WHAT YOU SHOULD KNOW IN FORENSIC ACCOUNTING

Forensic accounting or investigative accounting as some people call it is that branch of accounting that is specially designed to engage in litigation and financial investigation. In forensic accounting, most of the things done there are a little bit more advanced than what is being learnt in conventional accounting.


In forensic accounting, you need to have knowledge in the following fields

COMPUTER FORENSICS: computer forensic knowledge would save you time in forensic accounting. Computer forensics is the investigative branch of computer science. It was carved out as a discipline just to checkmate the increasingly high rate of computer related crime and fraud.

CIVIL LAW and CRIMINAL LAW: you need to have good understanding of the civil law and criminal if you are to do well in forensic accounting. You need to be able to distinguish between civil cases and criminal case.

EVIDENCE LAW: in forensic accounting, evidences only speak volume when they are gathered using the right evidence gathering procedures. I have seen a forensic accountant who spent more two-third of his whole investigation time defending him-self in the law court. It happened that he gathered his evidence wrongly.

BALANCING ACT / PRIVACY LAW: just like the evidence law, if may land your self into trouble if you don’t have an idea of what these two legal documents are saying.

SOFTWARE ENGINEERING: software engineering made it possible for so many things to be achievable with computer today. You may not need to be a software engineer before doing well in forensic accounting but, basic knowledge can save you from frustration.

DIGITAL DEVICES: you need to have knowledge of digital devices before you can get evidence from it.

The reason for getting all the above diverse knowledge before going into forensic accounting is to be sure that no one would easily fool you. Your chances of being fooled are high if you solely rely on the expertise of third parties for your forensic accounting investigation.

JOBS SCAMS; MEANING, SIGNS AND SOLUTION OF JOB SCAMS

Job scams are another scheme devised by online fraudsters to further rip money off the pocket of their victims. People are more likely to fall victim to this kind of scam as the global economy is still feeling the effects of global financial crisis. Job scams perpetrators promise bogus job offers that range from online to offline job offer to their victims. In this article are list of common job scams and the catchy phrases used by job scammers and what you should do to protect yourself from being a victim of job scams.


INTERNET JOBS SCAMS

Working from home jobs / work from home jobs

Work from home for free

Work from home business

Work at home opportunities

Work at home programs

Work at home opportunities for moms

Make money fast

Internet business opportunity

OFFLINE JOB SCAMS

Get plume job in oil servicing firm

Get your dream job today

Get banking job training and banking job

HOW TO PROTECT YOUR SELF FROM BEING A VICTIM OF JOB SCAMMERS

Ask questions: ask intelligent questions that will help you uncover the true intention of the person you are dealing with. Question like how many people have you helped to get jobs in this industry may open loopholes to you as a job seeker.

Perform whois of the web address: whois search is an act of finding the true identity of the owner of a web address. Though some privacy services are purchased in this regard to protect people’s identity but certain information can still be obtained. The age of the domain name and expiration date will give you clue on how credible the site is. Sites that expires say in about two weeks time and are still not renewed will probably be a working tool of job scammers.

Enquire from regulatory authority: if there are government agencies regulating the activities of recruitment companies. Endeavour to enquire from them to see if the company is actually registered.

Consult with your consultant: employ the service of consultants to investigate the credibility of Recruitment Company. This option may however be expensive but, could be considered as an option when the amount you are asked to pay is big.

Don’t be in a hurry: scammers generally have a way of instilling sense of urgency in you to act fast. Shield them as much as possible.

Jobs scams if left unattended will in no distant time erode people’s confidence in doing any legal work and thereby resorting to engaging in criminal activities. Knowing how these job scammers operate can help you stay out of trouble as far as you keep updating your knowledge database of the activities of scammers.

LAND SCAM AND PROPERTY SCAM; COMMON SYMPTOMS AND SOLUTION

Land scam and property scam are proving to be one major source that people lose their money fast to fraudsters these days. The fact that real estate investment makes a good investment has made land scam and property scam to be the toast of fraudsters. Millions if not billions of dollars have been lost to land and property scammers.


