...1. What does forensic mean? From Latin forensis ‘in open court, public,’ - Relating to, used in, or appropriate for courts of law or for public discussion or argumentation. - Of, relating to, or used in debate or argument; rhetorical. - Relating to the use of science or technology in the investigation and establishment of facts or evidence in a court of law: a forensic laboratory. http://www.thefreedictionary.com/forensic 2. Define forensic accounting. Forensic accounting is a type of accounting which unites investigation accounting and litigation support to provide an accounting analysis that is suitable for court. 3. What are the key components of the definition of forensic accounting? Forensic, accounting, time, purpose - legal forum, peremptory. 4. How does a forensic audit differ from a regular audit? According to Ronald L. Durkin, the following differences in a forensic audit versus a traditional audit: •Not limiting the scope of the engagement based upon materiality. •Not accepting sampling as evidence. •Not assuming management has integrity. •Seeking the best legal evidence. •Melding the requirements of the evidential matter standard with the rules of evidence R.L. Durkin, "Defining the Practice of Forensic Accounting," CPA EXPERT (Special Edition, 1999). 5.Who may have been the earliest expert witness? Hercules De Cordes may have been an early expert witness. 6. What impact did the IRS have on forensic accounting in...
Words: 3750 - Pages: 15
...If I were an accountant two business sectors that I would be interested in would be in management accounting or forensic accounting. Management accounting is being available to management within companies to provide them with information that will overall help them manage and control the business more efficiently. Business recovery is helping businesses in financial distress to recover financially. While I am not interested in the accounting field, these were two sections that really caught my eye. I currently run three Subway stores as a General Manager, so the management accounting is a sector that I know from experience would be very helpful to a business. Personal experience is what would peak my interest into this field. Forensic accounting is investigative accounting or auditing that is suitable for a court of law. Law has always been a big interest for me. I think that auditing and investigation would be a very interesting and fulfilling job. The company that I chose and researched was Feely and Driscoll. This is a company that provides forensic accounting and auditing services. I imagine that working for this company would be very interesting. I imagine that as a CPA I would be handed files and company information that I would have to audit to look for fraud or other issues. There may also be cases of profit analysis. Once the investigations are complete, I imagine that compiling the information suitable for court would be very tedious and time consuming. However, I...
Words: 273 - Pages: 2
...Forensic accounting is the specialty practice area of accountancy that describes engagements that result from actual or anticipated disputes or litigation. "Forensic" means "suitable for use in a court of law", and it is to that standard and potential outcome that forensic accountants generally have to work. Forensic accountants, also referred to as forensic auditors or investigative auditors, often have to give expert evidence at the eventual trial. There are several organizations worldwide that provide continuing education and certification for forensic accountants. There has been a growing need for this specialized field with recent company scandals that have occurred. Forensic accountants utilize an understanding of business information and financial reporting systems, accounting and auditing standards and procedures, evidence gathering and investigative techniques, and litigation processes and procedures to perform their work. The main goal of their engagements is to provide the answers to the how, where, what, why, and who committed the alleged allegations. They will use the same basic procedures for obtaining evidence of the crimes that they investigate. They will examine records and interview suspects to determine the answers to these questions. Forensic accountants are also increasingly playing more proactive risk reduction roles by designing and performing extended procedures as part of the statutory audit, acting as advisers to audit committees, fraud deterrence...
Words: 346 - Pages: 2
...The Past, Present, and Future of Forensic Accounting G. Stevenson Smith, PhD, CPA, CMA The CPA Journal Vol. 85 (LXXXV)/No. 3 March 2015 pp. 16-21 Today’s business society, including many large corporations as well as small and medium-sized businesses, has been part of the rapid technological advances the world is facing. Nowadays every business is operating via Internet as we are facing constant technological improvements throughout the past couple of decades. That being said, the potential of cybercrimes being committed drastically increased, as the cyber criminals have been able to break into the companies’ systems and manipulate and extract crucial data sets. This article is focusing on chronological development of the new area of accounting, forensic accounting. Forensic accounting is primarily focused on fraud protection, investigation of the security breaches and any other malicious activities against a company and its confidential data. At the very beginning of the twentieth century forensic accounting was not recognized as a separate practice area from auditing. As the passage of time, forensic accounting became a more distinct practice area. The development of computers and the internet caused forensic accounting to expand and become a separate field which deals with investigating activities and fraud protection rather than stating an opinion on whether or not the financial statements are in accordance with GAAP. Continually, auditors are focusing on the fair...
