Forensic Accounting Report: Fraud Detection and Investigation Methods

This report delves into the fundamentals of forensic accounting, exploring the definition of fraud, the essential skills required for forensic accountants, and the qualities they should possess. It differentiates forensic accounting, fraud auditing, and investigative auditing from financial auditing, highlighting their distinct roles. The report outlines the systematic steps involved in a fraud investigation, including accepting the investigation, planning, gathering evidence, and court proceedings. A case study is presented, illustrating the application of these principles. The report also emphasizes the importance of examining financial statements to uncover fraudulent activities, and the skills and qualities a forensic accountant must have to successfully disclose fraud. The report concludes by discussing the court proceedings and questioning of the administrator. References to relevant books and journals are included to support the analysis.

Introduction to Forensic
Accounting

Contents
(1) What is Fraud?...................................................................................................................................4
(2) What skills are most important to the successful practice of forensic accounting?............................4
(3) What qualities of mind and/or body should a forensic accountant possess?.......................................4
(5) How would you distinguish forensic accounting, fraud auditing, and investigative auditing from
financial auditing?...................................................................................................................................6
CASE STUDY............................................................................................................................................7
REFERENCES............................................................................................................................................9

(1) What is Fraud?
Fraud is a purposely misleading activity intended to provide an unfair benefit to the
offender, or to deny a suspect's privilege. In banking, commercial property and identity theft may
exist. Examples of fraud involve tax fraud, bank fraud, witness tampering, mortgage fraud, and
stock fraud. As per the Association of Certified Fraud Examiners (ACFE), workplace fraud is
'the utilization of one's career for financial gain via the intentional exploitation or abuse of the
wealth or property of the hiring company. Deceptive behavior can be conducted by a single
person, numerous individual or a corporation overall. Fraud requires the misrepresentation of
evidence, either through deliberately hiding essential information or making false claims to some
other individual for the sole aim of acquiring benefits which would not have been given even
without deceit (Okoye and Mbanugo, 2020).
(2) What skills are most important to the successful practice of forensic accounting?
There are mentioned some important skills which are required to successful practice
forensic accounting such as:
Investigative skills: Investigative skills are an important factor of the skill-set of a forensic
accountant. Typically he / she will have to make an effective contribution at a period in the
prosecution where proof is established across the criminal's intent and motivation, and the profit
gained from it. Forensic accountants do need to be impartial and take advantage of the
uncertainty where it would be appropriate.
Problem solving skills: For the forensic accounting require having problem solving skills
because in this accounting face various problems at the time of investigation. A forensic
accountant may address his / her conclusions whether in orally or in writing form. Descriptive
helps can also accompany the presentation. A private investigator would understand that
reporting or bank information for the ordinary individual with no accounting experience is not
easy to comprehend.
(3) What qualities of mind and/or body should a forensic accountant possess?

Forensic accountants are appointed to perform inquiries, propose alternatives to contested
business problems, prepare work material, collect and offer evidence in court, and make court
proceedings as witness.
Knowledge of evidence: A forensic accountant should be a specialist in facts-gathering methods
and be mindful that such proof will be used for a criminal court from either the end of the
research. He / she will strive to make sure the proof is true and permissible in trial.
Mindset: It is essential that perhaps the forensic accountant build a mentality that helps him / her
to detect whether anything is wrong before understanding the essence of the anomaly in reality.
This characteristic separates a forensic accountant with a normal accountant that understands and
adheres to all laws and is incapable of thinking like a scammer. A forensic computable should be
cynical and also doubt the creativity (Pan and Seow, 2016).
(4) Outline the basic steps involved in fraud investigation
For the forensic investigation require to follow particular steps in systematic manner such
as:
Accepting the investigation: The first stage of the inquiry is to decide whether the investigative
team has the expertise and skills needed to conduct the research. Forensic accounting is a
professional field; thus, auditors have to know the analytical tools and regulatory specifications
correctly. They do need to be qualified to handle proof and maintain it in collective bargaining.
Reporting: At the conclusion of a fraud investigation, the customer will receive a full document
outlining the facts gathered, the magnitude of the damages suffered, the control systems of the
business that the offenders collapsed to avoid perjury, the method wherein fraud was committed,
etc.
Planning the investigation: The next step in the investigation process is preparing the job
carefully. The investigative team will have to evaluate their task goals. The investigative team
will be educated in the best tools for collecting data, namely computer-assisted audit strategies
Gathering evidence: When collecting evidence, the investigation team must be extremely
vigilant and will insure that the correct review process is followed. Unless the proof appears to

