Forensic accounting - A perfect tool in fraudulent cases

Abstract

Several instances of corporate scandals and failures in recent past have put the professional accounting bodies into a new perception that goes beyond statutory audit. In this article an effort has been made to show that how forensic accounting is valuable in shorting out fraudulent cases. Forensic accounting often involves examining and commenting on a report prepared by an opposing expert. The forensic accountant should also expect to be required to assist those instructing him in preparing questions to be addressed to the other principals in the case, as well as the other experts, both prior to any hearing as well as in the courts of law. Forensic accounting is a combination of law, investigative auditing, criminology and accounting. The infamous scams of Harshad Mehta, Ketan Parekh, Sanjay Seth and the recent India bulls scam and Kingfisher Airlines' credit card fraud are still fresh in our minds. Whether it is stock market fraud or bank fraud or cyber fraud, forensic accounting has become an indispensable tool for the investigations. With India being ranked as the 88th most corrupt nation, needs for the forensic accountants become more profound. Fraudulent activities in banking are posing threats to the Indian economy. Their vibrant effects can be understood by the fact that in the year 2004 the number of Cyber Crimes were 347 in India which rose to 481 in the year 2005 showing an increase of 38.5%.