Words: 981 - Pages: 4
...owners' equity. Accounting provides information on the resources available to a firm, the means employed to finance those resources, and also the results achieved through their use. ACCOUNTING CAREERS Choosing the field of accounting as a career path is a smart decision. This field will always be in demand. This field can help you to grow continuously and help you move up inside your organization. A lot of different positions are available in the field of accounting. Accounting careers can range from entry level positions to executive level positions. Some of the popular careers in accounting are Accountant, Accounting Clerk, Accounting Manager, Bookkeeping, Budget Analyst, Certified Internal Auditor, Chief Financial Officer – CFO, CPA, Forensic Accounting, Tax Accountant. MAJOR FIELDS OF ACCOUNTING There are three major fields of accounting public accounting, management accounting, and government accounting. Public accounting. Public Accountants are usually employed...
Words: 1639 - Pages: 7
...A GUIDE TO FORENSIC ACCOUNTING INVESTIGATION THOMAS W. GOLDEN, STEVEN L. SKALAK, AND MONA M. CLAYTON JOHN WILEY & SONS, INC. A GUIDE TO FORENSIC ACCOUNTING INVESTIGATION THOMAS W. GOLDEN, STEVEN L. SKALAK, AND MONA M. CLAYTON JOHN WILEY & SONS, INC. This book is printed on acid-free paper. Copyright © 2006 by PricewaterhouseCoopers LLP. PricewaterhouseCoopers refers to the individual member firms of the worldwide PricewaterhouseCoopers organization. All rights reserved. Published by John Wiley & Sons, Inc., Hoboken, New Jersey. Published simultaneously in Canada. No part of this publication may be reproduced, stored in a retrieval system, or transmitted in any form or by any means, electronic, mechanical, photocopying, recording, scanning, or otherwise, except as permitted under Section 107 or 108 of the 1976 United States Copyright Act, without either the prior written permission of the Publisher, or authorization through payment of the appropriate per-copy fee to the Copyright Clearance Center, Inc., 222 Rosewood Drive, Danvers, MA 01923, 978-750-8400, fax 978-646-8600, or on the Web at www.copyright.com. Requests to the Publisher for permission should be addressed to the Permissions Department, John Wiley & Sons, Inc., 111 River Street, Hoboken, NJ 07030, 201-748-6011, fax 201-748-6008, or online at http://www.wiley.com/go/permissions. Limit of Liability/Disclaimer of Warranty: While the publisher and author have used their best efforts in preparing this...
Words: 246885 - Pages: 988
...CHAPTER 1 Introduction to Auditing SOLUTIONS FOR REVIEW CHECKPOINTS 1-1 Auditors add credibility to financial information provided by the accountable party such as management (i.e. auditors make the financial or other information more likely to be true). Other common ways of characterizing this property of audited numbers is that the numbers are more accurate, have higher assurance, or are more reliable. These relate to different dimension of truthfulness, as we discuss later in the text. 1-2 Auditing is the verification of numbers provided by others. To attest means to lend credibility or to vouch for the truth or accuracy of the statements that one party makes to another. The attest function is a term often applied to the activities of independent PAs when acting as auditors of financial statements. Since financial statements are prepared by managers of an entity who have authority and responsibility for financial success or failure, an outsider may be skeptical that the statements are objective, free from bias, fully informative, and free from material error--intentional or inadvertent. The audit opinion of an independent-PA auditor helps resolve those doubts because the auditor's success depends upon his independent, objective, and competent assessment of the conformity of the financial statements with GAAP. The auditor's role is to lend credibility to the statements, hence the outsider will likely seek his independent audit opinion. 1-3 Client:...
Words: 1498 - Pages: 6
...NAME: ADDRESS: EMAIL ADDRESS: TELEPHONE NUMBER: COURSE NUMBER: TITLE: INSTRUCTOR: DATE: INTRODUCTION Lifestyle auditing is the study of a person’s standards of living and uses this information to confirm whether it is consisted with their reported income. This involves the tax authorities conducting independent investigations on business trusts, individual tax payers and company. This is done to ensure that monthly living the monthly living expenses of the tax payer are consistent with his assets and income statements that what was declared. Lifestyle auditing is one of the critical tools used by the management in helping in the detection, prevention and correction of fraud and error on a timely basis. Life style auditing is a term that is used by forensic auditors to find out whether the lifestyle of an individual directly relates to their know income streams Lifestyle auditing is simply the putting together of various databases which give the management and also investigators a quick view into certain aspects of the life of an employee. The use of a life style audit will legitimately lead to the prevention and detection of fraud. HISTORY In the recent past, there has been an increase in corruption cases such as taxpayers colluding with tax collecting officials hence posing a great challenge to public service as the government cannot collect enough money to finance setting up of schools, hospitals and other infrastructure for...
