In forensic accountants generally have to work, Crumbley,

In this chapter the researcher to focused on literature
and views of other Authors bringing out a broader understanding of the subject
matter. This is done in order to prepare for data collection and analysis after
which we should be able to come out with a well thought and informed conclusion
and recommendations.



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E. Peloubet is ascribed with developing the term forensic accounting in his
1946 essay “Forensic Accounting: Its Place in Today’s Economy.” By the late
1940s, forensic accounting had demonstrated its worth during World War II;
however, formalized procedures were not put in place until the 1980s when major
academic studies in the field were published, Rasey, (2009). Since the 1980s in
some Western countries, particularly in the USA, a new profession in the field
of accounting and auditing has emerged. This profession identifies a field
composed of accounting, auditing, and investigative skills, Ozkul and Pamukc, (2012).
Forensic accounting is the specialty area of the accountancy profession which
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, Crumbley, Heitger and Smith, (2005). Forensic accounting is recognized as
a particular form of professional expertise and endowed with specific
attributes; the recognition comes from possessing a formal certification in
forensic accounting which provides symbolic value, Williams, (2002).  Forensic accounting is a science dealing with
the application of accounting facts and concepts gathered through auditing
methods, techniques and procedures to resolve legal problems which requires the
integration of investigative, accounting, and auditing skills, Arokiasamy and
Cristal, (2009; Dhar and Sarkar (2010). Stanbury and Paley-Menzies (2010) state
that forensic accounting is the science of gathering and presenting information
in a form that will be accepted by a court of jurisprudence against
perpetrators of economic crime. Hopwood, Leiner, and Young (2008) argued that
forensic accounting is the application of investigative and analytical skills
for the purpose of resolving financial issues in a manner that meets standards
required by courts of law. Howard and Sheetz (2006), views that forensic
accounting is the process of interpreting, summarizing and presenting complex
financial issues clearly, succinctly and factually often in a court of law as
an expert. It is concerned with the use of accounting discipline to help
determine issues of facts in business litigation, Okunbor and Obaretin, (2010).
 Degboro and Olofinsola (2007) noted that
forensic investigation is about the determination and establishment of fact in
support of legal case. That is, to use forensic techniques to detect and
investigate a crime is to expose all its attending features and identify the
culprits. Forensic accounting is a discipline that has its own models and
methodologies of investigative procedures that search for assurance,
attestation and advisory perspective to produce legal evidence. It is concerned
with the evidentiary nature of accounting data, and as a practical field
concerned with accounting fraud and forensic auditing; compliance, due
diligence and risk assessment; detection of financial misrepresentation and
financial statement fraud, Skousen and Wright, (2008); tax evasion; bankruptcy
and valuation studies; violation of accounting regulation, Dhar and Sarkar, (2010).  Singleton and Singleton (2010), said forensic
accounting is the comprehensive view of fraud investigation. It includes
preventing frauds and analyzing antifraud control which includes the gathering
of nonfinancial information. Bhasin (2007) noted that the objectives of
forensic accounting include: assessment of damages caused by an auditors’
negligence, fact finding to see whether an embezzlement has taken place, in
what amount, and whether criminal proceedings are to be initiated; collection
of evidence in a criminal proceedings; and computation of asset values in a
divorce proceedings. He argues that the primary orientation of forensic
accounting is explanatory analysis (cause and effect) of phenomenon including
discovery of deception (if any), and its effects introduced into the accounting
domain. According to Bhasin (2007), forensic accountants are trained to look
beyond the numbers and deal with the business realities of situations.
Analysis, interpretation, summarization and the presentation of complex
financial business related issues are prominent features of the profession. He
further reported that the activities of forensic accountants involve:
investigating and analyzing financial evidence; developing computerized
applications to assists in the analysis and presentation of financial evidence;
communicating their findings in the form of reports, exhibits and collections
of documents; and assisting in legal proceedings, including testifying in
courts, as an expert witness and preparing visual aids to support trial
evidence. In the same vein Degboro and Olofinsola (2007) stated that forensic
accountants  provide assistance of
accounting nature in a financial criminal and related economic matters
involving existing or pending cases as specified by the Alliance for Excellence
in Investigation and Forensic Accounting (Alliance) of Canada: assisting in
obtaining documentation necessary to support or refute a claim; review of the
relevant documentation to form an initial assessment of the cases and identify
areas of loss; assistance with the examination for discovery and the
formulation of questions to be asked regarding the financial evidence;
attendance at the examination from discovery to review the testimony; assist
with understanding the financial issues and to formulate additional questions;
reviewing of the opposing expert’s damaging report, and reporting on both the
strengths and weaknesses of the position taken; and attendance at trial, to
hear the testimony of the opposing expert and provide assistance with
cross-examination.  Gray (2008) reported
that the forensic accountants investigation include identification fraud.
Gottschalk (2010) stated that the focus of forensic accounting is on evidence
revealed by the examination of financial documents. The evidence collected or
prepared by a forensic accountant may be applied in different contexts.
According to Curtis (2008), forensic accountants are essential to the legal
system, providing expert services such as fake invoicing valuations, suspicious
bankruptcy valuations, and analysis of financial documents in fraud schemes.
These forensic accountants calculate values, draw conclusions and identify
irregular patterns or suspicious transactions by critically analyzing the
financial data, Arokiasamy and Cristal, (2009). It provides an accounting analysis
to the court for dispute resolution in certain cases and it also provides the
court with explanation to the fraud that has been committed. That is why
forensic accounting may play a vital role in detecting and reducing accounting
frauds in the business sector.  In this
concept, forensic accountants provide an account analysis to determine the
facts necessary to resolve a dispute before it is brought before the court or
the lawsuit process takes its course, Ozkul and Pamukc, (2012). The job of
forensic accountants is to catch the perpetrator and fraud occurring in the
companies per year. This includes tracing money laundering and identity theft
activities as well as tax evasion. Insurance companies hire forensic
accountants to detect insurance frauds such as arson, and law offices employ
forensic accountants to identify marital assets in divorce cases, Weygandt,
Kieso, and Kimmel, (2008).