This article is written as part of my job as a forensic accountant (fraud fighter) to educate the general public on the activities of fraudsters and other criminals.

HOW IS LAND SCAM AND PROPERTY SCAM PERPETRATED?

In this section of the article are common characteristics of land scam and property scam so, I encourage you to read this section with rapt attention.

Too good to be true: scams in general sound too good to be true once your instinct tells you that an offer is too good to be true, just do your best to investigate the authenticity of the offer. Over 70% of the victims of fraud that I have interviewed admit that their instinct tells them that the offer sounds too good to be true and still go ahead to commit their hard earned money.

Element of sense of urgency: it is as if fraudsters go for training on how to make people believe that a situation is urgent and therefore require urgent attention and action. My standard advice for my clients is to try and exercise patients whenever an agent (land agent or property agent) ask you to forward your money as quickly as possible. One standard lie of theirs is ‘this property will be off if you don’t pay before tomorrow’ I am sure you don’t need me as a forensic accountant to be by your side to tell you that you are trading with the wrong people?

Issuance of fake land / property documents: land fraudsters and property fraudsters are known for issuing fake documents to their preys. You need to carryout your due diligence before entering into contract with any land or property agent. Be sure that he or she is registered with the appropriate regulatory authority. Business name registration unit is the place to go in order to be sure that you are actually dealing with a legal entity. You should however note that certain crooks still go ahead with sharp practices even after registering with the authorities. So, you will do yourself a lot of good by going one or two steps further.

Use of classified ads: perpetrators of land scam and property scams usually make use of classified ads to advertise their dirty business. Classified ads are those advertisements placed on those spaces of newspapers and other media tools. You will notice that one particular ad will run for a long period of time with the same sense of urgency and the same number of properties to let. Just run as far as you can from these kinds of adverts.

I am not in any way saying that all classified ads are fraud oriented but majority of fraudsters make use of this medium as there are relatively relaxed policy that governs the use of classified ads section.

HOW CAN ONE BE FREE FROM LAND SCAMMERS AND PROPERTY SCAMMERS?
The best way to be free from scam as a whole is to be educated about their operations and to resist temptation and greed.

FORENSIC ACCOUNTING EXPOSES INTERNAL THEFT

Forensic accounting is that aspect of accounting that deals with litigation and investigative accounting with the aim of presenting evidence in the court of law. Internal thefts are criminal activities perpetrated by employees of an organization. Under normal condition, it is very difficult to curb and prevent internal thefts, but the advent of forensic accounting has helped to expose most fraudulent and criminal actions of employees and other insiders.

Forensic accountants have helped uncover and prevent many occupational frauds and other Ponzi schemes that are engineered by employees. Forensic accounting doesn’t just expose internal theft, certain calculated steps needs to taken to ensure that forensic accounting exposes frauds and other financial crimes.

EMPLOYMENT OF FORENSIC ANALYSIS TOOLS

Further and useful insights into the cause of variances are obtained with the use of forensic tools. Unlike the traditional way of analyzing accounts manually, were variances analyses are done manually on various components of the financial statements. Under the traditional method of variance analysis, a comparison will be made between goods that depleted and the ones that are properly accounted for. Attention shouldn’t be directed solely to negative variances (a situation where the variance analysis shows that the depleted quantity is more than what is recorded).

Apart from analyzing transactions manually, forensic tools employ advanced techniques like biometrics to prevent and deter internal fraud / internal theft. Someone may at this point be saying that implementation of access control and other assets protection methods is the duty of information security professionals. I do agree with you but I would like to make you understand the fact that the bar has been raised on what is expected of the accountants.

Forensic tools are also used to analyse transactions that are performed with the computer. This is especially more important now that the world has developed high dependence on computers and network infrastructures. The complex nature of computer transaction makes it feasibly impossible to perform an effective data analysis in an organization.

