entire forensic accounting project
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FORENSIC ACCOUNTING
PROJECT PREPARED BY
VISHITA SHETTYJAMES FERNANDESJIGNESH BHATIAVISHWANATH JADHAVAVINASH MATHIAS MMM 21
INTRODUCTION RAPID CHANGES IN THE
ACCOUNTING PROFESSION > Operations of Day to day task of
debiting and crediting.
> Reports on internets (Technology)
> Demand of Global Economy and International market.
OVER VIEW Forensic accounting have been around for nearly 200 years Found in 1824 First institutions to use the services IRS (International Financial
Statistics) GAAP ( General Accepted Accounting Principles) and tax laws
became widespread and mandatory. Companies that manipulated accounting rules to boost their
earnings in a stock market gone wild. The year 2002 the annals of accounting history as
the Year of Truth when companies disclosed billions of dollars of financial fraud. SEC issued earnings restatements between the years 1997
and 2002. The FASB (Financial Accounting Standard Board) and the
SEC(Security and Exchange Commission) scrambled to find solutions to the problem of such ubiquitous financial fraud.
FORENSIC ACCOUNTING Forensic accounting is hardly a new field in
accountancy. Forensic accountants as preventative measures
as the demand for trustworthy financial statements increases in the wake of the recent accounting scandals.
Forensic accounting", provides an accounting analysis that is suitable to the court which will form the basis for discussion, debate and ultimately dispute resolution.
Forensic Accounting encompasses both Litigation Support and Investigative Accounting
ASSISTANCEFORENSIC ACCOUNT Litigation Support It deals primarily
with issues related to the quantification of economic damages. A typical litigation support assignment would be calculating the economic loss resulting from a breach of contract.
Investigation Support “Investigative
accounting", is often associated with investigations of criminal matters. A typical investigative accounting assignment would be an investigation of employee theft. Other examples include securities fraud, insurance fraud, and proceeds of crime investigations.”
FORENSIC ACCOUNTING ENCOMPASSES A WIDE RANGE OF ACTIVITIES :
The expert witness – preparation of formal reports for filing in Court and giving evidence as an Expert
Fraud Detection – assisting clients in detecting financial fraud by employees and others and tracing misappropriated funds. This section provides information for fraud-related engagements
•Computer Forensics –
assisting in electronic data recovery and enforcement of IP rights etc.
FORENSIC ACTIVITIES PROCESS 1.Preparation (of the
investigator, not the data)
2. Collection (the data)3. Examination4. Analysis5. Reporting6. Comparison to Physical
Forensics
NEED FOR FORENSIC ACCOUNTANTShareholder/partnership disputes•Personal injury claims/accidents•Business interruption/insurance claims•Employee fraud•Divorce/bankruptcy•Professional negligence•Financial statement fraud•Retained by lawyers, law enforcement, banks and companies
FORENSIC ACCOUNTING TECHNIQUES
FORENSIC ACCOUNTING TECHNIQUES
Direct Method Indirect Method
The Direct Method, also known as the Transaction Method, is similar to traditional auditing procedures. In this method, the appraiser commonly examines:
Cancelled checks & invoices
Contracts & agreements
Public records & notices Interview management
& staff (multi levels)
Indirect Method is commonly employed when the conventional Direct Method is not productive. The most widely used techniques under the Indirect Method are the:
Cash T Method Source & Application of
Funds Method Net Worth Method Bank Deposit Method
WHO RETAINS A FORENSIC ACCOUNTANT? Forensic Accountants are often retained by the following groups:•Lawyers; •Police Forces; •Insurance Companies; •Government Regulatory Bodies and Agencies; •Banks; •Courts; and•Business Community.
“Auditor should be watchdog ”. It’s a good quote that every auditor should know. This quote makes the definition of Forensic accountants even more simple.”
Growing cyber crimes, failure of regulators to track the security scams,
Satyam scandal
Conclusion:……………………….The importance of the forensic
accountant’s role in the detection of fraud is continuously growing. Armed with combination of skills, these financial detectives are today important assets to modern legal teams. In the backdrop of increasing levels of frauds, the demand for forensic accountants is bound to substantially increase in the future.
End End of Satyam Empire
of Satyam Empire
?