Make Money Online Taking Surveys for Beginners

In the event that you are new to paid surveys, you may possibly speculate how do I begin making money by taking on the net surveys? This article is a guideline for paid survey newbies and make sure you follow my step by step guidelines below to get on a speedy and good start.1. Keep in mind this: do NOT pay any person to do paid online surveys in any way. It is generally FREE to do paid surveys and get money. Authorized paid survey and market research firms do not charge you, in fact they pay you for your opinion.2. Create a devoted email account. You will receive lot of emails and you require a separated email address for survey invite emails. Note: you’ll have to turn OFF your spam filter or establish the spam filter option to do not erase emails in spam folder instantly, normally you may miss survey emails.3. You may well want to open up a free PayPal account. Various of survey sites provide their payment via PayPal. It’s 100% free to send money, and 100% free to accept payment in the event that you have a basic account, a low transaction fee make use of for Premier and Business Accounts to get cash, and it is generally faster than check payment.


4. Register with all the real online survey businesses you can find, starting with the top 10 cash paying survey panels. Be sure to verify your survey panel membership. This often entails clicking the link in the confirmation email coming from the survey panel following signing up. This is essential step for sign up. I recommend you take time to subscribe with ALL the genuine survey sites you can find. The cause is very basic, the more survey sites you sign up with, the even more survey invitation you acquire to do.5. Suggestions on staying away from scams.a. If you come cross a survey internet site, make sure to check their policy. If you are not content with the privacy or they don’t have an online privacy policy, avoid from them.b. Take note the main difference among paid surveys sites and get paid sign up offer internet pages. The later oftentimes state they are survey sites, in fact their particular main business is paid offers. They are the places you get paid for registering offers, and often you need to pay or offer credit card data while sign up non no cost offers.c. Avoid from any websites, paid or free offering known scam or spam, commonly those sites state they have a list of 300+, 400+ or even 500+ paid survey sites, the fact is there are NOT THREE HUNDRED survey sites that pay!) They are just marketing anything at all they can find for commissions, regardless of its scam or spam and can’t be trusted.6. Tips on performing surveys.a. Be genuine with your personal profile details when join with survey corporations.b. Response survey invitations promptly. Many surveys have quota and a lot of fill fast, especially large paying and fast to qualify surveys.7. Tips on getting paid.Make certain to keep the invitation emails for the surveys that you meet the requirements and finished, especially those on the web interactive surveys focus group. You want to have proof for your involvement when there is an issue.


8. Be patient.This is very essential for survey newbies. It can take a while to receive money since many survey sites have minimal payout need and it will take time for them to process payment. Likewise it requires a while to acquire more surveys. For me personally, I didn’t obtain any kind of cash or other benefits in the 1st month, I had several points or others but not plenty of to cash out, and the cash didn’t start arriving in until the end of second month. It is equally soon after two months, I began to get and meet the criteria for extra surveys, incorporating those high-end surveys such as online surveys and focus organizations.Performing paid surveys does not help to make me rich, but I delight in it. By way of the survey money I made, last year I bought a completely new laptop computer for myself! I also bought toys, DVDs, gifts, books and other products for my child, wife and family members. Paid survey undoubtedly is an easy to do and fun method to make increased spending cash, and it really worth my time!

Forensic Accounting – a New Paradigm For Niche Consulting

OBJECTIVES OF WRITING THIS ARTICLE: Forensic accounting(F.A.) has come into limelight due to rapid increase in financial frauds and white-collar crimes. But it is largely untrodden area in India.The integration of accounting, auditing and investigative skills creates the speciality know as F.A.The opportunities for the Forensic Accountants are growing fast;they are being engaged in public practice and are being employed by insurance companies, banks, police forces, government agencies etc.This article seeks to examine the meaning and nature, activities and services rendered, core knowledge and personal skills required for forensic accounting as a specialized field in accountancy profession. Indeed there is a future in F.A. as a separate niche consulting.

The lack of respect and belief in India’s law enforcement agencies and the rate at which white-collar crimes have increased has prompted the development of Forensic Accounting in India. The fraud detecting agencies seems to lack time and devotion needed for detecting and prevention of errors and fraud. According to a large global accounting firm, the market is sufficiently big enough to maintain an unit devoted entirely towards “forensic accounting”. Many large as well as small accounting firms as well as the tiny firms have inculcated or rather developed separate forensic accounting departments.