Words: 1269 - Pages: 6
...Journal of Forensic & Investigative Accounting Vol. 4, Issue 2, 2012 The Obvious Fraud: A Short, Problem-Based Case Study to Highlight Inappropriate Fraud Examination Techniques David O’Bryan Jeffrey J. Quirin* INTRODUCTION Assume you are an internal auditor for a large, multinational, manufacturing organization with a division in Mexico. One of your responsibilities is to investigate allegations made on the company’s fraud hotline. When you arrive at work one morning you learn an anonymous tip was left on the hotline that alleges fraud involving the division manager. “Pat’s significant other is a fraudulent vendor,” was the anonymous tip left on your company’s fraud hotline. Pat is a division manager at your company. “Wow. I can’t believe this guy is so blatant,” you’re thinking as you review some accounts payable invoices while following up on this anonymous tip. The invoice that caught your attention is shown in Table 1. A quick search of the AP file reveals a total of three invoices like the one in Table 1, all for identical amounts but on different dates. The division manager, Pat, has the authority to approve payment of invoices for less than $10,000. It is obvious to you that the manager has a created a shell company. You happen to know that Pat’s significant other is named Kim, hence the name Kimco Marketing. There is no documentation to support these transactions other than the invoices, all of which are purportedly for marketing services. * The authors are, respectively...
Words: 3900 - Pages: 16
...CHAPTER 1 The Role of the Public Accountant in the American Economy Review Questions 1–1 The “crisis of credibility” largely arose from the number of companies that restated their previously issued financial statements as a result of accounting irregularities and fraud. Especially responsible were the very visible Enron and WorldCom fraud cases. Both companies filed for bankruptcy and constituted the largest companies in American history to do so. The extent of the accounting irregularities and fraud being investigated and disclosed brought into question the effectiveness of financial statement audits. In addition, the criminal conviction of Arthur Andersen, LLP, one of the then Big 5 accounting firms, on charges of destroying documents related to the Enron case brought into question the ethical standards of the profession. 1–2 Assurance services are professional services that enhance the quality of information, or its context, for decision making. The two types are: (a) those that increase the reliability of information and (b) those that involve putting information in a form or context that facilitates decision making. 1–3 A financial statement audit is, by far, the most common type of attest engagement. The overall assertion, made by management, most frequently is that the financial statements follow generally accepted accounting principles. 1–4 A large corporation with securities listed on a stock exchange is required by the rules of the stock...
Words: 5310 - Pages: 22
...Running head: THE FORENSIC ACCOUNTANT FORENSIC ACCOUNTING IN PRACTICE Tanon Patrick Contemporary Business - BUS 508 Dr. Ronnie A. Jones December 20, 2013 Abstract Accounting is the systematic process of identifying, recording, measuring, classifying, verifying, summarizing, interpreting and communicating financial information. It reveals profit or loss for a given period, and the value and nature of a firm's assets, liabilities and owners' equity (Business Dicitionary.com). Accountants take a vow to ensure the accuracy of all financial records for the company they work for. When a company suspects fraudulent activity they often call in a forensic accountant to help with the investigation. The forensic accountant has the skills to investigate what happened, to measure damages, and to provide litigation support to corporate and outside counsel (Flexstudy.com). FORENSIC ACCOUNTING IN PRACTICE Determine the most important five (5) skills that a forensic accountant needs to possess and evaluate the need for each skill. This paper will give some incite on the different levels of responsibility and skills that the forensic accountant must have to provide quality service. “Accounting professionals work in a variety of areas in and for business firms, government agencies, and not-for-profit organizations. They can be classified as public, management, government, and not-for-profit accountants” (L.E. Boone...