2.2 Definitions of Fraud

is very difficult to define. It means different things to different persons
with no definite  and worldly accepted
definition. Okafor (2004) , Singleton et al(2006) and Albrecht et al(2012, p.6)
stated that fraud is a generic term and embraces all the multifarious means
which human ingenuity can devise, which are resorted to by one individual to
get advantage over another in false representation. According to Anyanwu
(1993), fraud is an act or course of deception, deliberately practiced to gain
unlawful or unfair advantage; such deception directed to the detriment of
another.  Accounting fraud is an act of
knowingly falsifying accounting records, such as sales or cost records, in
order to boost the net income or sales figures; accounting fraud is illegal and
subjects the company and the executives involved to civil lawsuits, Arokiasamy
and Cristal, (2009). Company officials may resort to accounting fraud to
reverse loss or to ensure that they meet earning expectations from shareholders
or the public. Fraud is to create a misjudgment or maintain an existing
misjudgment to induce somebody to make a contract Arzova (2003).

de?nitely leave traces, and experienced auditors could ?nd the fraud and the
fraudster by tracking traces Arzova (2003).



types of fraud are committed in business Bozkurt (2003) which are personal use
of business resources that is, against the entity and drawing up ?nancial
statements of the business falsely( for the business). Examples of frauds that
employees commit to bene?t themselves are given by Bozkurt (2003) as follows,
embezzlement money, stealing the cheques of business, tampering the bank
records, creating ?ctitious debts and making payments done, creating ghost
suppliers and having payments made in their favor, inventory theft, creating
ghost employees and embezzling their salaries, manipulating the overtime periods
and obtaining extra payment. ACFE calls it occupational fraud  whereby an individual misuses or misapplies an
organization s resource for personal gains. In this type of fraud, the business
is the victim.




in the events of fraudulent acts has led to great importance attached to the
initial detection of fraud, Enofe, Okpako and Atube, (2013).There are two main
ways to detect frauds: (a) detection by chance and (b) conducting a proactive
research and encouraging initial identification of symptoms, Enofe, Okpako, and
Atube, (2013). Identifying the occurrence of the cases of fraud is very
difficult, Karwai, (2002). According to, Karwai, (2002), frauds perpetrated by
organizations in modern day usually involve complex web of conspiracy and
deception that often mask the actual cause.

business frauds are analyzed, it is established that three components come
together when committing white collar crime. These are pressure, opportunity,
and justi?cation that forms the fraud triangle.


2.4.1Pressure Factors

(2003) states that pressure factors could be grouped into three:

with ?nancial content, pressures stemming from bad habits, pressures related
with job pressures with ?nancial contents generally show up when people are in
need of cash and these are:

Itching palm and greediness
Desire to live well
High amounts of personal debts
High amounts of health expenditures
Unexpected ?nancial needs

2.4.2 Opportunity Factors

(2003) states the opportunity factors are the third component of the fraud
triangle. They directly involve top management and owners of the business in
particular. An effective way of decreasing employee frauds is to create an
Internal Control System. Pertinent issues when instituting the system are as below:

