Fraud Detection in Australian Organizations - Research Proposal Example

INTRODUCTION This study examines effects of fraud detection in Australian organizations. The aim of the survey is to determine the degree of interrelatedness between fraud detection and forensic accounting. Primary data was collected using applicable methods of collecting data, and analysis of the data performed, and there is a great relationship between forensic accounting and fraud detection. Therefore confirming that there is a great benefit of the forensic accounting department in the organization to reduce and control fraud. LITERATURE REVIEW In the past years, there has been the significant increase in white collar crimes and accounting scandals. Enron and world com debacles illustrated by Crumbley, 2005 are some of the examples of accounting scandals that have faced the world in the recent past. Due to this, it has caused the spotlight to be on the accounting profession, therefore, the creation of a new niche, forensic accounting. Demand for forensic accountants was high so in June 2008 there was the establishment of the certified in financial forensic (C.F.F) by the American Institute of certified public accountants. In that year, they had a target of 900 certifications, but they surpassed this objective, the year ended, and they achieved three thousand five hundred certifications. It proved that many organizations require this accountant and the desire to have the skill set by various analysts was eminent. Fraud, (Mark, 2011) is the intentional act of manipulation, deceit, deception and cheating in the reporting of financial information. Therefore, this is an intention that is purposed by an individual to alter the financial reporting to change stakeholder judgment on the company, or to enable the individual to embezzle funds for his gain. Cases of fraud in the organization have been on the constant increase in the recent years, mainly perpetrated by the top management through their subordinates. This is the case not only in Australia but also in the world over (Gordon, 2010), where employees of a company are manipulating their financial statements to lure in investors and to have a greater competitive edge on their competitors. (Arokiasamy and Cristal, 2009) Forensic accounting is the application of financial knowledge and investigative mindset so as to uncover issues which can be used as evidence of fraudulent activities. The primary consumers of forensic accounting knowledge are attorneys of the law who require such information so as to provide evidence for them in the court proceedings. It is a discipline that engages in the knowledge of fraud, financial know-how, and a good understanding of the activities that take place in an organizational set up (Bologna and Lindquistn, 1987). Traditional accountants and forensic accountants are different in that for one to be a forensic accountant a different skill set is required for the job. An individual should possess professional responsibilities and practice management, should be equipped in law, courts and dispute resolution techniques, planning and preparation skills, information gathering reporting and testimony. Communication skills are a valuable skill that a forensic accountant should have and also the ability to simplify information. In regards to the Australian case, there is enough suspicion to prove that it has not been spared from fraudulent activities. Many cases can act as evidence to prove the validity of this statement and it just goes to show that forensic accounting knowledge is of high importance in today’s society. Forensic accounting is a field that encompasses accounting, auditing and investigative skills (Dhar and Sarkar, 2010) define the profession as a science that deals with the application of accounting competencies, auditing methods and techniques and methods of conflict resolution that require one to have investigative knowledge. Therefore, this practice is done by deeply examining the financial reports, inquiries from various stakeholders such as debtors, creditors, managers, and suppliers, then careful investigations are carried out, and the cause is noted, and answers provided. RESEARCH PROBLEM (Williams, 2002) States that forensic accounting is a discipline that is endowed with attributes such as rationality of thought, neutrality and independence. Businesses are aiming to lure investors into their companies; this is the cause of many fraudulent cases that have been happening in the recent past. This has led to an increase of fraud cases in many organizations. Thus, Williams is correct in his statement and thus demonstrates the dependence in the field of forensic accounting. Enhancement of technology in communication such as the creation of computers, the internet, and the mobile phone sector has increased the ease of conspiracy. STATEMENT OF HYPOTHESIS H0: Which role does the forensic accounting department play? H1: Forensic accounting department plays a significant role. H0: does the use of forensic accounting significantly result in the reduction of fraud cases in an organization? H1: forensic accounting reduces the cases of fraud in an organization. H0: is there a difference between the forensic accounting department and the external auditing services? H1: is there a difference between the forensic accounting department and the foreign auditing services. SCOPE OF STUDY The study