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In the USA, the Certified Public Accountant are considered as a professional not only because it is recognised as such by a statutory institution, but also because a number of requirements of the society are meet by the profession to be accepted as a profession. The Certified Public Accountants are equipped by the characteristics of a sound professional person and these can be compared with the characteristics of a forensic auditor. The purpose of this report is to identify the qualities and characteristics of forensic accounting and the qualities and characteristics of the person who wants to pursue the profession of forensic accountants. The businesses are growing and so the frauds are also increasing, therefore the scope of forensic accounting is getting larger. This report will shed light on the fact that the forensic accounting is growing as a profession in the country of USA. The meaning, characteristic of the forensic accounting will also be discussed. Forensic accounting and forensic auditing are two different things and major difference between the two methodologies will also be discussed in this report.
The forensic accounting is not a modern technique but it is still in its developing stage. The origin of the forensic accounting is observed from past 70 years. Forensic accounting is directly related to detecting the fraud, as the frauds are not the new concept, so as the forensic accounting. The methods of frauds keep changing and therefore the development of forensic accounting from past 70 years is being done. Various standards on auditing such as statements on auditing standards (SAS) 99, lays down the methods in which the forensic accounting can be done (Ocansey, 2017).
The process in which a person who is well qualified in the field of accounting and finance utilizes the knowledge of accounting and auditing with the investigative skills to conduct an examination or the review of the finance and accounts of a business entity or an individual person is to be called as forensic accounting. Unlike normal accounting and auditing, the forensic accounting is only limited to the numbers, it is about seeing beyond the numbers to identify the situation of business reality. This technique is widely used for investigating the cases of frauds and embezzlement. In other words, it can be said the forensic accounting is combination of techniques of investigation and accounting procedures to determine or discover the crimes related to finance of a business entity or an individual person (Rehman & Hashim 2019).
Forensic accounting includes procedures such as identification of asset, tracing of the funds, recovery of the assets and providing an independent review of the situation following the principle of due diligence.
The characteristics of the technique lies in its meaning, the characteristics of the forensic accounting are as follows:
The name of the two techniques seems to be same, but the meaning of the two terms is different. For understanding the major difference of the two techniques, the types of frauds need to be understanded first. There are two types of frauds and these are stated below:
The major difference between forensic accounting and forensic auditing is that the forensic accounting investigates the frauds which are committed against the business a forensic auditing is done for investigating the fraud which is done for the business.
Currently in USA, the most prestigious accounting course is the Certified Public Accountant (CPA). The CPAs are well educated professional who perceive the knowledge of accounting, auditing, finance, taxation and corporate legislations. CPA can be said a most professional course and therefore the characteristics of a CPA can be analysed to determine the attributes of a professional in the country of USA. The characteristics of the CPAs are discussed below:
Ethics are the code of conduct which the person shall follow at its workplace or during delivering its official duties. A CPA is a person with high ethical values. Ethical values of a person help him in succeeding in his professional as well as personal life. When a person is in a situation where due to his act, he can get good benefit for himself and the larger society will suffer some losses, in this situation if a person chose to go in a right direction and do the thing which is more beneficial for the society, then that person can be said as a highly ethical person. An ethical person is required in the field of accounting as during the examination of the statements, if anything is found which is not legitimate, such ethical person will report it to the authorities rather than dealing with the persons who are involve in such transaction (Sherwood & Anthony 2020).
The legislations related to taxation and accounting are something which keep changing and therefore a CPA needs to be a constant learner. He shall know each and every amendment in all the related acts, legislation, accounting standards and auditing standards which may affect the financials of the business. CPAs never stop learning, even after achieving their license they are required to learn all the technical or non-technical changes in the economic and business environment.
The financials of a business firms are very much complex. Businesses have lots of transactions and arrangements and the CPA must analyse all these transactions to present a fair view on the financial statements of the business. For this lots of calculation is to be done by the accountant. CPAs make sure that all these calculations are accurate, they follow various procedures to reach on a calculation. CPAs knows which method is applied in different situation for calculating the financials of the business such as valuation of the assets, liabilities or goodwill of the business firm. The knowledge acquired by the CPAs about accounting and finance is very sound and therefore the calculations done by them is considered to be very reliable (Ramesh, 2020).
For conducting an audit or for preparing the accounts of a business firm, lots of transactions are analysed, this ultimately leads to lots of documents and paperwork. For maintaining the documents and paperwork in a right manner, a person shall be organized. The organizational skills of the person shall be at the best level. Each and every document related to the business is very important and it shall be dealt with utmost care. CPAs do have the best organizational skills and they manage all the paperwork in an effective manner. Any document can be needed at anytime and for that the CPAs are always ready with their highest level of organizational skills (Kumari et al. 2019).
The business contains lot of secrets. From trade secrets to financial secrets, there are many things about which the company do not want to tell anyone, especially the competitors. As the CPAs are independent person and they have good relationships with many businesses in the industry, there is a risk that the confidential information of the company can be made public or it can be given to any competitors. The CPAs have the characteristic of confidentiality. While performing their official duty, they do not leak any information apart from the facts that they are legally liable to disclose. CPAs can be trusted with the secret and confidential information of the business (Kumari et al. 2019).
