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Forensic Accounting

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CHAPTER ONE
INTRODUCTION
1.1 BACKGROUND OF STUDY The auditing standard and guidelines of 1980 (U.K) defines internal control “as the whole system of controls, financial and otherwise, established by the management in order to carry on the business of the enterprise in an orderly and efficient manner, ensure adherence to management policies, safeguard and assets and secure as far as possible the completeness and accuracy of the records”. This working definition is all embracing enough to serve as a guide throughout this chapter. The system of internal control extends beyond financial matters of an organization, in that human resource control, production control, work study and scheduling, operations research, quality control, total quality management, audit committee, corporate governance and all security arrangements among others are integral part of the system of control. Even a recent development in accountancy profession called ‘forensic accounting’ could be traced to have emanated from the system of internal control in an effort to produce accounting information “suitable for use in a court of law”. Invariably, forensic accounting is increasingly playing more pro-active risk reduction roles by designing and performing extended procedures as part of audit, control measures and fraud deterrence. Therefore, internal control system is concerned with the controls operating in every area of an establishment as well as with the way in which Individual control interact. Internal controls extend to the physical security of the properties of the organization. It should be noted that internal check and Internal audit are both important aspect of internal control system. Internal check is concerned with those detailed administrative aspects of an organization, which are designed purely for the purposes of prevention or early detention of errors or fraud.

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