountants who have specialized in the field
of forensic is becoming common due to the increase in case of fraud. The reason for
the arising of forensic accounting is the impact of technical error due to man
incapability and fraud. Many organizations worldwide were not putting a lot of
concentration on the application of forensic accountants’ skills. Due to the increase in
the instances of fraud in the world, the companies have started to apply forensic
accounting to minimize the losses. Forensic accounting refers to application of
knowledge in accordance with financial matters and put in place a systematic inquiry
to ascertain the mentality of issues which have remained unsettled, performed in line
with the context of laws, rules and principles of evidence (Arokiasamy and Cristal,
2014).Bologna and Lindquist (2017) stated that forensic accounting composed of fraud
knowledge, sound knowledge, financial expertise and well understanding of how
business operates and the functionality of legal system. Forensic accounting is one of
the key ways of detecting accounting fraud effectively and minimizing them. This
field of forensic accounting is becoming the most popular in the world. There are
many institutions which provide this course such as; Crownways Institute in Kenya,
Maryville University and Franklin University in England among other prestigious
educational institutions.
Rationale
Williams (2012) indicated that forensic accounting has a certain form of expertise
knowledge and well equipped with special attributes which are identifiable. The key
features among others are neutrality and rationality. Accountants who specialized in
forensic are fully in possession of a specific social recognition, keen observation that
enable them to critically translate economic matters into symbolic form which are
trusted. Forensic accountants are endowed with symbolic capability where the issue of
translating fraud is becoming simpler and can be detected easily (Appah, 2012). The
accomplishment of legal mediation within cultural setup and economic claims lies
under the forensic accounting. In the late times of nineteen centuries, many
organizations experienced great tsunami in scandals, failures and fraud (Ball, 2013).
These events have greatly contributed to Huge Recession and substantially impacted
the free market to function effectively. Public accountants are the main facilitators of
these events (Enron and Arthur Andersen,2015). The occurrences of fraud, failures

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and scandals have brought about the decline in the level of loss of self-reliance in the
side of financial statements users in the aim of mitigating the problems which arises
on financial issues within the organizations which have catalyst the growth in need for
forensic accountants (Huber, 2012).
The financial statements prepared in an organization are always displays inadequate
information that the outsiders need in order to make informed decisions. There are
some companies which have involved in in cases like fraud. They are great
organizations which have greatly affected by issues of fraud until their internal control
structures have been made weak. The reason behind the fact that big companies are in
high chance of engaging in fraud is because it is easy for such organizations to access
data then manipulate the information, the details in the paper and those in the
computer to be alike. It relates bad in the part of human expectations of nature and the
level of management which operates in a strategic and well organized manner. The
perfect way of dealing absolutely against this matter is through provision of adequate
training to all staff members and public on the functionality and use of forensic
accounting in preventing fraud from occurring. This knowledge will help the public to
demand for information and services from the organizations they have invest in.
Accountants in the field of forensic have played a crucial and important duty in the
handling with legal disputes and litigation in the frauds that keeps on occurring. The
real fact is that less has been put down by different people on the fraud detection and
its prevention. The key aim of this study is to focus on related effects of forensic
accounting and how to detect.
Research Objectives.
The study of forensic accounting is a very crucial activity in any organization. This is
because for the firms to perform effectively and efficiency, there is need to minimize
instances of fraud. The major objective that brought about this study is observing and
analyze the effect of forensic in the field of accounting in line with detection of fraud.
The are some main objectives that were keenly researched on and give the specific
results of the study; they include: Investigate on fraud and finding out how forensic
accounting impact its detection, this is undertaking the research on various ways of
detecting fraud in the organization then suggesting ways of curbing with it to prevent
losses Forensic accountants have a role of reducing the bad effects of fraud by
detecting them early enough and advise the management to lay down strategies to

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deal with it. Ascertain if the study of forensic accounting has
ability of curbing fraudulent practices in the organization.
Research Questions
1. What are the benefits of forensic accounting?
2. How does forensic accounting detect fraud in an organization?
3. Can forensic accounting help to prevent fraud cases in an organization?
Literature Review
Benefits of forensic accounting.
The great personnel who developed forensic accounting in early nineteen centuries is
Maurice E. Peloubet.He developed this term based on his essay “Forensic
Accounting: is credited with developing the term forensic accounting in his 1946
essay “Forensic Accounting: The place for this is in the economy of today. In early
times, forensic accounting was incapable of proving its value during the end of World
War I; despite that fact that it had been developed, there were no formalized steps and
procedures which had been indicated till late 1980s when great academic studies were
carried down and published (Ramsey, 2009). Some countries in the Western part of
the world had developed forensic accounting where new specialization in the area of
accounting has emerged. Auditing as a similar field to accounting has also been
created. This accounting profession come up with crucial field which includes
auditing, investigative skills and accounting (Oulu and Pamukc, 2012).
Forensic accountants are important personnel in an organization who fully describes
the engagements which occurs due to expected or actual disputes .The term “forensic”
means that “it is suitable to be applied in court systems, ’and determines how forensic
accountants will have to work based on the potential outcomes and standards form the
court(Crumbly, Heitger and Smith, 2015).this field of forensic accounting has been
termed as professional expertise which has particular attributes; for one to be
recognized as specialized forensic accountant, he/she must own formal certificate
which gives symbolic value (Williams, 2012).