The main objective of the audit is to give an opinion that the information contains in the financial statements of the company are true or fair. The accountability of an auditor in case of an audit is limited to provide an opinion. But this does not mean that he is not accountable for his acts which are done with a bad intention. Every act done by the CPA is recorded and if there is something wrong which is being done by the CPA, he shall be held accountable for the said act.
The auditing and accounting of a company is not an easy task and therefore a team of many CPAs is required to audit or maintain accounts of a business entity. CPA must have he ability to work in a team. Working in a team is not an easy task, when the number of people in a team is more, there are chances of conflicts of interest between them. The members of the team shall make sure that their act shall move towards the direction in which the interest of the team lies. For making sure that the persons of the team are coordinated with each other there must be a leader of the team who must make sure that all the team members are working in the same direction.
The CPA must be equipped with all the relevant knowledge of the subjects and an adequate experience in the field of accounting and auditing. The CPA shall make sure that they have all the required knowledge of the business and the industry in which the business is conducting its operations so that all the complexities of the business can be deal by the CPA.
The CPA must have the quality of due diligence in him. As the auditing and accounting is done at a very large scale, he shall understand the associated risks, and he shall conduct the audit by following the principles of due diligence. Whenever making a decision, a CPA shall make sure that the decisions is sustainable and do not have any prejudice in it.
Communication is very important, the reports maintained by the CPA must be communicated to the authorised person. And in case of any wrongdoings in the company the CPA must inform to the authorities about it. And for this the CPA must have the sound communication skills so that the reporting is done effectively.
For taking license to work as a CPA, a person must have the bachelor’s degree and after that the person needs to undergo the curriculum designed by the AICPA – American Institute of Certified Public Accountants. After completing the curriculum and passing the examinations, the person is awarded by the license to work as a CPA by the AICPA.
After analysing the attributes of a professional in the country of USA, the attributes that must be equipped by the forensic accountants are observed to be the following.
The person shall have high ethical values and he must have the integrity in his personality. Meaning of ethics is discussed in the previous parts of this report. The ethics is required for the forensic accountants because the amount involve in the fraud is generally high and the people who are involve in the fraud will try to make a deal with the investigator. The investigator shall report all the facts with full integrity (Huberts 2018).
The forensic accountant must determine and examine every detail of the event of frauds so that nothing can be left from the examination. Likewise, the CPAs, the forensic accountant shall conduct a full and detailed examination of all the facts.
Confidentiality is a major requirement of the investigation. All the information shall be safe with the investigator and the reports of all the facts and observation shall be given to the authorised persons only so that the person who are involve in the fraud can not influence the investigation (Levine, 2021).
The techniques of conducting the fraud keeps changing, and therefore the forensic accountant shall make sure that he never stops learning. The knowledge of the latest amendments in the legislations as well as knowledge about the latest technologies which are being used to conduct frauds must be known by the investigator.
The forensic accountant must have great knowledge about the financial and economical laws and he must have an adequate experience on working the cases of frauds and embezzlement. The forensic accountant must take all the knowledge about the business of the company and the industry in which the company is operating so that he can do detail investigation of all the facts.
When the fraud happens in a big business, the paperwork is very high. The investigator will make several investigations and examinations and documentation of those investigations and examination is very important, therefore the forensic accountant must have the organizational skills so that the documentation of the investigation is proper and all the facts are correctly recorded.
The valuation, calculation or analyses done by the forensic accountant must be accurate. The stakes of the investigation are very high, the calculation of the amount of fraud or valuation of any asset must be done by the most appropriate method so that the calculation and valuation are accurate and reliable.
An investigation requires a lot of communication. The investigator has to examine persons, do follow ups on them. Also, the forensic accountant has to send periodic reports to the authorised persons about the progress achieved by the forensic accountant at different levels of the investigation. The communication with al of other persons shall be done by proper channel and it shall also be documented properly, therefore the forensic accountant shall have the skill of communication.
It has been discussed earlier also that the stakes of an investigation are very high and therefore the accountability of the forensic accountant must be determined. He shall do all the activities in good faith and if the investigation is done in a bad faith, the forensic accountant must be help liable for that.
The forensic accountant must do every activity with proper due diligence. The activity undertaken by the forensic accountant is very crucial, he needs to identify the person who have committed the fraud. Therefore, every decision of the forensic accountant shall be undertaken by following the principles of due diligence.
Currently licensing is not required by the forensic accountant. There are no such requirements till now and generally the Certified Public Accountant (CPA) or other persons who have the financial and accounting knowledge are doing the forensic audit. But as the profession of the forensic accountant is growing, the need of a particular institute will also be there in future. A particular institute will also be responsible for giving the licenses to the qualified person for conducting the profession of forensic accounting.
The analyses of the things are done in this report to find out weather the forensic accounting is becoming a profession in the country of USA. In USA, the highest standard of profession in the field of accounting is kept with the Certified Public Accountants, the license to be become a CPA is given by the American Institute of Certified Public Accountant – AICPA. Currently the CPAs are pursuing the profession of forensic accounting, not only the CPA any other person who is well equipped with the knowledge of accounting and finance is eligible to pursue the profession of forensic accounting. This can be concluded that the profession is forensic accounting is growing and the future of the profession is also good as the frauds in the businesses are not going to be stop. There is a need of different institute for the forensic accounting professional in the country of USA so that the growing profession can grow more rapidly and the scope of the profession also increases.
BUL, B. I. (2020). Contemporary Issues in Audit Management and Forensic Accounting. education, 19, 20.
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