We were of the belief that detection and prevention of frauds or white-collar crimes is part of conventional accounting function. It was thought that the frauds, both internal as well as external has be to detected by the auditors through their periodic audit. Now it is crystal clear that auditors can only check for the compliance of a company’s books to generally accepted accounting principles, auditing standards and company policies. Hence the need was felt to detect the frauds in companies that are suspected to be engaged in fraudulent transactions. This field of accounting is known as “forensic accounting”.

The litmus test of investigation, first introduced by the ever great Sherlock-Homes(considered by many as the father of Forensic Accounting) is perhaps the first ever application of forensic accounting. Though, the contribution of the other few great historians to the field of forensic accounting cannot be overlooked. They used various tricks to investigate various crimes.

F.A. is a specialized a area of accounting practice that describes engagements which result from actual or anticipated disputes or litigation. The word “forensic” means “suitable for use in court”. The forensic accountants have to keep in mind this statement while they have to work or chalk out their programme. The F.A. work is tailor made according to the situation and need. The gathering of information and evidences is done according to the need and situation. We can say, it is customized according to the situation. The forensic-accountants give expert evidence at the ultimate trial. All the modern medium-sized as well as the large-sized accounting firms have specialized forensic accounting departments. Within these firms there may be specialized forensic accounting departments. Within these groups their may be further sub-specializations. Various sub-specializations include insurance claims, personal injury claims, fraud detection, construction or royalty audits. Nearly 40 percent of the top 100 US accounting firms are expanding their forensic and fraud services, according to Accounting Today. Now if we consider this data as significant then we can say that the total contribution of forensic accounting to the total revenue of the C.A. firms would be highly significant in the years to come. Under rising instances of frauds and litigation and flourishing businesses these services are considered to be very significant as they are rendered at a very competitive price.

The forensic accountants utilize the various information relating the business, utilizes financial reporting systems, various accounting and auditing standards and procedures, investigative techniques and litigation processes and procedure to perform their work. By acting as advisors to audit committees and assisting in investment analyst research, they are playing more “proactive” risk reduction roles.This is possible by designing and performing extended procedures as part of the statutory audit. The objectives of such an accounting include measurement of losses caused by an auditor due to his negligence, to look into the matter whether their has been any embezzlement of cash, the amount, necessity of criminal proceedings, computation of asset values in a divorced proceeding.

The primary approach technique of forensic accounting is explanatory analysis(cause and effect)of the phenomena-including the discovery of deception(if any), and its effects -introduced into an accounting system field. The primary methodology employed by the forensic accountants is the verification of the objective. They are trained to deal with real world business and do have the sufficient expertise to look beyond(behind) the numbers. The scope of the forensic accountants are growing at a rapid pace. The increase in their work opportunities have been accelerated due to the fall of the Enron corporation and the collapse of the American Twin Towers.

This has led to increase in the demand for American forensic accountants. So as far India is concerned, formation of Serious Fraud Investigation Office(SIFO) is a landmark creation so far as forensic accountants are concerned. Failure of regulators to track security scams, increasing cyber crimes, chain of cooperative banks bursting -all point to the ever increasing need for forensic accountants. Our understanding of the need for forensic accountants is immaterial here. In India due to the growing number of frauds the need for forensic accountants is ever increasing. The regulatory and administrative agencies will put pressure for greater demand of forensic practices. This has been initiated due to the changing nature of Indian and International accounting.Auditing and assurance standards also confirm this. A change in the curriculum can be initiated if the written exams and practical industrial training are boosted to show the “new knowledge base and skill-set” required by the professional accountants in the new era. It is therefore recommended that the “forensic accounting and auditing” be introduced as a paper in the various professional examinations conducted by the various accounting bodies in India. Unfortunately forensic accounting is largely an unexplored area as far as India is concerned. The chartered Accountants(CAs) deal with such cases in an irregular fashion. In the western counter-part(countries), the Lawyers, police, insurance companies, government and regulatory bodies, banks, courts and business communities are increasingly utilizing the services of the forensic accountants.The accountants and the auditors must have the skills and expertise to venture into the emerging field of forensic accounting.