Again, the psychological effect that the installment of forensic tools will have on internal thieves is that fear of being caught will be instilled in them thereby deterring them from committing fraud and other economic crime. Even your presence in a company as forensic accountant is enough to make any body that want to steal internally to think twice.

It is important that every accountants and auditors acknowledge the fact that forensic tools and other investigative tools can help relieve them of avoidable stress and heartache.

AUDITING FOR INTERNAL FRAUD

Internal fraud is a very delicate issue that has capability of wrecking a company within a period of two days. It only takes two to conspire and the business is down. Internal fraud is a killer that every success thinking company should do all within its reach to keep at bay.


Auditing for internal fraud is the process of critically evaluating the internal control systems of a business to give reasonable assurance that frauds will not be perpetrated by insiders without being detected. Auditing for internal fraud does not only have to be a detective tool, it also has to be preventive and deterrent tool. This is part of the risk fraud analysis that organizations carryout to ensure that all is moving well. This means that auditing for internal fraud has one aim and that is to protect the asset of an organization.

As an auditor in this modern world, you will have to be concerned with issues that are beyond compliance with accounting rules. You must recognize that finding fraud is part of your responsibility too. Auditing for internal fraud will sharpen your existing skills and teach you new skills / techniques that are necessary for effective fraud detection.

TIPS ON HOW TO AUDIT FOR INTERNAL FRAUD

Evaluate the objectives of the company in the light of its objectives: the first thing that you must do in auditing for internal fraud is to have a working knowledge of the objectives of an organization. After gaining a working knowledge of the internal control of a business, the next thing that must be done will be to evaluate the actual operations in the organization.

Chances are that a company may have a high level internal but still do not implement the letters of the laid down procedures. A deviation will give you a clue on the likely crimes that could be perpetrated in this kind of control environment. The control environment in a business environment is in many cases more important than the controls themselves.

Review past incidents of frauds and financial crimes: understanding the kinds of frauds and financial crimes that have taken place in a company will give insight into how effective an organization’s internal control is in the area of fraud and crime prevention.

Test your internal controls: occupational frauds and other forms of frauds mostly occur in relatively weak controls. Testing your internal control is one way of finding out if your organization is prone to fall victim of frauds and economic crimes.

Evaluate the knowledge and competencies of responsible officers: you will get insight into how strong a company’s internal control is in respect to controlling internal control. You will be reasonably sure that fraud is likely to occur in a place where the head of internal control unit is being headed by a non-qualified and ill-experienced person.

As forensic accountants, we should endeavour to learn the basics of auditing for internal controls. Bear in mind that the content of this blog you are reading will not be enough for you to effectively hone your skills as an internal fraud auditor. In addition, you must have working knowledge of computer forensics.

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COMPUTER FORENSICS KNOWLEDGE; A MUST FOR EVERY FORENSIC ACCOUNTANTS

WHAT IS COMPUTER FORENSICS?


Computer forensics is the investigative arm of computer science that handles investigations in order to bring out evidences that could be used in the law court to prosecute a suspect when found guilty of an offence. Computer forensics investigators perform their duties through data analysis. The nature of forensic accounting requires that investigations be carried out in certain cases.

One may be asking; what concerns investigation with computer? Well, the answer is simple, most frauds if not all frauds are committed through the computer and other electronic devices.

HOW TO BECOME A COMPUTER FORENSICS PROFESSIONAL

You can become a computer forensics professional by becoming a member of any of the professional computing forensic organizations like; IACIS (International Association of Computer Investigative Specialists) one of the oldest bodies created by police officers that wanted to formalize credentials in computing investigations. Apart from joining a professional body, the most important thing in becoming a computer forensics professional is knowledge and experience. As a basic requirement, you must have a first degree.

