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Frauds and Other Issues in Accounting - Research Paper Example

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The paper “Frauds and Other Issues in Accounting” is a cogent example of a finance & accounting research paper. The Australian Institute of Criminology (2012) has released its results on the fraud expenses which amounted to $8.5 billion and accounts for 40% of the total crimes in Australia. This figure is supported by the KPMG Forensic report - the level of fraud cases in Australia has increased…
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Issues in Accounting Name: Student ID: Course: Lecturer: Date: Issues in Accounting Issue and Motivation The Australian Institute of Criminology (2012) has released its results on the fraud expenses which amounted to $8.5 billion and accounts for 40% of the total crimes in Australia. This figure is supported by discoveries by the KPMG Forensic report which indicated that the level of fraud cases in Australia has significantly increased and that illegitimate financial act is major problem in the Australia which portrays the need for practical and responsive forensic accounting services (Van Akkeren, Buckby and MacKenzie, 2013, p. 189; Candilis, 2009, p. 425). The public is more aware of the fraud cases; hence, there is numerous fraud cases being carried on in Australia and majority of the cases are inclusive of proficient accounting firms. Nevertheless, there is inadequate information concerning the sole focus of the Australian forensic firms, the structure of this profession, testimonials, skills and the professional level of forensic accountants (DiGabriele, 2008, p. 335). Globally, there is increased need for knowing what role is carried out by the forensic accountants. Research has shown that there is the requirement of extensive skills, acquaintance and qualification so that an individual can carry out the role of forensic accounting effectively (Gaffikin, 2009, p. 170). In Australia, forensic accounting is an expertise profession within the accounting field that offers extensive services outside fraud research. There still exist some levels of obscurity in the field of forensic accounting. In most cases, financial crimes are hard to categorize because their activities are covered through sequence of complicated transactions which is inclusive of large size of data which makes investigation complex DiGabriele, 2008, p. 337). Hence, the occupation area of accounting which handles financial crime entails high levels of specialty to assess complex financial data (Van Akkeren, Buckby and MacKenzie, 2013, p. 191). Current research fails to elucidate the lawful qualifications and the kind of training required for forensic accounting professionalism (Evans, and Poullaos, 2012, p.17). Further research seeks to define what forensic accounting is; what skills and knowledge are required in forensic accounting; what kind of qualifications are suitable for teaching University students who aspire to become forensic accountants. Further research should aim at providing key insights into the field of accounting and will be of importance in assisting universities in the establishment of a suitable forensic accounting curriculum. The information will also assist accounting firms with the right and appropriate topics should they aspire to establish Australian-based accounting authorization. Theoretical Perspective and Framework There are various meanings that designate the variety of forensic services presented in the accounting field. Universally, it has been defined as the utilization of specialty accounting knowledge in issues concerning probable or real civil criminal trial. Also, it has also been defined as the submission of financial skills and an exploratory perspective to unsettled issues which are carried out within the law framework of a particular country. From an Australian legal framework, the Accounting Profession and Ethical Standards Board working in conjunction with FASIG delivered forensic accounting amenities which give a definition of forensic accounting services to mean skilful onlookers, lay witnesses, expert consultants, and investigators. The document describes the profession service requires accountancy, auditing, financial management, taxation skills. Nonetheless, it is distinct that the field is complex and stresses specific proficiency. Literature Review Considering the increase in the rate of financial criminalities in Australia, it is not difficult to relate the rise in demand for forensic accountants. Majority of companies require a systematic comprehensive investigation in various risky auditing sections and the major role of forensic investigation is to identify, explain, communicate information surrounding financial and commentary events. This profession focuses on white collar criminality which refers to crimes for own selfish gain by masking or dishonesty that are mainly carried out by persons who are workers in genuine companies with affluence, power, high education level, and social links (Van Akkeren, Buckby and MacKenzie, 2013, p. 190; Bewaneh, 2011, p. 77). Considering the nature of white color criminalities, fraudsters are difficult to identify as it is difficult to detect the hidden events until a period of more than 15 weeks after they were carried out. Previous research have suggested that occupational fraud is an example of white color criminality and may include misappropriation, burglary of wares, tax circumvention, and