What Is Forensic Accounting? The growing needs of corporations has changed the definition of forensic accounting. As per Bologna and Indquist, “the application of financial skills and an investigative mentality to unresolved issues, conducted within the context of rules of evidence.It is a new emerging field that encompasses financial expertise, fraud knowledge, and a sound knowledge and understanding of business reality and the working of the legal system.”It means that the forensic accounting should be skilled not only in financial accounting but also internal control systems, the legal matters, other institutional requirements, investigative blend of mind and interpersonal skills.

According to AICPA: “Forensic accounting is the application of accounting principles, theories, and discipline to facts or hypotheses at issues in a legal dispute and encompasses every branch of accounting knowledge: ‘ Similarly, forensic accounting is defined by Horty as:
“The science that deals with the relation and application of finance, accounting, tax and auditing knowledge to analyze, investigate, inquire, test and examine matters in civil law, criminal law and jurisprudence in an attempt to obtain the truth from which to render an expert opinion.”
In simple words, forensic accounting includes the use of accounting, auditing as well as investigative skills to assist in legal matters.It comprises of two major components: litigation services, that recognizes the role of an accountant as an expert consultant and investigative services, that uses a forensic accountant, s skills and may require possible court-room testimony.
Investigation of theft and defalcation of corporate and individual assets are part of legal matters.They use their education as well as experience to discuss the facts, patterns of the theft or misappropriation.Business accounting systems are reviewed by the forensic accountants.They suggest ways and means to solve and improve the internal control and internal accounting system.This is adopted to prevent theft and fraud. Because of their expert knowledge and educational background and experience their(forensic accountants) work is elevated to a new height.

Forensic accountants do not contest in cases.They act as fact finding devices, try trt to seek the real truth from the hidden facts.They conduct their work in an unbiased and objective manner.They need legal knowledge, expertise, training and experience to perform their work in an effective and real manner.Extensive knowledge in the field of commerce, legal, accounting as well an investigative blend of mind is needed to perform the work in a proper fashion.Expertise in litigation support and testimony in courts of law are also prerequisites of the forensic accountants.This is due to the fact that their work would many times be used in a court of law.The valuation of damages due to criminal and civil wrong-doings need to be done with perfection and for that reason knowledge of business valuation theory is the most essential.

What exactly do the Forensic Accountants perform? Answer: They are trained to deal with real life business situations and are trained to look beyond the numbers.
Analysis, interpretation and summarization of complex financial and business related issues are prominent characteristics of this accounting/auditing profession. Familiarity with legal concepts and procedures is a must.Insurance companies, public practice, banks, police forces and government agencies are major employers of forensic accountants.
The various field of work encompassing the arena of a forensic accountant can be stated in points format as follows:

1) Financial evidence investigation and analysis.
2) Development of computerized software to help in the analysis and presentation of financial evidence.
3) Sharing their findings in the form of reports, slide shows or exhibits and documents collected.
4) To support trial evidence they prepare visual slides, assist in legal proceedings, including testifying in courts as an expert witness.
If we want to say or rather point out the role performed by the forensic accountants in a nutshell, we can say as follows:

Measurement or to quantify the impact of lost earnings. Such as construction delays, stolen trade secrets, insurance disputes, damage/loss estimates, malpractice claims, employee theft, loss of profit, financial solvency reports, disturbance damages, loss of goodwill, compensation losses suffered in expropriation determination, assessment of the potential business compensation costs and providing consultation on business defalcation minimization. Lease default damages, breach of contract, business interruptions, breaches of shareholders and partnership agreements, reconstruction of accounting records,
Investigation of misappropriation, assistance in establishing ownership and division of assets, commercial damages, professional negligence cases, partnership disputes, expert evidence, fair value or fair market value and personal injury damages are included in commercial damages. Tax advocacy, compliance and review of financial statements, tax reporting and tax planning in such areas as income as estate matters are included in tax matters. Analysis, interpretation, summarization, presentation of complex financial and issues relating to the business for investigation is the role of a forensic accountant.
They carry out investigative accounting and provide litigation support.

The services rendered by the forensic accountants are in great demand in the following areas:

1) Fraud detection where employees commit Fraud:
Where the employee indulges in fraudulent activities:
Where the employees are caught to have committed fraud the forensic accountant tries to locate any assets created by them out of the funds defalcated, then try interrogate them and try to find out the hidden truth.