This experience and knowledge can only be acquired through reading, learning and doing. I knew nothing in computer forensics when I started but today, I can reasonably conduct computer forensic analysis and investigation with little help from professional bodies where I belong. Since you are looking at becoming a computer forensics from the perspective of an accountant, it will really be nice if you top it up with a credential in fraud examination like the ACFE.

BASIC TOOLS NEEDED IN YOUR COMPUTER FORENSICS LAB

Note that the list of computer forensics tools listed here cannot be a comprehensive one but just to give an idea of what you need to ensure you take care of. Below are some of the tools needed in your office/ work area:

A work room built with copper

A well ventilated and well lighten place

Electrostatic discharge bags and other forensics storage bags

Software for data analysis like; spydrive, Encase, etc

Scheduled and routine lab auditing procedure

A well equipped library

Computers with different OSs like Macintosh, windows, vistas and other older operating systems.

You also need to consider the office ergonomic

Like I said before, you will get more requirements from your professional body.

BENEFITS OF BECOMING A COMPUTER FORENSICS PROFESSIONAL

A lot of benefits accrue to all those that have credential in computer forensics and other investigative fields in the society. The most prominent of them all is respect and honour in the society. Note however that there are risks associated with computer forensics credentials. But, that wouldn’t deter people from becoming computer forensics professional. Your professional organization will link you up to security agents that will see to your basic security needs. Even life itself is full of risk so do not be afraid of that.

Wow! A lot has been discussed about computer forensics, now that you have known all these, wouldn’t you rather become a computer forensics professional today? If you consider joining any of the professional bodies mentioned above, also consider buying any of these books on computer forensics displayed below.

To your success as a computer forensics professional!



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FRAUD RISK ASSESSMENT; THE ROLE OF FORENSIC ACCOUNTANTS

Fraud risk assessment has been identified by; regulatory bodies, professionals, professional standard setters, law enforcement authorities, and auditors as the most powerful proactive tool that can assist businesses in fighting fraud and economic crisis. Fraud risk is the probability that fraud can occur in a system and still go undetected.


Fraud risk assessment plays crucial role in the development and maintenance of effective fraud management programs, controls and systems. Fraud has been identified as one of the principal causes of global economic meltdown.

Managers of business and the business community at large have called upon forensic accountants to device better means of protecting business assets and resources. Hence, the development of this wonderful tool called fraud risk assessment. Below are the roles of a forensic accountant in the process of assessing the level of business exposure to fraud risk


DUTIES OF FORENSIC ACCOUNTANTS IN FRAUD RISK ASSESSMENT

Testing of internal controls: all my years of experience in the fraud fighting field has consistently proved to me that quality and implement-able internal controls are the key to successfully curbing of frauds and other financial misappropriations in any entity. It is the role of forensic accountant to test internal controls of organizations and help establish one where there is none. This is an important role in the risk assessment procedures.

Evaluation of recruitment procedures: poor recruitment procedures are the prime cause of fraud in an organization. A lot of employers of labour fail to adequately investigate the background of employees before engaging the service of the employee. It is the duty of forensic accountant to ensure that best practices in recruitment procedures are followed. Forensic accountants should also advise management on the best method of rotating employees.

Review of incident management process / business continuity plan: most frauds are hidden under the disguise of implementing change. A lot of frauds are perpetrated while pretending to implement change. It is the role of the forensic accountants to review change management procedures to ensure that frauds are not hidden while doing this.

Review of work ethics/ environment: workplace bullying is a fertile ground that breeds occupational fraud. Workers are likely to conceal fraud in a tensed atmosphere than they would do in a plain atmosphere. It is the duty of the forensic accountants as a fraud fighting professional to ensure that working environment is encouraging enough for fraud to be prevented, detected, and corrected. Work complaint documentation should be seriously reviewed for possible loopholes that are likely to lead to fraud.
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FORENSIC ACCOUNTANTS AS DATA ANALYST

Forensic accountants / fraud examiners are traditionally known for information measurement professionals. But, the digitalized nature of the world, forensic accountants finds themselves wearing the hat of data analysts. Today’s evidences are found in servers, databases, chat rooms, e-mails, electronic spreadsheet, html codes, iphones, ipads, laptops, etc.