manipulation of records. It has been anticipated that ‘cybercrime’ will be one of the most common worry for companies in the coming years and will need superior levels of computer capability to alleviate the threat. Hence, the investigative skills which involve a wide variety of techniques will be required for the investigation of such matters (Van Akkeren, Buckby and MacKenzie, 2013, p. 193). Besides fraud, accounting companies provide extensive services which fall within the forensic accounting profession. These services range from reactive services such as argument resolution and trial guidance to proactive services such as threat assessment, Information technology control, and commercial analytics. Majority of these services are inclusive of extensive technological activities such as data mining, e-Discovery, reportage, and computer forensics. Additional services offered have been identified as list dispute counseling, lawsuit sustenance, business evaluations, and skilful witness schedules. However, the amount of time spent of each service and the specific services offered by the Australian firms is not yet determined. Hence, further research is necessary to fill the literature gaps (Van Akkeren, Buckby and MacKenzie, 2013, p. 200-205). Litigation services involve both cooperate litigation and difference advisory. The disputes are inclusive of individuals, organizations, civil and non-civil groups and when grievances arise, people may have suffered financial or non-financial losses. During such instances, forensic accountants are required to play the role of advisors offering professional advice to lawyers during the litigation procedures. Those who are engaged in litigation carry out exploratory accounting, appraising, and offer monetary valuations in disagreement instances. Nevertheless, first-hand evidence explaining the role of forensic accounting in litigation in the case of Australia is rare because majority of the research has been conducted in the U.S and the UK (Candilis, 2009, p. 427). In most cases, forensic experts may resolve litigation issues without the involvement of trial testimony expertise; nevertheless, there are instances where there is need to testify if the disagreement intensifies up to court level and judges may not make any ruling without the presence of their testimony. The forensic accountants are offered this honor of testifying their findings depending on their level of specialty (Van Akkeren, Buckby and MacKenzie, 2013, p. 215). In Australia, it is directed by various regulatory documentations that are distinct depending on the state. Legal and ethical issues of forensic accounting are clearly outlined and expert witnesses have community accountability to act ethically, guard the concerns of the community since their testimony may influence a case in either direction regarding to the level of specialty. They are very persuasive in court cases based on their findings or suggestions. Hence, with a clear understanding of their unique role, there are questions as to whether the forensic accountants require specified training or legal certification (Bewaneh, 2011, p. 76). In the US, forensic accountants do not require state issued authorization before they enter into the field of forensic accounting. Nevertheless, there are various certifications in relation to forensic accounting and deceit investigation offered by various professional organizations. In the U.S, such organizations include the Certified Fraud Examiners and the AICPA Certified in Financial Forensics (Behn et al, 2012, p. 599). These organizations govern deceit investigators and evaluators. So as to be certified, these bodies require an individual to demonstrate expertise knowledge, investigative skillfulness, the capability to collect, assess, and appraise evidential information and the capability to understand and communicate conclusions to the court. With respect to these services provided by forensic accountants, it is clear that the customary accountancy role needs extensive skills more than it did in the previous eras. In Australia, no such legal organizations based on forensic accounting exist. More study is required to offer valuable understanding into the abilities, skills, and qualities that are required in case Australian professional agencies aim at establishing their personal certification (Gottlieb, 2014, p 25). In the US, it has been demonstrated that forensic accounting requires extensive skills to carry out distinct services provided within the country. The profession appeals extensively from the field of accounting, Information Technology, and law. Additionally, the forensic accounting firms offer expertise training or involve legally trained experts to head investigations and IT educated experts to head the electronic forensic groups (Bloch, Brewer, and Stout, 2012, p. 530). In Australia, formal certification does not exist and further study will offer insight into what is needed in the forensic program and education. In the past two decades, the accounting disciplines in institutions of higher learning have revised the forensic accounting curriculum to make it inclusive of various courses vital in the activities of forensic accountancy (Idris, Kehinde, Ajemunigbohun and Gabriel, 2012). In Australia, there exist only a few steadfast forensic accounting universities. Majority of the universities in Australia offer single units in business and accountancy. The curriculum and the course units of forensic accountancy are not consistent