2)Criminal Investigation: Matters relating to financial implications the services of the forensic accountants are availed of. The report of the accountants are considered in preparing and presentation as evidence.

3) Outgoing Partner’s settlement:
If the outgoing partner is not happy about his settlement he can employ a forensic accountant who will correctly assess his dues(assets) as well as his liabilities correctly.
4)Cases relating to professional negligence:
Professional negligence cases are taken up by the forensic accountants.
Non-conformation to Generally Accepted Accounting Standards(GAAS) or non compliance to auditing practices or ethical codes of any profession they are needed to measure the loss due to such professional negligence or shortage in services.

5) Arbitration service: Forensic accountants render arbitration and mediation services for the business community, since they undergo special training in the area of alternative dispute resolution.

6) Facilitating settlement regarding motor vehicle accident: As the forensic accountant is well acquainted with intricacies of laws relating to motor vehicles, and other relevant laws in force, his services become indispensable in measuring economic loss when a vehicle meets with an accident.

7) Settlement of insurance claims: Insurance companies engage forensic accountants to have an accurate assessment of claims to be settled. Similarly, policyholders seek the help of a forensic accountant when they need to challenge the claim settlement as worked out by the insurance companies. A forensic accountant handles the claims relating to consequential loss policy, property loss due to various risks, fidelity insurance and other types of insurance claims.

8) Dispute settlement: Business firms engage forensic accountants to handle contract disputes, construction claims, product liability claims, infringement of patent and trade marks cases, liability arising from breach of contracts and so on.

9) Matrimonial dispute cases: Forensic accountants entertain cases pertaining to matrimonial disputes wherein their role is merely confined to tracing, locating and evaluating any form of asset involved.

Core Knowledge Of Forensic Accountants:
A forensic accountant is expected to be a specialist in accounting and financial systems. Yet, as companies continue to grow in size and complexity, uncovering fraud requires a forensic accountant to become proficient in an ever- increasing number of professional skills and competencies. Here are some of the broad areas of useful expertise for a forensic accountant:

” An in-depth knowledge of financial statements and the ability to critically analyse them. These skills help forensic accountants to uncover abnormal patterns in accounting information and recognise their source.
” A thorough understanding of fraud schemes, including but not limited to asset misappropriations, money laundering, bribery, and corruption.
” The ability to comprehend the internal control systems of corporations, and to set up a control system that assesses risks, achieves management objectives, informs employees of their control responsibilities, and monitors the quality of the programme so that corrections and changes can be made.
” Proficiency in computer and knowledge of network systems. These skills help forensic accountants to conduct investigations in the area of e-banking and computerised accounting systems.
” Knowledge of psychology in order to understand the impulses behind criminal behaviour and to set up fraud prevention programmes that motivate and encourage employees.
” Interpersonal and communication skills, which aid in disseminating information about the company’s ethical policies and help forensic accountants to conduct interviews and obtain crucially needed information.
” Thorough knowledge of company.s governance policies and the laws that regulate these policies.
” Command of criminal and civil law, as well as, of the legal system and court procedures.

Personal Skills Required:
So what does it take to become a forensic accountant? In addition to the specialised knowledge about the techniques of finding out the frauds, one needs patience and an analytical mindset. One has to look beyond the numbers and grasp the substance of the situation. There is a need for the same basic accounting skills that it takes to become a good auditor plus the ability to pay attention to the smallest detail, analyse data thoroughly, think creatively, possess common business sense, be proficient with a computer, and have excellent communication skills. A “sixth”sense that can be used to reconstruct details of past accounting transactions is also beneficial. A photographic memory helps when trying to visualise and reconstruct these past events. The forensic accountant also needs the ability to maintain his composure when detailing these events on the witness stand. Finally, a forensic accountant should be insensitive to personal attacks on his professional credibility. A fraud accountant (as forensic accountants are sometimes called) should also observe and listen carefully. By this, you can improve your ability to detect lies whether they involve fraud or not. This is so because”not all liars are fraudsters, but all fraudsters are liars”(Wells).