Words: 1557 - Pages: 7
... Contents SUMMARY OF TERMS 3 ABSTRACT 4 STATEMENT OF THE PROBLEM 5 LITERATURE REVIEW 6 a. Introduction 6 b. The Need for an Audit 7 c. Risk of fraud 8 d. The Auditor-Investor ''Expectation Gap'' 9 e. Auditing Profession and Challenges 9 f. Public opinion 10 g. Family or Personal Relationship 10 h. Integrity 11 i. Inherent limitations of an audit. 11 j. Responsibility of Auditors to Third Parties – Case Law 12 k. International, Assurance Auditing, Standards Board (IAASB) 14 CORPORATE FRAUD CASES 16 CASE STUDY: 21 CONCLUSIONS………………………………………………………………………………24 REFERENCES……………………………………………………………………………..….25 SUMMARY OF TERMS ISA: International standards of Audit KPC: Kenya Pipeline Company IAASB: International Assurance Audit Board IFAC: International Federation of Accounting USD: United States Dollar KCB: Kenya Commercial Bank BCCI: Bank of Credit International SEC: Securities and Exchange Commission ABSTRACT The way in which auditors perform their duties and the auditing profession in general raises questions and puts the auditors on the spotlight from clients who rely on their reports. Questions on whether the public trust the way auditors perform their secondary duty of detecting errors and frauds, the reliability, completeness and accuracy of their auditing reports have been raised. The research focuses on; Management and auditors’ responsibility for its prevention and detection of fraud, the auditor’s responsibility for reporting fraud to management. The...
Words: 5798 - Pages: 24
...assessment of the entire organization was performed. Thus, the internal auditing organization tried to ensure that important risks were being addressed. Douglass said he wished the FBI worked that way, instead it was forced to constantly react to emergencies. The first thing you do when you are assigned an internal audit or an external audit is to set audit objectives. This task is what makes it an audit and not a fishing expedition. Generally, the audit objectives of an internal audit will correspond to the type of audit: operational, financial, or compliance. After the audit objectives are known, then a preliminary survey is done to understand as much about the auditee’s operations as possible. This survey entails interviewing key employees, observing operations, and reading or examining documents and records. When the preliminary survey is completed, then an audit program is written, listing the audit procedures that will be done during the audit. A budget is then estimated based on the audit program. For large, public companies a brainstorming session is required. Once they have completed the audit tests, the auditors can review the evidence gathered and reach conclusions which are then reported to management. Once the report is issued and managements responds, then a follow-up visit is made to ensure that the issues identified in the audit report are addressed. Walker told Douglass that the modern internal auditing profession was only 50 years old. In 1941, the institute of Internal...
Words: 691 - Pages: 3
...THE ROLE OF INTERNAL AUDITING IN FRAUD PREVENTION AND INVESTIGATION. INTRODUCTION. Internal auditing is charged with the overall responsibility of reviewing, evaluating and monitoring the organization’s internal controls to ensure efficiency. Its functions include a detailed testing of transactions and balances, and performing routine or sometimes, random checks as a precautionary measure. During this process, an auditor might uncover fraudulent practices, which would otherwise have gone unnoticed. This paper intends to clarify the difference between auditing and fraud investigation, fraud indicators, highlight the role of audits in fraud prevention and investigation. THEORETICAL FRAMEWORK AND CONCLUSION. Paul A. Rodrigues said, “It has been aptly said that auditors look at the ‘donut’ and fraud examiners look at the ‘hole’” (Auditing vs. Fraud Examination, para. 2). That statement indicates a difference between auditing and fraud investigation; audits are reoccurring (on a regular basis), fraud investigations are not (only when there is sufficient predication); an audits scope is general, that of fraud investigations are specific (allegation based); an audit’s objective is to express a general opinion, a fraud examination’s is to affix blame where an allegation is confirmed (adapted from the ACFE Fraud Examiners Manual). That being said, an internal audit is party to a fraud investigation along side forensic investigators, legal counsel, law enforcement and the lot...
Words: 482 - Pages: 2
...Alter: I am writing to apply for an Auditor Intern position at Defense Contract Audit Agency, which you are currently seeking to fill through your recruitment on the USAJOBS website. Enclosed is my résumé, which describes my academic and professional experiences to date. As my résumé details, I completed my undergraduate studies at the State University of New York at Stony Brook. I am currently pursuing a Master in Accountancy and Master in Business Administration at Rider University. I have had significant experience in the auditing field, first at Orbitex Fund Services preparing mutual funds for audit, and then at Resources for Human Development where I audited employee timesheets. In addition, I have completed several courses in auditing including Fraud and Forensics Accounting and Principles of Auditing and Practices. I believe that my academic background along with my professional experiences provide a solid foundation for your auditing position. Thank you for your time and consideration. I look forward to speaking with you in the near future. Please note: As my résumé reflects I have acquired a myriad of experiences in the professional world. This has been attributed partly to the fact that my father was in the military, which explains my frequent moving. He has since retired and I look forward to a permanent stable job location. Sincerely, Maxwell Smart...
Words: 262 - Pages: 2