A healthy internal control environment
A proper accounting system
Weak moral policies
Undisclosed contracts made with third
parties and partners
Incapability to assess the quality of the
job employees performed
Absence of a well-disciplined environment
in which fraudsters will be punished
Weakness of the information ?ow among
employees within the business
Ignorance, indifference, and inabilities
of top management


2.4.3  Efforts to justify fraud /Rationalization

(2003) states that the third component of the fraud triangle is fraudster are
developing defense mechanisms in order to justify his/her action. Some efforts
of the fraudsters to justify themselves and the excuse they made up are given

I had borrowed the money, I would pay back
This is in return for my efforts for the business,
the organization owes it to me.
Nobody has suffered as a result of this
I have taken the money for a good purpose
I did not know that this was a crime
Business had deserved this
Since business evades tax, I have taken
something which was already mine


opinions on the skills forensic accountants are available. Harris and Brown
(2000) while investigating the qualities of a forensic accountant identifies
specialized skills and abilities they should possess. They found that a
forensic accountant should be conversant with civil and criminal law.  Also, they stressed the need for
understanding of court room procedures and expectations, investigative skills,
creative thinking as well as clear and precise communication skills.  According to Grippo and Ibex (2003), the most
important skills of a forensic accountant arise from experience in accounting,
internal controls, auditing, taxation management, interpersonal relationships,
business operations and communication. Competencies and skills required by a
forensic accountant have been identified by DiGabriele (2009) and include
deductive analysis ability, creative thinking skill, and unstructured problem
solving competence, investigative flexibility, and analytical proficiency
including oral communication ability, written communication ability, specific
legal knowledge and good composure. In a study conducted by Davis, Farrell and
Ogilby (2010), on the features and skills of a forensic accountant; the views of
attorneys, academics and CPAs were sought on the basic skills that a forensic
accountant should possess. The results arrived at showed that a forensic
accountant should be analytical, detailed – oriented, ethical, responsive,
insightful, persistent and sceptic.  
Ghosh and Banerjee (2011) identified three fold- approach of skills
required by a forensic accountant to include the base, middle and top layer.
The base layer comprises mainly accounting knowledge. The middle layer has to
do with knowledge in the fields of auditing, internal controls, risk assessment
and fraud detection. While at the top layer a strong knowledge of the legal
environment is required including a strong communication skill. Based on their
research, a forensic accountant is expected to have competence in a broad
spectrum of disciplines including accounting, law, auditing, criminology,
information technology and communication skills. Knowledge and skills required
in forensic accounting include the following: Investigative skills, research,
law, quantitative methods, finance, auditing, accounting, and law enforcement
officer insights, Hopwood, Leiner and Young, (2012).


2.6 Forensic Accountant versus
Traditional Accountant

forensic accountant applies reliable principles and methods to sufficient facts
or data and typically needs expertise and skills in private investigation and accounting;
while on the other hand, there is no such necessity in the traditional
accounting space, Hopwood, Leiner and Young, (2012). Forensic accountants share
some goals similar to traditional accountants though they have different roles,
knowledge and skills. Moreover, traditional auditing has a focus on error
identification and prevention while forensic accounting involves fraud
identification Gray, (2008).

auditing makes use of techniques of sampling to discover unintentional errors
usually caused by weaknesses in internal controls which occur at regular
intervals. On the other hand, intentional errors (fraud) by humans can only
occur in few transactions, hence forensic accounting methods use full
populations where possible Albrecht and Albrecht, (2002). As a result of large
volume of data that are required for forensic analysis, it is usually done with
computer with the WorldCom fraud discovery being a typical example of detection
using computer technology, Lamoreaux, (2007). A forensic accountant carries out
investigation on specific allegations. Hence, he has much time to investigate
and analyze thoroughly specific fraudulent financial issues with emphasis of
using such as evidence in a law court in case of dispute, Albrecht and
Albrecht, (2009), while the audit carried out by a traditional auditor is
general in nature. According to Milucky and Mac (2013), a traditional audit is
carried out on general financial matters (that means the auditor considers all
issues relating to accounting). A forensic accountant is employed or appointed
by organizations to resolve allegations and detect or prevent fraudulent
activities suspected or envisaged in the organization. Thus, it is not a normal
audit but audit which may or may not follow auditing procedures. Millichamp
(1990), state that the statutory audit is a compulsory audit which ensures that
financial statements are in line with GAAP. 
Zimbleman et al. (2012) states that, such audit is a proactive audit
which goes beyond normal audit procedures. A traditional auditor or statutory
auditor is appointed to carry out statutory audit. The audit is usually carried
out to satisfy statutory requirements and ensure that accounts prepared are in
line with GAAP.

2.7 Why need  Forensic Accountant