According to a forensic accounting expert, “the traits of a forensic accountant could be compared to a well-baked pizza. The base of forensic accounting is accounting knowledge. Size and the extent of baking decide the quality of the pizza. A middle layer is a dispersed knowledge of auditing, internal controls, risk assessment and fraud detection. It is like the spread of the cheese in pizza. The toppings of this pizza area basic understanding of the legal environment. The legal environment is essential in order to support the litigations. The cherry on the toppings of the pizza is a strong set of communication skills, both written and oral. It is just the beautification part. Perfect combination of the pizza base, cheese spread and good toppings makes the pizza delicious and the of company’s the laws that Forensic Auditor perfects. It is a combination that will be in demand for as long as human nature exists.”

In addition to these personal characteristics, accountants must meet several additional requirements to become successful forensic accountants, say a Certification, acknowledging his competence. One can learn forensic accounting by obtaining a diploma given by Association of Certified Fraud Examiners (ACFE) in the US. Indian chapter of ACFE offers the course based on the white-collared crimes prevalent in US, based on their laws. However, there is no formal body that provides formal education of the frauds in India. Besides the formal certificate, one can deepen one’s knowledge and sharpen one’s skills in forensic accounting by undergoing training under an experienced forensic accountant, participating in various international conferences, reading relevant journals, books and other literature on forensic accounting.

To combat the frauds effectively one needs the active support of government at every stage. There are three-four such agencies in India, which are dedicated to the mission of combating frauds. Serious Fraud Office looks into violations of Income Tax, FEMA, RBI Act, etc.; CBI (Economic Office Wing) deals with big financial frauds; Central Vigilance Commission deals with corruption. These are the major government agencies that combat frauds of different types. Unfortunately, there is no specialised education provided by any of the Universities in the country. Recently, TCS has also come out with software to combat money laundering and Subex Systems have designed software to combat the telecom frauds. Thus, combating the frauds with software has started picking up in India, with few big companies like ACL and IDEA, joining the race.

The Need For Niche Consulting:
The CPA Vision Statement states: “The CPAs are trusted professionals who enable people and organisations to shape their future. Combining insight with integrity, CPAs deliver value by: (a) communicating the total picture with clarity and objectivity, (b) translating corn plex information into critical knowledge, (c) anticipating and creating opportunities, and (d) developing pathways that transform vision into reality1 It reflects the trend towards providing a broader range of assurance services. However, recent corporate accounting scandals and the resultant outcry for transparency and honesty in reporting have given rise to two disparate yet logical outcomes. First, forensic accounting skills have become crucial in untangling the complicated accounting manoeuvres that have obfuscated financial statements. Second, public demand for change and subsequent regulatory action has transformed corporate governance. Increasingly, company officers and directors are under ethical and legal scrutiny. Both trends have the common goal of responsibly addressing investors’ concerns about the financial reporting system. Indeed, there is a future in forensic accounting as a separate”niche” consulting area in India. The need to specialise, otherwise known as Niche Consulting, is imperative to practising accountants because the fast-paced developments in business thereby demand specialised knowledge and skills. While a majority of CAs have excellent analytical skills, they need to acknowledge that ‘forensic’ services require ‘specialised’ training as well as real-life ‘practical’ corporate experience. There is a need for specialised information, not just audit and tax service. What clients seem to want are people with unique sets of skills and experiences. With the maturing of the audit business, and the rapid development of technology that makes existing services low cost and cheap, it appears that it is the right time now to acquire those unique skills. To help practitioners move into ‘niche’ consulting, some professional organisations in the US have concluded that: “Future success for the profession depends, in part, on how the public perceives the ability of CPAs. New efforts in consulting, specialisation and understanding global business practices and strategies are considered crucial. We go out into the niche market, examining our strengths first. We go where the action is, only then we know we can adequately service our clients and make money doing it.” One area where ‘niche’ consulting is becoming the global trend is in “Forensic Accounting and Auditing’ But the major question facing the Indian accountancy profession is: Are we ready to plunge to where the challenging action is?

