Forensic Accounting
When I hear the word ‘Forensic’ the idea and image of a homicide investigation in which evidence gathered is analyzed at a laboratory to determine ‘who done it’. Shows like CSI, Bones, Law and Order depicts the forensic aspect in their broadcast. Being a registered nurse, another thought comes to mind when hearing the term ‘forensic’. I like to watch Dr. G medical examiner on the Discovery channel. That is a reality show regarding investigative research on how a person died. This is done by performing an autopsy and analyzing the pathological reason for a death to determine if foul play was involved. However, I rarely placed the thought that accounting can have a forensic aspect, too. I was always under the impression that auditors were the forensic accountants. Internal Revenue Agents to audit income tax filings to make sure all income are reported, and deductions have receipts as supporting evidence. Certified Internal Auditors to look at business operations and financial statements within a corporation to make sure internal controls are in place, financial statements are properly recorded, and government regulations have been met. External auditors perform audits for SEC compliance and to attest that the company is in good standings to ensure protection of the public interest. These auditors, in essence, would be able to detect fraud in their job when reviewing audit trails and documentations. Needless to say, I my conception have been construed. There is a whole new field of accounting that is on the rise, which specifically deals with fraud detection. This is called Forensic Accounting. This area sparked my interest.
In this paper, I will elaborate on 1. What is a forensic accounta...
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Bologna, Jack, Lindquist, Robert, Wells, Joseph, & Jones, Peter. (2004). Fraud and corruption in public services. Gower Publishing Company.
Steensma, Stephanie. (2010, August). Forensic accounting vs. auditor [Web log message]. Retrieved from http://www.ehow.com/facts_5929119_forensic-accounting-vs_-auditor.html#ixzz0wFj8if3U
Ness, Eliot, & Hoover, J. (2010, August). Gotcha! How forensic accounting brought about the downfall of Al Capone. Retrieved from http://www.bbforensic.com/blog/gotcha-how-forensic-accounting-brought-about-the-downfall-of-al-capone.html
Interviewing technique for investigations and audits. (2010, August). Retrieved from http://www.aicpa.org/InterestAreas/ForensicAndValuation/Resources/ForensicAcctg/ForensicAccounting/Pages/Interviewing%20Techniques%20for%20Investigations%20a
Corruption is a persistent problem that plagues the world and it knows no boundaries. Transparency International defines it as the “abuse of entrusted power for private gain” (2013). For the purposes of this thread, ‘corruption’ is defined as any individual, collective, or structural act or process that permits the use of public authority or position for private gain. This definition captures the broad and many ways individuals and institutions abuse power and the public trust. In regard to whistleblowing, much conflict stems from the context in which the whistleblower is viewed. We will examine the case of NYPD Narcotics Detective Frank Serpico who was regarded a snitch and a rat by fellow officers who were on the take and complete a what would you do dilemma.
The definition of “corruption” is when an officer uses their position to acquire unprofessional benefits, mainly through bribes (Goldstein, 1977). The abuse of power transpires in three separate fields, psychological, physical, and legal misconduct (Carter, 1985). Psychological misconduct happens through disdain, coercion, scorn, and terror, while physical misconduct uses unrestrained force and physical intimidation. Lastly, legal misconduct occurs through illegal search and seizure methods or fabricating proof.
Corruption is an individual and institutional process where there is a gain by a public official from a briber and in return receives a service. Between the gain and the service, there is an improper connection, (Thompson p.28). The two major categories of bribery is individual and institutional corruption. Receiving personal goods for the pursuit of one’s own benefit is personal fraud. An example of individual distortion is the financial scandal involving David Durenberger. Organizational corruption involves “receiving goods that are useable primarily in the political process and are necessary for doing a job or are essential by-products of doing it,” (Thompson p.30). An instance of institutional fraud is the Keating Five case. There are also times where there is a mixture of both individual and organizational corruption in a scandal. An example of this diverse combination is James C. Wright Jr. actions while he was the Speaker of the House.
The term “fraud” is commonly used to describe the use of deception to deprive, disadvantage or cause loss to another person or party. This can include theft, the misuse of funds or other resources, or more complicated crimes such as false accounting and the supply of false information. This case study of Mountain State Sporting Goods is an excellent example of individuals acting on the opportunity to financial benefit by committing what they thought was harmless adjustments, but in reality was fraud. In this case study there are is just so much wrong with this company and how it operates. We noticed multiple areas of concern before even seeing the financial statements and my concerns were confirmed upon further investigation.
Bilski, J. (2009, 17 July). Workers gone wild: 7 outrageous cases of employee fraud. CFO Daily News. Retrieved from http://www.cfodailynews.com
Transparency International defines corruption as “the abuse of entrusted power for private gain.” In politics, as we have learned, this includes (but is not limited to) fraud, bribery, embezzlement, influence peddling, lying, conflict of interest, and patronage.