Data analysis is the only basis upon which forensic accountants can lay their claims. Evidences are made credible when backed by proof of analysis. All these made it even more pertinent for fraud professionals like forensic accountants. The problem that many accountants have is; what data analysis skills are we supposed to have. If you are in this class, then read further as this article is written for you.

DATA ANALYSIS SKILLS REQUIRED OF A FRAUD ACCOUNTANT / FORENSIC ACCOUNTANT

Ability to carryout statistical analysis: some times, an accountant needs to get certain ratios and some other testamentary evidence for information to have weight in the law court. You must be proficient in the use of statistical tool and other analysis tools. I recommend that you take a course on operations research as this will give you the right kind of exposure you need in areas like: goal programming, integer programming, linear programming, regression analysis, etc. Most occupational frauds concealed in data are easily discovered by simply running any of these statistical tools on them.

Ability to use forensic data analysis tools: digital evidences are oftentimes hidden in digital formats that are impossible for human eyes to see and require the use of forensic tools to recover. This is the area where investigators of our time are now proving their worth. So, if you want to be a force to reckon with, it is a must that you acquire skills of data analysis.

You may be wondering at this point if it is a must that you acquire data analysis skills. Well, it is not a must as many investigators rely on third parties to get their data analysed but for the reasons I will be mentioning in the next paragraph, I would advise that you learn to do your analysis yourself.

DISADVANTAGES OF ANALYZING YOUR DATA EXTERNALLY AS FORENSIC ACCOUNTANT

Forensic data analysis in usually iterative in nature: you will spend more money paying data analyst if they spend more time on your data. And most data analysis is iterative in nature meaning that cost cannot be avoided in doing this. Then what is your worth as an accountant if you cannot safe cost? – after all, accounting is all about cost savings.

No ad hoc access to further and urgent analysis: you cannot always get the service of a data analyst when need them at all time. And this may create a vacuum in the fraud fighting process.

Lack of flexibility: you will lose the benefits of being flexible if you simply outsource all your data analysis jobs to IT specialists and outsiders. Also, you may not get all the privacy that you require to be successful in your investigative work.














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What level literacy of data analysis do I need to gain as a forensic accountant?

As far as data analysis skill is concerned, you can choose to be any of the following:

• Be totally ignorant of what can be done with data


• Understand data analysis possibility


• Know how to generate report from programmed and hidden system


• Ability to use query for data mining


• Full scripting and programming skill to analyse underlying database / data

The choice is yours. But if you really want to be effective and efficient in investigation as a forensic accountant; then you seriously need to acquire basic data analysis skill. This article will not be complete if I don’t say anything about data.

WHAT IS A DATA?

It is important to draw a line between a data and information. Data are statements accepted as they are without further query. That is, data are unprocessed information. Data becomes information when processed.

TYPES OF DATA / DATA TYPES

As a forensic accountant, you are supposed to have idea of the different types of data and how they interpret certain signs like ‘division sign (/)’. We basically have four types of data VIZ:

String (text, char or varchar)

Integer (long, int, bigint or smallint)

Date (time or timestamp)

Float (double or money)

I will not explain these data types now as this article is already too long. But, one thing to take home as regards data type is the fact that a particular symbol have different meaning in the eyes of the computer when processing information.

PONZI SCHEME: AN EPIDEMIC?

Ponzi scheme is a type of investment scam whereby perpetrators deceive their victims into believing in their pyramid scheme and entrust them with their hard earned money and other resources. The term Ponzi came after an Italian fraudster named Carlo Charles Ponzi, born in 1882.