across various universities. The training needed to carry out investigative forensics is not offered in the traditional accounting curriculum; hence, the specific education involving fact-finding skills is required in the curriculum development in this field. Hypothesis Currently, various universities in Australia offer full-degree courses in forensic accounting. However, it has not yet been determined whether these universities provide the trainees with the appropriate curriculum with the desired knowledge, abilities and skills required in field of forensic accounting. Hence, considering further curriculum for universities and/or colleges should aim at identifying relevant forensic skills and instills them in students. Also to take note is that in Australia, and as argued in the literature review, there are no legal agencies which are mandated for the ethics, rules, prospects and policy for forensic accounting. As such, the government of the day should come up with legal framework responsible for drafting relevant legal procedures for enactment into law. Further the structure of forensic accounting in Australia is not known and the specific services offered by this professionals. The specific kind of qualification required for forensic accounting is also not yet clearly determined which should be done in order to be at par at current global trends and future developments. The proposed hypothesis for the study would be ‘the Australian forensic accounting profession should undergo reforms so as to ensure quality and accountability of the services offered by forensic accountants.’ Research Methodology Various studies have been conducted to classify the most recent trends in the field of forensics accounting in Australia and how the clients are able to meet the needs of their customers (Shanikat, and Khan, 2013, p. 112). The findings have been partially used to state in the field of forensic accounting which is vital for prediction of the future status. Previous study utilized investigative and qualitative semi structured interviews which gave opportunity for extensive investigation concerning the present state in the field of forensic accounting. The study was inclusive of three types on evaluation which included firm, specificity, and role. The study involved interviews from distinct firms and major conventions of the study were addressed. Interview questions aimed at addressing the main areas which needed clarity (Van Akkeren, Buckby and MacKenzie, 2013, p. 211). Previous research focused mainly on forensic accounting firms and forensic accountants. It has been suggested that legal opinion by the government based on the issue of forensic accounting is vital so as to determine the legal qualifications of the profession. It will also add to the already established data concerning the changes that ought to take place in the university curriculum so that the skills and training given to forensic accountants meets the required criteria. The questionnaires posing similar questions should be completed by legal investigative agencies in Australia, forensic accounting firms, and forensic accounting institutions so as to fully cover the gaps in literature. They would thereafter be analyzed so as to come up with representative results on the perspective under investigation. This would come in handy at establishing the relevance of establishing forensic regulations in Australia. Bibliography Behn, B. K., Ezzell, W. F., Murphy, L. A., Rayburn, J. D., Stith, M. T., and Strawser, J. R. 2012. The Pathways Commission On Accounting Higher Education: Charting A National Strategy For The Next Generation Of Accountants. Issues in Accounting Education, 27(3), pp. 595-600. Bewaneh, S.S. 2011. Forensic accountants in the digital age. Interdisciplinary Journal of Contemporary Research in Business, 3(3), pp. 75‐86. Bloch, J., Brewer, P. C., and Stout, D. E. 2012. Responding To The Leadership Needs Of The Accounting Profession: A Module For Developing A Leadership Mindset In Accounting Students. Issues in Accounting Education, 27(2), pp. 525-554. Candilis, P.J. 2009. The revolution in forensic ethics: Narrative, compassion, and a robust professionalism”, Psychiatric Clinician North America, 32, pp. 423‐435. DiGabriele, J.A. 2008. An empirical investigation of the relevant skills of forensic accountants”, Journal of Education for Business, 83, pp. 331‐338. Evans, E., and Poullaos, C. 2012. A Brief History Of The Various Pathways To The Accounting Profession In Australia. Emerging Pathways For The Next Generation Of Accountants, 3, pp. 16-26. Gaffikin, M. 2009. Education For An Accounting Profession. Pacific Accounting Review, 21(2), pp. 170-185. Gottlieb, O. 2014. Can Governance and Forensic Accounting Metrics Predict Stock Returns?. Rotman International Journal of Pension Management, 7(1), pp. 24-30. Idris, A. A., Kehinde, J. S., Ajemunigbohun, S. S., and Gabriel, J. S. 2012. The Nature, Techniques and Prevention of Creative Accounting: Empirical Evidence from Nigeria. Canadian Journal of Accounting and Finance, 1(1), pp. 26-31. Shanikat, M., and Khan, A. 2013. Culture-Specific Forensic Accounting Conceptual Framework: A Skills Set Theoretical Analysis. International Journal of Business and Management, 8(15), p. 112. Van Akkeren, J., Buckby, S., and MacKenzie, K. 2013. A Metamorphosis Of The Traditional Accountant: An Insight Into Forensic Accounting Services In Australia. Pacific Accounting Review, 25(2), pp. 188-216. Read More
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