be incomplete and incomplete, or if the custody process is not enforced, the proof can be
contested in litigation and even considered unlawful.
Court Proceedings: The entire investigation typically ends in a court case where the facts
obtained mostly during inquiry will be submitted to the court. Leaders of the forensic committee
will also be presented until the tribunal to clarify how they succeeded in finding the fraud
suspects (Quirin and O'Bryan, 2016).
(5) How would you distinguish forensic accounting, fraud auditing, and investigative auditing
from financial auditing?
Financial auditing is a term other than forensic accounting and auditing fraud. Financial
auditing generally refers to the mechanism by which an external, independent body reviews the
conformity of financial reports with legal standards, primarily for public entities. Forensic
accounting method directly transactions in terms of confirming or disproving financial
misconduct which acts as testimony of (or avoidance of) misconduct in court. It'd also be safe to
conclude that forensic accounting has developed as a legitimate instrument for the identification,
investigation and prevention of money laundering, online scams, share price fraud etc. Forensic
accounting as a method of collects and money for the organization data in a format which could
be used in the investigation of criminal offences by a criminal court. This combines accounting,
auditing and forensic competencies to identify fraud and deter potential deceptive accounting
activities (Van Akkeren and Buckby, 2017).
Items for analysis Forensic Accounting Auditing
Why, when and where It provides as a replacement to
demonstrate fraud in a seemingly
risk-prone company
Constant, certifying the latest
technology of a company and
observing the effective
concept of the industry
Reporting Study or Expert Studies Income reports, statements of
executives or a report by
accountants.

CASE STUDY
(1) For the investigation in given case study require to follow the steps in systematic manner in
which focus on these steps such as
 Accepting the investigation
 Reporting
 Court proceedings
 Planning the investigation
 Gathering evidence
(2) To disclose the administrator’s fraud activities require focusing on different documents like
financial statements of school and other statements. These financial accounts present all the
transactions and fraud that conduct by the administrator in each financial year. This is the
misleading activities disclosure which always outcomes in accounting errors in the financial
documents of the enterprise. It contains the intentional absence of business transactions, forgery
of financial accounts, misrepresentation of financial reports voluntary disclosure, or
misinterpretation of financial reporting. The purpose behind the manipulation of financial
information is to mask the assets of the company so as to enhance the illusion of financial power.
So for this check all the financial statements to check out financial statement fraud.
(3) When forensic accountant hired for the fraud accounting that time focus on their skills and
qualities that helps to easily disclose all the fraud activities which can done by the administrator
Forensic accountants have abilities conducting inspections, propose solutions to contested
accounting standards, prepare expert reports, collect and show the evidence in courtroom, and
make arraignments as observers. A forensic accountant may not be financial specialists; he / she
is also best equipped in business cases and is capable of supporting representation through
guidance. Forensic accountants can further participate in these kind of parts of the country as
claims for insurance, embezzlement, arguments for royalties, allegations for civil litigation, etc.
Most large and medium-sized accounting companies have divisions forensic accounting to
support companies with fraud investigations and several other special situations.
(4) At the stage of Court proceeding ask the questions from the admi nistrator in regard all
the financial transactions that occurred in past year financial period. Representatives of the

investigative team will also be recalled prior to the actual court to clarify how they succeeded in
finding the fraud defendants. The researchers then need to be able to fully understand the facts
they have properly accumulated.

REFERENCES
Books and Journal
Okoye, K. R. E. and Mbanugo, C. I., 2020. FORENSIC ACCOUNTING A TOOL FOR FRAUD
DETECTION AND PREVENTION IN THE PUBLIC TERTIARY INSTITUTIONS IN
SOUTH EAST NIGERIA. European Journal of Education Studies. 7(6).
Pan, G. and Seow, P. S., 2016. Preparing accounting graduates for digital revolution: A critical
review of information technology competencies and skills development. Journal of
Education for business. 91(3). pp.166-175.
Quirin, J. J. and O'Bryan, D., 2016. The marriage of Sharon and Henry sawbones: A forensic
case illustrating the use of a tax return in a litigation advisory services context. Issues in
Accounting Education. 31(3). pp.347-354.
Van Akkeren, J. and Buckby, S., 2017. Perceptions on the causes of individual and fraudulent
co-offending: Views of forensic accountants. Journal of Business Ethics. 146(2). pp.383-
404.