Forensic Accounting In India:
It is in an infancy state in India.It is still an untrodden area in India.But due to ever increasing cases of bank & cyber-frauds its growing importance cannot be denied.
One immediate landmark creation is “Forensic Research Foundation”.They provide support for investigation of fraud.They publish one bi-monthly journal named as “White Crimes”.It relates to forensic and economic crimes. Another international organization named as KPNG has set up investigation detection centre in India.. Networks Limited, a Delhi based organization, working in the similar field, they are also trying to innovate ways and means to detect financial irregularities and crimes in India.Serious Investigation Fraud Offices(SIFO), has been established in India for the same reason, i.e. detection and prevention of economic irregularities and crimes. The need for such bodies and the importance of Forensic Accountants have been highlighted by L.N.Roy Committee.Lenin Parekh Committee has also expressed the view that one “fraud detection committee”need to be established. The main aim of such boards should be to prevent the interest of the stakeholders.

Conclusion:
Forensic accounting in India has come to limelight only recently due to rapid increase in white-collar crimes and the belief that our law enforcement agencies do not have sufficient expertise or the time needed to uncover frauds. A large global accounting firm believes the market is sufficiently large to support an independent unit devoted strictly to ‘forensic’ accounting. All of the larger accounting firms, as well as, many medium-sized and boutique firms have recently created forensic accounting departments.

Forensic accounting, in fact, integrates accounting, auditing, and investigative skills to conduct an examination into a company’s financial statements. Broad-based knowledge (within the themes listed above) is crucial to the success of entry-level forensic accountants. Because forensic accounting is relatively a new area of study, a series of working definitions and sharing of corporate experiences should be undertaken and encouraged to ensure a common understanding. Indeed, there is great future in forensic accounting as a separate”niche” consulting.

While the forensic accounting and auditing practice had commenced in the US as early as ’1995, the seed of this specialisation has yet to take off in India. Forensic accountants are only dealing with financial implications of the cases entrusted to them and not engaging in auditing exercise. On account of global competition, the accounting profession must convince the marketplace that it has the “best-equipped” professionals to perform such services.

Forensic accountants are also increasingly playing more ‘proactive’ risk reduction roles by designing and performing extended procedures as part of the statutory audit, acting as advisors to audit committees, and assisting in investment analyst research.

While majority of CAs have excellent analytical skills, they need to acknowledge that ‘forensic’ services require ‘specialised’ training as well as real-life ‘practical’ corporate experience.
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References: –
1)Journal Of Forensic Accounting: Editor-In Chief: Crumbley D. Larry, Publisher: Inc.Edwards. R.T.
2)Journal Of The Chartered Accountant 2007, Pages: 1000-1010.Dr. Madan Bhasin, The Author is Head, Accounting Department, Mazoon College, Muscat, Sultanate Of Oman.
3)Referential Notes Of Prof. Dutta Kr. Uttam, Reader Deaprtment Of Commerce, Reader, University Of Burdwan.
4)Website access: http://www.wikipedia.com, accessed on 4th, February, 2008.

A New Domestic Accounting Model based on Domestic Well-Being

Summary of Rationale and Technical Introduction

Other articles on Domestic Well-Being Accounting (DWBA) have hinted about the new ideas upon which this new domestic accounting model is based. In this article, the rationale, ideas and concepts are summarised, based on the coverage in a new book ‘Accounting for a Better Life’.

Accounts

At its simplest, an account is just a list of transactions relating to some area of financial activity or interest. The most familiar form of account is the bank statement that customers periodically receive from their bank.

The first important thing to appreciate is that accounts are for accumulating information about value. We are so used to bank and credit card accounts which are all about currency that people sometimes do not realise that accounts are equally useful for accumulating transaction details relating to, for example, our home, our car(s) – one account for each car – our investments, etc.

Accounts will usually have two columns, one for increasing (+) amounts and the other for decreasing (-) amounts.

The next important concept is to appreciate that there are two distinct, overarching types of accounts that we can use in our sets or books of accounts. One is called an asset account and the other is a liability account.

The asset type account as its name infers, typically relates to storing transactions for assets such as bank accounts, houses, cars, etc. The idea behind this is that positive amounts entered into the + column of an asset account signify increasing value; so £500 entered into the + column of an asset account implies an increase in value of £500. However accountants will also have in their business accounts, what I call working accounts for home accounting, as other accounts of the asset type which are not strictly for an asset such as a car or home. Examples include accounts for asset acquisitions and for depreciation.

