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Forensic and Fraud Examination

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Added on  2020-10-23

Forensic and Fraud Examination

   Added on 2020-10-23

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Forensic and FraudExamination
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Every business is susceptible to fraud and every day many businesses are affected byfraudulent activities. Fraud could be understood as a criminal offence, which means use oftechniques, such as cunning, conniving, tricking or unfair behaviour of an individual leading tocheat somebody (Bodnar and Hopwood, 2012.). An individual resorts to such kind of behaviourto get an advantage over another by use of false means. According to Singleton & Singleton(2010) corporate fraud is committing fraud by or for or against a corporation, for instance,employee fraud or occupational fraud, etc. Forensic Accounting is a process for recording,dividing and analysing financial data with the help of applying financial principles and theories,which helps the management in reaching on to informed decisions.Fraud, in general terms means any act which is committed with the intent to deceivesomeone, which results in economic loss to someone or gaining advantage over someone. Fraudcan also be called as 'theft by deception'. In legal terms fraud is a criminal offence committed byan individual with an intention to cause deception to any other person. Fraud could becategorised as asset misappropriation, corruption or financial statement fraud. Assetmisappropriation is misusing or stealing the assets of an organisation, for instance, stealinginventory etc. Corruption means unlawful or wrongful use of power or influence in a commercialtransaction to gain advantage or personal benefit while in an employment (Kossovsky, 2014).And, financial statement fraud means misrepresenting the financial information intentionally tomisguide the persons who rely on such information to take economic decisions. Fraud examination is used in resolving fraud related disputes by a fraud examiner, whoinspects and analyses financial transactions. A fraud examiner should have knowledge ofproperly and legally obtaining evidence for resolving a fraud related issue. An examiner shouldalso have specific skills to write a clear, accurate and unambiguous report after examination ofdata collected pertaining to fraud. A fraud examiner has to testify his findings in a courtproceeding before the judicial authorities, as an expert evidence.Accounting in general terms means collecting, classifying and calculating any financialdata to reach on to a specific results. Forensic accounting is application of financial principlesand theories to the facts of a circumstance or situation, involving a legal dispute. Primarily,forensic accounting is for providing – litigation advisory services and conducting investigations.The professionals working for Forensic and Litigation Advisory Services (FLAS) are consultedfor providing technical, functional and industry related services, which are applied to resolve the1
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issues pertaining to occupational fraud, employee frauds, corruption or financial statement fraudcases. These professionals help and provide assistance to the attorneys in collection of financialinformation which could be useful to the party approaching the court. The FLAS professionalsare responsible for providing support in technical sphere such as, data mining etc. Forensic litigation professionals help with preparing a strategy for litigation, argumentsand preparing an inventory of testimony in both civil and criminal matters (Daniels, Ellis andGupta, 2013). The forensic accountants are involved in inspecting and analysing the accounts forresolving legal disputes arising in any organisation. Financial forensic is a combination of twodifferent spheres – finance and law. Therefore, the forensic accountants are responsible forapplication of financial principles such as accounting, auditing, quantitative techniques andvaried aspects of law in resolving the matters arising in any organisation pertaining to fraud.Secondly, the forensic accountant investigates and collects data to be used as evidence in thematter. And, thirdly, the accountants are responsible for critically examining the data andcommunicating the same as a result of an investigation. The two terms might be understood as same but both the terms are different on a varietyof grounds. Firstly, on the basis of timing forensic accounting is conducted after the allegationsof misconduct are made whereas, fraud examination is conducted even if there are predictions.Secondly, the goals of fraud examiner and forensic accountant are different, as the former isresponsible for determination of fraud and the later analyses whether the allegations arereasonable or not (Turvey, 2013). Thirdly, the methodology adopted by both the fraud examinerand forensic accountant is different, as the former conducts document examination, reviews theoutside sources and conducts interviews, whereas, the later gathers financial and non-financialevidences to critically analyse whether the allegations are correct or not. And, lastly, theapproaches of both the examination are different as one deals with resolution of fraudulentconduct and the other attempts to gather sufficient evidence to prove or refute the allegations.Fraud examination is a method that resolves the signs or declarations of fraud onthe person. This methods forms a uniform, legal process for resolving the issue that can arrive ontimely basis. It frames the path that it should move in a linear order from general to the specificthat focuses on the culprit through analysis of the evidence that are gained while investigating.This involves the efforts to resolve the allegationsthe signs of fraud when the facts or theevidences are not clear and are unknown (Brody, Melendy and Perri, 2012). Therefore this helps2
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