Importance of Forensic Accounting
Business has been around for thousands of years with people buying, selling/ trading food, animals, and jewelry just to meet their own standards of living. Business fraud has been around for just as long as business has. Every person to this day and in the future was and will be looking for ways to save and earn money. The best know earliest case of fraud deals with the whites and Indians in 1626 with land swindling. Business fraud is on the rise and needs to be stopped. This is a job for forensic accounts. Forensic accounting should be the core of any business to help any business avoid sudden collapse due to fraud. A study conducted by Jacob J. Levy, back in 2011 studied 684 accounting professionals and looked for the Big Five traits in a professional career, which were agreeableness/ teamwork, conscientiousness, emotional stability, extroversion and openness. Also Levy looked for four narrow traits, which consisted of assertiveness, customer-service orientation, optimism and work drive. The study showed that the agreeableness/ teamwork trait scored a lower mean score when compared to other professionals but the ones that scored higher valued cooperation or working collaboratively with colleagues at work. The conscientiousness seemed to be an ideal standard in the work place. The accountants that turned out to be higher on that level tend to be more satisfied with their careers. Emotional stability displayed the highest correlation with fulfillment in accounting but while being compared with other professions the scores were lower. Extroversion was highly associated with the field of accounting even though it seemed to attract more introverts. The openness trait for accountants was very low. This means that they usually like to stick to the strategies that work instead of trying new innovations. For the narrow traits assertiveness has become more important because of the familiarity of being in constant face with negative reactions. Customer Service Orientation was highly related to career satisfaction because of the increasing emphasis on the communication part of the career. Optimism in accountants showed that they had higher performance in their career whereas pessimism showed lower performance. Work drive had significant correlation with career satisfaction many look to go above and beyond the job requirements (Drost). Forensic Accounting has found its way to brunt of the storm in the business world. Back in 2003 the FBI estimated that the united States spend more than 300 billion dollars annually for white-collar crimes. Forensic accountants are often called into assignments for their expertise on investigating any intentional tampering of a company’s financial record. “These fraudulent misrepresentations can range from overvaluation of inventory and improper capitalization of expenses to misstatement of earnings and embezzlement (Digabriele)”. Forensic accountants are brought into evaluate a company’s value during an emergence with another company or in the process of being bought out. Forensic accountants are usually brought into to work current or expected litigations. These litigations often include cases dealing with personal injury, product liability, contract disputes, and intellectual property; these may also include complicated matrimonial cases. Forensic accounts don’t stop there; they also work for the government under the FBI, CIA, and IRS, looking for fraud by individuals on a business (Digabriele). There are many reasons for forensic accountants to be up on businesses. There are many ways businesses can try to get away with fraud. Small business tends to be an easier target for fraud because of the individual owner. “In a cash business, receipts may be diverted and unreported. Professionals
often have the ability to delay billings, defer income recognition, and to park
client payments in escrow or...
Please join StudyMode to read the full document