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Accounting a helpful way to fight against corruption

As the complexity and scope of commerce has expanded throughout the world, the need to track
money and financial information has grown. But in such case corruption is the disease that
gradually demolish the ethics of an organization as well as the people of its territory. Fraud
includes all the multifarious means human ingenuity can devise that are resorted to by one
individual to get an advantage over another by false suggestions or suppression of the truth. It
includes surprises, tricks, cunning or dissembling, and any unfair way by which another is
cheated. According to the FBI White Collar Training Manual, white-collar crime encompasses
those criminal acts characterized by fraud, concealment, or a violation of trust that are not
dependent upon actual or threatened physical force or violence.
How we can define in that an organization is running smoothly with out being affected by
corruption? It is hard to find out from an organization but possible to justify whether its
activities are being legal or illegal.
Accounting is the weapon that can identify any corruption in any field of an organization. It is a
service activity which function is to provide quantitative information primarily financial in
nature, about economic activities that is intended to be useful in making economic decisions, in
making choices among alternative courses of action.

Accounting an aid to manage corruption:

Accounting helps the management in many cases to find out any mistakes or unethical activities
which can cause huge problem in an organization. Management can easily find out kind of
mistake as:

Accounting follows Double entry system that analysis debit and credit and check

transactions calculation of ledger to modify whether it is correct or not.

People can find their daily transactions report accounting. It shows their daily purchases

and sells, income and expenditure, liabilities or debt to resolve. So with such report in hand it is
hard for any one to take any advantage from any transactions.

If any kind of forgery, deceit, and trick occurs accounting can extirpated and take

obstruction measures as remedy of such situation. In this case eligible knowledge of accounting
provides great support.

Different expenditure of financial institution and Government is being reported by an

accountant. Although he/ she can initially do mistake in order to fulfill his or her own desire.
They can create different false information about different cost and wastage many income of an
organization or a government by poring profit in to their pocket. This kind of situation can be
stopped if:

Direct and indirect cost is being analyzed by the auditor.

Fixed and variable cost is being analyzed.

Controllable and uncontrollable cost is being analyzed.

Auditor reports to the higher authority for any corruption.

Create awareness so that such situation can be stopped.

When there is a lack of evidence there is chance of mistrust and often the probability of

having corruption. Accounting information system provides information about different

evidence through we can identify any kind of doubt. It provides necessary information of an
organization through which we can find out right the culprit.

As accounting information system is based on such rules and regulation; Participative

law, company law, Security and exchange law, income tax , Business and industry law of an
organization so any depraved can be captured easily.

In an organization if there is no accountability or value people will do unethical activities

to maximize their own benefit. Accounting creates accountability that forces them to clarify
actual situation and makes them careful in case of expanses of money and making any decision.

Debt equity ratio provides information about debt and balance sheet shows the total

liabilities and total asset of an organization. Whether its a private or public organization we can
easily find out the how much asset or liabilities there should be and lessen the opportunity of
doing any unethical act.

Accounting is the tool of making values and accountability that helps people tom

moderate their activities and also raises responsibility that can eradicate the effects of
Although we have talked about accounting the entry-level job recipients should need to know
how to determine whether an individual has failed to report income to the appropriate taxing
authorities. They should understand how assets can be hidden, and how to locate hidden assets.

A dynamic tool for combating corruption:

There has been a corresponding increase in illegal financial activity, according to separate
surveys by the U.S.Department of Justice, Pricewaterhouse-Coopers, and the Association of
Certified Fraud Examiners (ACFE). Ironically, illegal businesses and perpetrators of financial
crimes also need to keep track of their cash flow and manage their operational performance to
generate profits, fund activities, and avoid detection, prosecution, and seizure of their assets.
In fact these have prompted businesses houses to hire forensic accountants to discover through
investigation, various types of wrongdoing, on one hand and prevent such occurrence, on the