That other overall type of account is a liability account. It is used for accumulating debts and/or liability. Now we have the reverse concept in that increasing amounts e.g. £300 in the + column of these types of accounts imply more debt or more liability, whilst a decrease of £200 represents less of a debt. You might think more debt means less value but it all depends on the purpose for which a liability account is being used. Again, accountants mostly use liability type accounts for holding true debt amounts but again, have a need for other accounts of the liability type to mediate certain transactions. I refer to these as working accounts in home accounting as they do not relate to any true debts of a person or household; examples of these are for accumulating temporary information about asset acquisitions and growth in the value of a home.

Another area for confusion here relates to the names for column headings used in the different software packages available to support accounting; in business, the convention is that debits (the + column for asset accounts and the – column for liability accounts) are traditionally in the left-hand column of each account, with the credits on the right (the – column of asset accounts and the + column of liability accounts). This convention is not always adhered to in some software packages, together with not always using the headings, debit and credit.

Double Entry and the Accounting Equation

The last bit of theory to mention which lies at the heart of DWBA accounting is so-called, double entry. This concept appears confusing to people because it has two aspects. First, it is an accounting concept which relates to an approach for taking into account (there’s an appropriate phrase!) all the financial aspects of some financial entity. In business, an entity might be a department or a division, a sole-trader or even a whole plc. For domestic accounting, such an entity would most often be an individual or a household. The point is that the accounts supporting any of these entities consider or model the totality of the financial aspects of the entity. As such, the accounts will be able to capture and make visible both the static and dynamic aspects of the entity finances. The practical effect is that a set of double entry accounts (the books) requires an account to store the total financial value of the entity as well as usually, some accounts for accumulating periodic changes in terms of increases and decreases to this overall value. The result is what is termed a balanced set of accounts, related to an accounting equation.

The other common use of the word double entry is related to the bookkeeping techniques for implementing this form of accounting which requires two (double) entries in the accounts for each new transaction, in order to maintain the required balance.

What do we mean by balance? Well balance is the key to double entry and it comes from balances in accounts, as maybe related in some way in this equation; the so called accounting equation.

If we consider a household, it might consist of a collection of assets – a home, a car, three investments and a consolidated bunch of unspecified appliances. We could set up 6 accounts to represent all these assets and assuming there were no liabilities of the personal debt sort – an unlikely assumption – we could say that our domestic wealth equals the sum of the balances of those 6 asset accounts. Here is a statement, which is not yet a true equation:

The sum of all Asset a/c balances = our Domestic Wealth

Now if we had some debts, perhaps a mortgage on the house and a loan for the car, we could set up two more accounts (of the liability type) to hold these two debt amounts.

Since we owe two amounts for these debts to some financial organisations, we have to earmark the appropriate amounts to be repaid from the value of our assets, in order to derive the changed new value of our domestic wealth, so we can show this in another statement:

All Asset a/c balances – All Liability a/c balances (of the debt type) = our Domestic Wealth

The crucial point about the double entry system is that we need to setup an additional account in order to store the amount of our changing domestic worth. I call it a Domestic Wealth account.

Now, instead of a statement, we have an equation which is balanced:

All Asset a/c bals – All Liability a/c bals (of the debt type) = Domestic Wealth a/c bal

The next issue is what type of account do we need to hold the domestic wealth – asset or liability?

When you think about it, the amount of the domestic wealth represented by the assets less the debts is owed to the eventual beneficiaries of the household or individual’s estate. It should therefore logically, reside in a liability account.

Now we can tidy the equation up by putting all the asset type accounts on one side with all the liability type accounts on the other; the result is with appropriate changes to the signs:

All Asset a/c balances = All liability (debt) balances + the Liability (DW) a/c balance

Let’s imagine a situation where an individual starts up with £20,000 in a bank. For that individual to establish a double entry accounting system, we need an asset account for the bank account and since there are no debts, just a domestic wealth account; a double entry is required for the initial transaction, with £20,000 debited to the asset account for the bank and the same amount credited to the liability account for domestic wealth. In the accounting equation, we can see the result as:

Asset a/c bals £20,000 = All liability (debt) bals 0 + Liability (DW) a/c bal £20,000

Let’s see how we handle buying a car with a loan of £2,000. By breaking it down into steps, we first consider receiving a loan – so receive (debit) bank with £2,000 and setup a new liability type account for the loan company and credit it with the same £2,000 – with this effect in the equation:

Asset a/c bals £22,000 = All liability (debt) bals £2,000 + Liability (DW) a/c bal £20,000

Still balanced at £22,000 on each side!