Though, Bernard Madoff’s scandal created awareness of the resurgence of Ponzi scheme yet a lot of people still report cases of being victims of modernized Ponzi scheme. Bank accounts and retirement accounts have been drained as a result of the activities of these financial predators.

CAUSES OF PONZI SCHEME

The primary cause of Ponzi scheme is greed. This is true both from the perspective of the victims and perpetrators of Ponzi scheme. Individuals and corporate bodies would not be defrauded if they hadn’t craved to make unrealistic return from their investment. One common feature of Ponzi scheme is the promise of triple return or more.

The second principal factor that is responsible for the existence of Ponzi scheme is ignorance. People are oftentimes ignorant of the activities of the perpetrators of Ponzi scheme. This is where the forensic accountants and fraud examiners really come in. it is part of the duties of forensic accountant to educate the populace. Everyone cannot be a forensic accountant or a fraud examiner but with our help as fraud fighters, they all need information on the activities of fraudsters at all time. If you call yourself a fraud fighter or forensic accountant and you are educating people on the activities of fraudsters and how to prevent fraud, then you are not whom you claim to be.

Fraud examiners should continually look out for signs of fraud and immediately relate same to all those that look up to them for professional advice.

Unless we all team together to fight this phenomenon, Ponzi scheme will still continue to an epidemic that will continue to virally spread. All pointers are pointing to the fact that those saddled with the responsibility of eradicating fraud and Ponzi scheme are not doing their best. If this remains this way, I would then say that Ponzi scheme is not only an epidemic but a pandemic. Some people have even coined a word for this situation; Ponzi-demic.

But do you know what? There is hope as many fraud fighting professional bodies that we have today are beginning to take the bull by the horn. You too can become a fraud fighter today by buying any of the books displayed below.















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OCCUPATIONAL FRAUD IN SMALL AND MEDIUM BUSINESSES

Occupational fraud is the kind of fraud committed by employees of a company. This kind of fraud is also known as insider fraud and is always difficult to control in a situation where a company’s internal control is relatively weak. Small and medium sized businesses are particularly prone to falling to the tricks of occupational fraud perpetrators.


There are conditions that must be met before occupational fraud could take place. Those three conditions are what are called the fraud triangle. They are opportunity, pressure and rationalization.

Occupational fraud has singly accounted for over 40% of the totality of frauds that has taken place in business community as a whole. It takes the activity of an insider for an outsider to successfully operate. Many company and businesses have started taking the right action in the right direction to combat this ugly situation by engaging the services of forensic accountants and other fraud fighters.

The presence of forensic accountants and fraud examiners in a business instills fear in the mind of workers thereby making them do their possible best to stay away from occupational fraud of all kind.

Good internal controls and high spirit of workforce is the key to curbing occupational fraud. It is not just enough for people to state rules, principles, and procedures on paper without implementing it. The contents of the internal control ‘bible’ should be implemented to the letter. Management should be prepared to adhere to the advice proffered by the internal control experts in the advisory board.

Access control and other security issues should be taken seriously by all that really wants to squarely face occupational frauds. Access control simply means restricting how resources are used in a business. There is the physical and logical access control. The physical access control deals with the physical protection given to assets, while logical access deals with rights to access information via the computer and other network devices.

Again, education of staff members can help reduce occupational fraud in small businesses. Educating your workers will place them in a situation to recognize fraudulent activities whenever they see them going on.

Establishing and upholding good corporate governance is another good tool to fight occupational fraud in our businesses. With good corporate governance in place, occupational fraud will have no place to hide its ugly work in our company. Good corporate environment will enhance the working experience of workers and make them become more productive in their work.

The company that I worked for as a forensic accountant successfully fought occupational fraud by creating a conducive work environment.

Occupational fraud is a threat to business community as a whole and needs to be seriously dealt with. It begins from you, learn the basics of fraud fighting today and be glad you did.

The following books can be bought to leanr more
Third highest occupational fraud rate afflicts health care.(PRACTICE TRENDS): An article from: Family Practice News

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