other. The plague of fraud has accelerated the need for a specialist trained specifically in
investigation and detection.
Forensic accounting has established itself as dynamic and strategic tool in combating
corruption, crime and frauds through investigations and resolving allegations of frauds and
embezzlements. It is seen to be engaged in evidence gathering, document findings, provide
internal control assessment, internal risk assessments, design, implement and monitor fraud
policies, loss recovery, due diligence and compliance studies, lost profit analysis, damage
calculations, shareholder disputes, business damages, valuation, settlement negotiations,
mediation, search for hidden assets, business or pension plan, etc. Forensic accounting includes:
The use of accounting, auditing, and investigative skills to assist in legal matters.
It consists of two major components: litigation services that recognize the role of an
accountant as an expert consultant, and investigative services that use a forensic accountants
skills and may require possible courtroom testimony.
Developed by the AICPAs Forensic and Litigation Services Committee, forensic accounting
may involve the application of special skills in accounting, auditing, finance, quantitative
methods, the law, and research. It also requires investigative skills to collect, analyze, and
evaluate financial evidence, as well as the ability to interpret and communicate findings.
IT encompasses litigation support, investigation, and dispute resolution and, therefore, is the
intersection between accounting, investigation, and the law. Fraud examination is a
methodology for resolving fraud allegations from inception to disposition, including obtaining
evidence, interviewing, writing reports, and testifying. The ACFEs manual states that fraud
examiners also assist in fraud prevention, deterrence, detection, investigation, and remediation.
Like most forensic sciences, fraud and forensic accounting may include using financial
information to piece together or reconstruct past events in instances where that reconstruction is
likely to be used in some judicial proceeding (e.g., criminal or civil court, deposition, mediation,
arbitration, or settlement negotiation).

Fraud and forensic accounting is a broad area that includes occupational fraud, corruption and
abuse, financial statement fraud, and civil litigation matters. While the reconstruction activity
tends to look backwards, the impact may have implications for the future, particularly in civil
torts and breach of contact claims.

An understanding of effective fraud and forensic accounting techniques can assist forensic
accountants in identifying illegal activity and discovering and preserving evidence. Forensic
accounting is the application of accounting knowledge and investigative skills to identify and
resolve legal issues. It is the science of using accounting as a tool to identify and develop proof
of money flow. These tools and techniques can be invaluable for fraud and forensic accounting

Fraud and Forensic Accounting for eradicating complexity:

Because employee and management fraud, theft, embezzlement, and other financial crimes are
increasing, accounting and auditing personnel must have training and skills to recognize those
crimes. In addition, high-visibility corporate scandals, such as Enron, WorldCom, and Adelphia,
demonstrate the need to better prepare entry-level accounting graduates and practicing CPAs in
the areas of fraud prevention, deterrence, detection, investigation, and remediation. Finally, news
reports following the September 11 attacks depicted how terrorists used the international banking
system to fund their activities, transfer money, and hide their finances, and signaled a need for
investigators to understand how financial information can provide clues as to future threats.
These events raised public awareness of fraud and forensic accounting, and highlighted the
importance of ensuring that financial professionals have the necessary training and skills to
understand and act appropriately on any important evidence generated from financial

Forensic accounting", provides an accounting analysis that is suitable to the court which

will form the basis for discussion, debate and ultimately dispute resolution. It encompasses
both Litigation Support and Investigative Accounting.

As a discipline, it encompasses financial expertise, fraud knowledge and a sound

knowledge and understanding of business reality and the working of the legal system." This
implies that the forensic accountant should be skilled not only in financial accounting, but
also in internal control systems, the law, other institutional requirements, investigative
proficiency, and interpersonal skills. Corporations can rely on these skills for developing a
consistent system of corporate governance, disseminating such information within and
outside the company, ensuring that governance policies and objectives are interwoven into
the internal control system, setting up fraud prevention systems, and investigating any
existing fraud (Ramaswamy, 2005).

The forensic Accountant is a bloodhound of bookkeeping. These bloodhounds sniff out

fraud and criminal transactions in bank, corporate entity or from any other organization's
financial records. They hound for the conclusive evidences.

External Auditors find out the deliberate misstatements only but the Forensic Accountants

find out the misstatements, which have been created deliberately.

External auditors took at the numbers but the forensic auditors took beyond the numbers.

Forensic accountants take a more proactive, skeptical approach to examining the books of
accounting. They make no assumption of management integrity (if they assume so, then there
is no need for their appointment), show less concerns for the arithmetical accuracy and have
nothing to do with the accounting or assurance standards but are keen in exposing any
possibility of fraud.

Forensic accounting is focused, therefore, upon both the evidence of economic

transactions and reporting as contained within an accounting system, and the legal
framework, which allows such evidence to be suitable to the purpose(s) of establishing
accountability or valuation. Forensic accountants are typically CPA/CA/CGA/CMA that
specialise in those types of engagements where there is a need for such evidence.