In the business industry, there are ethical dilemmas that occur on a daily basis. Some ethical dilemma can include stealing or even having fraudulent documents in order to get an unfair advantage within the organization. Another ethical dilemma that has been brought into the light is bribery. What makes bribery unique is that in various parts of the world, bribery has become an acceptable behavior whereas other parts of the world people would consider that as unethical behavior. In order to understand what is acceptable or not when trying to bribe public officials, we must understand the principles of what is considered to be ethical or unethical.
Collecting, Analyzing and evaluating evidential matter is at the heart of forensic accountants’ work. A forensic accountant wears many hats including being an identifier of issues, gathering information and documentation, analyzing people and then reporting on their findings. There are many areas of financial disputes and investigations in which forensic accountants are typically involved which includes but is not limited to fraud investigations, construction claims, bankruptcy, business valuation, expert testimony, personal injury and wrongful death and many more. Communication skills and objectivity, investigative mentality, understanding of rules of evidence are much needed facets for a forensic accountant. So, in the process of covering
Focuses the root of corruption on the character, or lack thereof, of the individual officer. This explanation proposes that corruption is the result of poor selection practices that fail to screen out applicants who are unsuitable for public service (Withrow & Dailey, p. 4).
Public corruption is an issue that extents in a variety of areas within the public. These public official that are willing to commit white-collar crime are usually take bribes or soliciting money. Any official that is accused of corruption usually prosecuted under federal statute 18 USC 3282. Public officials are usually able to evade prosecution because they have political clout that allows them to maneuver around the charges. A public official should be held at higher standard for violating any laws while in office, there should be a mandatory minimum official just as there is a mandatory minimum for other crimes.
In this report I will concentrate only on external corruption because it has been the larger center of attention recently. I have decided to include the fairly recent accounts of corruption from a few major cities, mainly New York, because that is where I have lived for the past 22 years. I compiled my information from numerous articles written in the New York Times over the last 5 years. My definitional infornmation and background data came from various books cited that have been written on the issue of police corruption. Those books helped me create a basis of just what the different types of corruption and deviances are, as well as how and why corruption happens. The books were filled with useful insite but were not update enough, so I relied on the newspaper articles to provide me with the current, and regional information that was needed to complete this report. In simple terms, corruption in policing is usually viewed as the misuse of authority by a police officer acting offically to fulfill personal needs or wants. For a corrupt act to occure, three distinct elements of police corruption must be present simultaneously: 1) missuse of authority, 2) missuse of official capacity, and 3) missuse of personal attainment. (Dantzker, 1995: p 157) It can be said that power inevitably tends
Some people said that corruption is rampant in all governments, So that it is not unknown to any ethnic group, region and continent. It cuts across faiths, political systems, religious Denominations and affects both young and old people. Fraud can be found in public and authoritarian rule;...
The major characters of the tradition audit are all information what is needed by auditors are on the paper and the manual calculators and without high communication technology. Auditors usually were limited by the place in the paper time. When a several people are working on the same auditing project for a client with offices in cities across the country, even worldwide, it takes a lots all time those auditors get the information which they need from the client, even there is risk paper information disappear for many reasons. on the another hand, mail paper information increase the auditing cost. The mistake caused by the manual calculators inevitably, no matter how fixed auditors concentrate on recalculate is, after all auditors are human. The global business become major in the modern business world, some example, several auditors who are in different locations are working a same auditing project, or auditors are in different city even country with the client, when there is issue among these auditors or between auditors and client, they only can communicate with each other by phone or be together and have meeting. Phone call can not make sure information been watched in the same time when the voice is talking about the issue, but having a meeting takes time and money make all people together, it increases auditing cost.
The evolution of auditing is a complicated history that has always been changing through historical events. Auditing always changed to meet the needs of the business environment of that day. Auditing has been around since the beginning of human civilization, focusing mainly, at first, on finding efraud. As the United States grew, the business world grew, and auditing began to play more important roles. In the late 1800’s and early 1900’s, people began to invest money into large corporations. The Stock Market crash of 1929 and various scandals made auditors realize that their roles in society were very important. Scandals and stock market crashes made auditors aware of deficiencies in auditing, and the auditing community was always quick to fix those deficiencies. The auditors’ job became more difficult as the accounting principles changed, and became easier with the use of internal controls. These controls introduced the need for testing; not an in-depth detailed audit. Auditing jobs would have to change to meet the changing business world. The invention of computers impacted the auditors’ world by making their job at times easier and at times making their job more difficult. Finally, the auditors’ job of certifying and testing companies’ financial statements is the backbone of the business world.
Montesh, M. (n.d.). Conceptualizing Corruption: Forms, Causes, Types and Consequences. Retrieved May 4, 2014, from