Promoting Forensic Accounting and Auditing Practices - Research Proposal Example

Promoting Forensic Accounting and Auditing Practices in Compliance-Centric Accounting Environments Introduction Current accounting and auditing practices are basically centered on the primary and immediate concerns of the practitioners, i.e. accountants and auditors presume the importance of rule-based accounting practices to be the ultimate aim (Parker, 1995). In other words compliance with accounting and auditing rules is of primary and immediate concern to the practitioner. The significance of this outcome is essentially seen in the modern compliance-centric accounting environments where hierarchically organized structures exert an extraordinary amount of pressure on the average accountant/auditor to comply with norms that have very little if any to do with such broader and more important concepts like corporate governance, quality of accounting and auditing practices, audit judgment, auditor behavior, business forensics concerning auditing and the corporate pricing policy of audits. Research problems or questions What is the scope for the construction of a theoretical and conceptual contingency model on forensic accounting and auditing practices in compliance centric conventional accounting and auditing environments? What is the extent of prevalence of forensic accounting and auditing practices, if any, in the compliance-centric rule based organizational environments right now? What is the scope of potential adoption and acceptance of forensic auditing and accounting practices in the future against the backdrop of an evolving conflict between proponents and contradictors? How far the potential forensic auditing and accounting organizational environments are able to adjust to the changing circumstances of the new auditing and accounting practices? Finally why and how business organizations should adopt new accounting and auditing methods to obviate the shortcomings in the existing practices especially failure prone strategic accounting and auditing initiatives that lack supervisory oversight? Research aims/goals This research paper would establish positive and negative correlations between and among the theoretical and conceptual parameters of a contingency model on forensic accounting and auditing practices (Crumbley, 2007). To identify and determine the current prevalence rate of forensic auditing and accounting practices that converge on a probable reference framework of analysis. To establish positive and negative correlations and regressions between and among endogenous and exogenous variables of forensic accounting and auditing practices and those of conventional accounting and auditing practices (Seada Magda Abou-Seada (Author) › Visit Amazons Magda Abou-Seada Page Find all the books, read about the author, and more. See search results for this author Are you an author? Learn about Author Central and Kader, 2003). Finally to build a theoretical and conceptual framework for future analytical reference on the convergence parameters of a new auditing and accounting environment free of conventional constraints. Thesis statement Corporate auditing and accounting environments have been changing fast in their regulatory and functional spheres. As a result the strategic accounting and auditing practices also have undergone some rapid changes, including in the conventional accounting and auditing practices (Kral and Lorence, 1994). Thus the new forensic accounting and auditing practices have emerged from the transient organizational culture of work practices. This research effort will focus on the correlations and regressions between and among these old and new variables directly and indirectly related to the theoretical and conceptual evolutionary model. It will also focus on the related outcomes such as the degree of convergence between and among the different factors affecting such forensic auditing and accounting environments. Finally the research effort would identify and address the primacy and the immediacy of forensic accounting and auditing practices in the context of an evolving paradigmatic dichotomy between the conventional practice and the modern pressures for change. Literature review Auditing can be defined as an assessment of an individual, organization, system, process, enterprise, project or product or an examination of records or financial accounts to determine accuracy and compliance (Arter, 2002). However modern forensic accounting and auditing corporate environments demand not simple compliance with rules and accuracy of figures but also a greater degree of auditors’ involvement in determining the overall outcomes and preventing negative management. In other words they are not just number jugglers but active players in the process of detecting errors in advance. Thus this whole process can be regarded as an internal mechanism that controls and assesses the validity and the reliability of the presented financial records. The recent international developments and also the current economic recession have forced businesses to adopt far reaching changes that the need of a proper accounting and auditing standards at least to survive in the business environment (Randall, 2001). The World Bank’s Accounting and Auditing Report on the Observance of Standards and Codes (ROSC) concerning accounting and auditing assessments is the most comprehensive international compendium of standards to date though such other international bodies as International Accounting Standards Board (IASB) and International Accounting Standards Council (IASC) have been in existence for a number of years (Gale Reference Team, 2009). ROSC compliance agreements have exerted some substantial pressure on the auditors internationally to comply with not only standards but also to adopt corporate governance principles into accounting and auditing practices in ongoing projects. The existing literature does not, however, adequately deal with the recent spate of accounting and