Engagements are wide-ranging, and include transaction reconstruction and measurement;

bankruptcy, matrimonial divorce, and probate asset identification and valuation; falsifications
and manipulations of accounts or inventories or in the presentation thereof and accountability
within the statutory audit and other environments; among many others. Forensic accountants
are called upon to play important pre-emptive roles (as of right, without cause), offering
independent assurance in such diverse areas as audit committee advisory services, merger
and underwriting due diligence, investment analyst research, and enterprise risk
management. Forensic Accountants are trained to look beyond the numbers and deal with the
business reality of the situation

If a dispute reaches the courtroom, the forensic accountant may testify as an expert

witness. Investigation is the act of determining whether criminal matters such as employee
theft, securities fraud (including falsification of financial statements), identity theft, and
insurance fraud have occurred. As part of the forensic accountant's work, he or she may
recommend actions that can be taken to minimise future risk of loss

Investigation may also occur in civil matters. For example, the forensic accountant may

search for hidden assets in divorce cases.

Model Curriculum Outline:
The model curriculum developed for fraud and forensic accounting should ensure that entry-level
forensic accountants have the knowledge, skills, and abilities necessary to begin work in the
specialized area of fraud and forensic accounting. More specifically, entry-level fraud and
forensic accounting professionals should possess knowledge, skills, and abilities in the following

Criminology specifically oriented to the nature, dynamics, and scope of fraud and

financial crimes; the legal, regulatory, and professional environment; and ethical issues.

Fraud prevention, deterrence, detection, investigation, and remediation in the

following areas: asset misappropriation, corruption, and false representations; financial

statement fraud; and fraud and forensic accounting in a digital environment, including

computer-based tools and techniques for detection and investigation, electronic casemanagement tools, and other issues specific to computerized environments.

Forensic and litigation advisory services, including research and analysis,

valuation of losses and damages, dispute investigation, and conflict resolution (i.e.,
arbitration and mediation).
Other necessary steps of Forensic Accounting:
Forensic accounting plays an important role in different cases which can be clarified as follows:
important facet of fraud and forensic accounting is the use of computer software,
referred to as CATTs (computer-aided tools and techniques), to aid in the detection and
investigation of fraud and other white-collar crimes. This includes the use of generalized
audit software for data extraction and analysis; spreadsheet, database, and statistical
software use for fraud detection and analysis; investigative tools such as data mining,
link analysis software and case management software; as well as use of the Internet.
Since 9/11 Forensic Accountants have been playing a major role in tracing terrorists
around the world. There is currently immense public pressure on the auditing profession
to bridge this expectation gap coupled with regulatory support.
In the United States of America, has led to a dramatic increase in the number of
forensic accountants with an expanded rote and the enhancement of accounting
curricula to improve the fraud detection skills of statutory auditors.
It is also high time for Bangladesh to consider the Forensic Accounting as strategic
tool in combating as well as identifying fraud and corruption at all level of public and
private sectors. The new caretaker government of Bangladesh following 1/11 has
declared a crusade against corruption, which is likely to be assisted by Forensic
Through the development and implementation of the TWGED-FFA(Technical
Working Group for Education in Fraud and Forensic Accounting), accountants will have
one more tool to effectively and efficiently deal with the challenges faced in detecting

financial crimes and tracing ill-gotten gains from illegal activities.

Drivers of Curriculum Choices :

The outcome of the efforts of the TWG is a model curriculum for fraud and forensic accounting
that identifies those areas of knowledge, skills, and abilities necessary to enter the field given the
multiple career paths outlined in the Exhibit. In an applied discipline such as accounting, student
placement and initial on-the-job investigative success are usually viewed as key performance
indicators. Therefore, consideration was given to what potential employers require of entry-level
employees and typical initial assignments.
Nearly all of the experts agree on certain essential skills and abilities for entry-level individuals.
This list includes:

Utilizing a variety of techniques to prevent, detect, and investigate fraud and

financial crimes;

Gathering, analyzing, and reporting evidence and other information; and

Avoiding becoming a victim of fraud.

In addition to the core foundation of knowledge, these skills and abilities are essential for initial
success in the field of fraud and forensic accounting.

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