The term forensic had always gathered interest due to
its investigative approach and techniques used in various forensic fields but forensic accounting was never been much in
practice and not everyone was aware about its needs and advantages. Forensic
accounting had gained interest after major financial white collar crimes that
involved large corporate such as Enron and Adelphia communications scandals of
2001 and 2002. To catch hold of the suspicious and fraudulent practices in the
books of accounts, one needs to back with evidences which can be foreseen by
the investigations done with the help of methods and standards of forensic
accounting.
Kautilya was the very first economist who openly
recognized the urge of forensic accounting, he had mentioned forty ways of
embezzlement centuries ago. The legal crimes that are covered under the shelf
of forensic accounting are coined as “Crime against Property” which includes
all the frauds related to civil disputes. Officials that perform financial
accounting are also known as fraud investigators, investigative accountants,
forensic auditors or fraud auditors. Main areas that are covered under the
shield of financial accounting are litigation support, investigation and
dispute resolution.
Categories that are enclosed under the cap of forensic
accounting are Economic damage calculations such as tort and breach of
contract, post –acquisition disputes such as breach of warranties, tax frauds,
security frauds, money laundering, valuation of business, computer forensics or
e-discovery. Forensic accounting helps to place policies and procedures of a
business in such a way that it prevents from frauds, illegal or unauthorized
use of valuable resources of the business. They undertake preventive measures
by advance risk measurement and bring to light any grey areas of the business
which were overlooked by higher officials. This also directly contributes
towards the cost saving approach in asset management.
At last we can state that financial accounting acts as
a life jacket for a firm.
‘By failing to
guard your business, you can anticipate to become a victim of deception at some
spot in prospect and turn out to be a statistic in our next study.’
Thank You
Regards
Author- Sakshi Lunia
Kautilya
IBS Mumbai
Regards
Author- Sakshi Lunia
Kautilya
IBS Mumbai
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