auditing scandals that have plagued Europe and North America. Therefore it’s essential to focus on far more revolutionary accounting and auditing standards to bring about a real change in the current practices at the organizational level (World Bank, 2008). Thus forensic accounting and auditing practices need to be developed by using both national and international standards such those in the International Financial Reporting Standards (IFRS) and ROSC. The existence of Certified Forensic Accountants (CrFAs) ensures that accountants need not be bothered about detection of frauds within the company (Singleton and others, 2006). But if managers or stakeholders were more concerned about the financial frauds and discrepancies they would need more than accountants i.e. certified forensic accountants (CrFAs) who specialize in forensic accounting. Forensic accounting practices refer to a special practice area of accountancy that focuses on such things as outcomes from actual or anticipated disputes. Forensic accounting can be considered as ‘a legally accurate and acceptable accounting’ technique. Forensic accountants engaged in forensic accounting can be called forensic or investigative auditors. Some forensic accountants sometimes function as Certified Fraud Examiners (CFE), Certified Public Accountants (CPA), or Chartered Accountants (CA). Forensic accountants’ functions include understanding the business information; financial reporting systems and gathering evidence of probable inaccuracies and fraud; adopting investigative techniques and unconventional accounting practices; and sticking to auditing standards and procedures. And also they are acting as advisers to audit committees, assisting in investment analyst research to perform their as risk reduction practices (Palmrose and Saul, 2001). Rather than find the financial frauds/discrepancies, they will find out who, what, where, why, when and how from the accounting financial investigation. Basically forensic accounting procedure includes the identification, interpretation and presentation based on certain economic transactions and the forecast future conditions based on past economic transactions. Research methodology This research methodology is exclusively based on secondary research data that has been already published by other researchers and scholars. The research methodology would be divided into qualitative and quantitative analysis, thus focusing on the importance of both areas of research in this paper. Secondary data The secondary research data that has already been published would be subject to an extensive analysis and would be carried out in libraries and on the internet. Books, newspapers, news items and articles would be read and analyzed extensively in carrying out this research. This research effort would also involve internet based research to assess both the extent and the nature of the available literature on the subject and then to evaluate the possibility of enlarging on it to include other possibilities such as the correlations between variables affecting forensic accounting and auditing practices. Conclusion The final paper would focus on the probable conclusions related to the presently compliance-based environments of auditing and accountings and then make an attempt to delineate the probable parameters of a more unconventional contingency model of forensic accounting and auditing to identify the existing shortcomings of the current practices and rectify them accordingly. Thus the conclusion is just a tentative one right now. Research findings or learning outcomes These are yet to be decided. Recommendations Recommendations would include such possibilities of adopting good forensic accounting and auditing practices at the organizational level in accordance with some international standards. These recommendations would be elaborately presented in the final paper after investigating the outcomes of the research. REFERENCES 1. Dennis R. Arter, Quality Audits for Improved Performance, 3rd ed., (Wisconsin: ASQ Quality Press, 2002). 2. Gale Reference Team, “The International Accounting Standards Board (IASB) announced a series of actions it has taken to address recommendations made by the G-20 leaders last”, Journal of Accountancy, 207, no. 3 (2009): 30(2). 3. Graham W. Parker, Graham W. Parker (Author) › Visit Amazons Graham W. Parker Page Find all the books, read about the author, and more. See search results for this author Are you an author? Learn about Author Central The Internal Auditing of Management Systems: A Parsec Guide (PARSEC Guides) (Hampshire: Gower Publishing Company, 1995). 4. Larry D. Crumbley, Forensic and Investigative Accounting, 3rd ed., (Chicago: CCH, Inc., 2007). 5. Magda A. Seada Magda Abou-Seada (Author) › Visit Amazons Magda Abou-Seada Page Find all the books, read about the author, and more. See search results for this author Are you an author? Learn about Author Central and Magdy G. Abdel-Kader, Behavioral Aspects of Auditors Evidence Evaluation: A Belief Revision Perspective (Aldershot: Ashgate Publishing, 2003). 6. Mark E. Kral and Roger D. Lorence, “IRS revises cookbook for transfer pricing audits,” The Tax Adviser Article 25, no. 9 (1994): 545(3). 7. Robert F. Randall, “IASC Names Advisory Council (International Accounting Standards Committee )”, Strategic Finance, 83, no. 2 (2001): 71. 8. Tommie W. Singleton and others, Fraud Auditing and Forensic Accounting, 3rd ed., (New Jersey: Wiley & Sons inc., 2006). 9. World Bank, Doing Business 2009 (Doing Business), (Washington: World Bank Publications, 2008). Oliver Marnet (Author) › Visit Amazons Oliver Marnet Page Find all the books, read about the author, and more. See search results for this author Are you an author? Learn about Author Central 10. Zoe-V. Palmrose and Ralph S. Saul, “The push for auditor independence: The SEC Sought to restructure the accounting profession with its new auditor independence rule,” The Securities and Exchange Commission(SEC) 24, no. 4 (2001): 18(6). Read More