deals with which benefits a firm would enjoy when having a forensic accounting department. This is a measure of the availability or likeliness of fraud happening in the organization. With the changing times, fraud is a likely occurrence steps and actions should be put in place to curb such behavior. It also aids in noting the difference between an external audit and forensic accounting. RESEARCH QUESTIONS The study was expected to answer the following issues: A) What is the difference between auditors and forensic accounting? B) The role of forensic accountants? C) Does forensic accounting aid in fraud detection? METHODOLOGY AND TECHNIQUES USED The research used different methods of collection of data that included; Use of questionnaires- this were used to ask the stakeholders questions that would be helpful to the study to try and find answers to the research questions. Open ended, and rigid questions have been invited to enable the research team to evaluate their candidates entirely. Use of observation- a team of researchers was sent to different companies to see the day to day activities of a particular company and to ensure that that they collected as many data concerning the company as they could. Use of interviews- the research team conducted face to face talks with the relevant stakeholders to ensure that the answers that were given on the questionnaires were valid and also to find out what factors made them give certain answers to certain questions. Use of sampling- the research took a significant number of people to research on to represent the whole organization. This sample was enough to give a general view and also to provide the intended answers that the research team needed. Use of documents and records- since the study was based on financial statements the research team gathered all the financial records of the company to try and find out if there was any fraud that could be detected on them. PROJECT PLAN Task Start Date Duration End Date Questionaire 1-Jun 1 3-Jun Observation 1-Mar 7 8-Jun Interviews 30-May 4 3-Jun Group discussion 31-May 2 2-Jun Sampling 30-May 2 1-Jun RESEARCH PROCESS The research took a period of two weeks where various data collection methods were put in practice, and they were used to examine the research questions. The study started with interviews and sampling methods since this method took up most of the time in the research they needed ample time to make sure they were conducted carefully. Group discussions were held for two days since the research team saw that it took too many people's time, and a large number of people were required at the same time. Observations took the most time in the research since this type of data collection did not expect much of people's time in the organization. Questionnaires took the least time since they only needed a little time from the respondents to complete the questions. DATA COLLECTION AND ANALYSIS METHODS Data collected from the research showed significant reasons to believe that forensic accounting is a necessary department that each and every organization should have to reduce the likeliness of fraud and white collar thefts in organizations. The survey also showed that not enough forensic accountants displayed the necessary skills that were required in the field of accounting. The research also showed that there was a significant difference between forensic accountants and external auditors in that auditors only revealed that fraud was done but forensic accountants were involved in the prevention, detection, and uncovering of the frauds that were being perpetrated. A gantt chart was also used to show the duration of the of the research process, the process consisted of five different activities that were carried out in different time of the year but all for the same target. EXPECTED RESEARCH OUTCOMES The data that was collected showed that fraudulent activities played a significant role in the collapse of different companies across the world. The other was forensic accounting, and external auditing had significant benefits in fraud reduction, prevention, and uncovering of such unscrupulous methods of cheating investors. The study also proved that forensic accounting aid in fraud detection and prevention, this fact will aid many firms to understand the necessity of forensic accounting. References Crumbley, D. L. (2003). What is forensic accounting? Forensic accounting: Older than you think. Journal of Forensic Accounting. Arokiasamy, L., & Cristal-Lee. S. (2009). Forensic accounting: Public acceptance towards occurrence of fraud detection. International Journal of Business and Management. Williams, J. W. (2002). Playing the Corporate Shell Game: The Forensic Accounting and Investigation Industry, Law, and the Management of Organizational Appearances. Doctoral Dissertation, Toronto: York University. Dhar, P., & Sarkar, A. (2010). Forensic accounting: An accountant’s vision. Vidyasagar University Journal of Commerce, 15(3), 93-104. Parr, Russell L.; Smith, Gordon V. (2010). Intellectual property: valuation, exploitation, and infringement damages. Hoboken, N.J.: Wiley. pp. Chapter 33. Nigrini, Mark (2011). "Forensic Analytics: Methods and Techniques for Forensic Accounting Investigations". Hoboken, NJ: John Wiley & Sons Inc. Bologna, G.J., & Lindquist, R.J. (1987). Fraud auditing and forensic accounting: New tools and techniques, Hoboken, New Jervey: Wiley. Read More