MEMORANDUM
TO: Gail Yosh
FROM: Jane Doe
DATE: June 1, 2021
RE: Importance of Forensic Accounting
Due to the tremendous rise in accounting fraud statistics, forensic accounting might be an effective implementation in the auditing department of Quanta Communications. Following this potential change, auditors will need to educate themselves, or take coursesregarding fraud detection and keep up to date with new strategies used by forensic accountants during this process. I have included information below on conducted research that I thought would be helpful and informative regarding this matter.
Overview:
In this research paper, DiGabriele addresses the three most significant laws in accounting, the Sarbanes-Oxley Act, the Public Company Accounting Oversight Board, and the statement on Auditing Standards No. 99 – which have made fraud detection a main priority in auditing throughout the years. Many argue that forensic accounting is an important aspect of the accounting world which further educates individuals pursuing a career in auditing on the proper detection of fraud. In this research paper, both sides of the argument are viewed, and a conclusion is made by the author with the final results. It is said that through studying forensic accounting, individuals develop an investigative mindset that would cause them to be more cautious when reviewing documents. Thus, people that are educated in this aspect of accounting have the ability to distinguish and deter fraud quicker and more carefully than those who have no knowledge in this field. The author states that if requirements that enforce employees to take forensic accounting courses are put in place, individuals will need to refresh their memories and further educate themselves on such skills in order to be up to date with information.
Key Questions:
Some key questions that the author puts an emphasis on involve whether the three major stakeholders of the accounting profession, auditors, forensic accountants and accounting academics agree that studying forensic accounting is necessary and will improve the skills of an auditor. Furthermore, the article addresses whether or not individuals holding such titles are aware that the new forensic accounting rules would cause a drift in the auditor’s profile. And finally, the author answers whether forensic accounting shows a drift in abilities in the accounting markets or not.
Data Collection:
To collect data, the author used a survey directed to a group of 1,500 individuals with occupations such as accounting academics, forensic accounting, and auditing. In addition, the author split up the survey in three groups offive hundred individuals. Five hundred emails were sent to accounting departments in universities nationwide, five hundred were sent to individuals from accounting membership databases, and finally, the last five hundred were sent from a Google search targetingaccounting firms that incorporate auditing in their daily work. The professional working on conducting this research used a grading scale for nine statements, 0 being strongly disagree, and 4 being strongly agree. Lastly, by taking each participants’ opinion, they were able to determine the results.
Statistical Method(s):
During the researching process of this paper, the author used a reliability test by using alpha (α) to gather the results from the administered survey. As stated in the text, “the overall alpha was .86 indicating good reliability – two tailed tests and an alpha level of 0.05 were used for all inferential analyses.” In addition, by using the one-way ANOVA method, the professionals were able to compare the answers between the participants with different professions (accounting academics, forensic accountants, and auditors) based on each demographic’s agreements and disagreements with the given statements. In order to do this, it is demonstrated that the mean number of responses to each of the statements was taken.
Results:
To determine the final results, a total of two hundred and fifty-three participants contributed to the survey – “102 being accounting academics, 73 auditors, and 78 were forensic accountants.”
The results demonstrate that there is indeed an agreement amidst the different occupation groups believing that forensic accounting does play a significant role in the auditing process. Moreover, as previously stated, professionals include that in order to be properly skilled in this field, continued education is absolutely required. As stated in the text, forensic accountants seemed to agree to most of the statements, with auditors’ standing in the middle, and accounting academics last.
Conclusion:
The author concluded that forensic accounting is in fact extremely significant in the accounting world, and that auditors need to add to their capabilities as the market continuously changes. It is so important that even universities have begun to consolidate it in their courses in order to emphasize the importance of forensic accounting in the real world. An auditor educated in forensic accounting is more effective in identifying and deterring fraud.
Application:
Due to the fact that the author of this research paper emphasizes the important role forensic accounting plays in detecting possible fraud risks, I believe that it would be effective to apply this information to our accounting department’s strategy. Considering that fraud risks have been at an all-time high recently, it would be beneficial to educate our auditors on forensic accounting, and how to apply it to their auditing processes. Furthermore, by doing so, we could completely deter the potential risk of fraud in our company.
I have cited the article below in case you would like to read it for further detail. Please feel free to contact me should you have any questions or concerns.
Reference:
DiGabriele, J. A. (2009). Implications of regulatory prescriptions and audit standards on the evolution of forensic accounting in the audit process. Journal of Applied Accounting Research, 10(2), 109-121. doi:http://dx.doi.org.ezproxy.montclair.edu:2048/10.1108/09675420910984673