Now we buy the car for £7,000 using the £2,000 from the loan and the extra £5,000 from the bank assets. We also need to setup a car account to receive the value of the purchased car. The end result from the equation perspective is still a balanced equation:

Asset a/c bals £22,000 = All liability (debt) bals £2,000 + Liability (DW) a/c bal £20,000

The asset a/cs are now made up of Bank (£22,000 – £7,000) and car a/c £7,000 with no change in overall value on the asset side but a distribution in values across the asset accounts.

Another thought about double entry is that any single entry made to a balanced equation (set of balanced accounts) must unbalance it! The only way to retain balance is, from the maths perspective, if we add something to an account on one side then we must add the same amount to an account on the other side; or if we add something to an account on one side we must reduce by the same amount, in an account somewhere else on the same side. This in effect, if you work it out, is what the accounting rule says in that a debit posting must be balanced with a credit posting.

As we buy food, drink and clothing, pay utility bills and purchase holidays, we will see reductions or credit in our asset account for bank or, if we pay by credit card, equivalent credit entries to increase our debts in the liability type account for each credit card. These are termed expenses and will lead to an equivalent decrease in our domestic wealth. It should be obvious that if we post credits as the first part of each expense transaction, we will need corresponding debit entries to balance them. Increasing debits imply an asset type account so that will be the sort of account that we need for these increases. By the same logic, income such as salary or pension will be first entered as increases or debit entries in our bank account and must be balanced by credit entries in a new account for domestic increases – increases that are credit entries occur in liability type accounts so this is the sort of new account we need to setup for accumulating changes for increases to domestic wealth.

Non Double Entry Accounting

Traditionally, accounting for personal and home use has not made use of the principles of double entry; and the software packages that support home accounting are not usually geared up to properly support it. The reason is partly because when people ventured into home accounting, they tended to start with activities such as reconciliation of checking accounts and simple budgeting. For this, they tended to only require setting up accounts for one or two areas, mainly related to bank accounts. With this, as useful as it is, there is no concept of seeing the total picture, with the static and dynamic views of the financial state of affairs.

Business versus Domestic Accounting

When I first decided to start ‘doing’ my own home accounts many years ago, I believed that since business accounting had evolved over such a long time to be able to so successfully satisfy business managers’ needs to manage business finances (and there was a legal requirement for them to do so) there must be something special in business accounting that I could look for, to be able to help people better manage their personal and home finances. As described elsewhere, I discovered that business accounting methods themselves were of little help because of the wrong focus (profits for capital gain) and that the actual accounts, reports and associated business ratios were also, understandably, entirely inappropriate.

In thinking about alternatives, I realised there were some features that could be extracted from business and with modification, be used effectively to help manage home finances.

Reports

With the double entry system we can obtain a static view or ‘snapshot’ of the state of the finances of a business and this is called a Balance Sheet. This shows the assets, liabilities and capital value on any particular day.

Most of the entries in the business Balance Sheet come from balances in the accounts which can be easily extracted from a Trial Balance which is simply a list of all the balances for all the accounts in our books.

The structure and contents of the Domestic Balance Sheet (DBS) highlight the major components of the domestic assets and liabilities in order to derive the new value of Domestic Wealth. Rather like the net profits being brought into a business balance sheet, the domestic version shows the Total Domestic Change (TDC) as the contribution to Domestic Wealth over the past period.

Now, the important issue is what does the TDC consist of? We probably know that the business equivalent of profit or loss is exposed in the two accounts – the Trading account and Profit & Loss account. These two accounts highlight the dynamics of the financial situation; the changes over some period.

For business, the focus is on profits and so these accounts concentrates first, on the higher level aspects of the business with opening stock, the purchases made to augment this stock and the closing stock value.

The next account called the Profit & Loss account shows the impact of other increases and decreases which usually reduce the gross profit to some lower value, called the net profit.

The individual accounts required by business have no place in home finances as we are not primarily interested in profit.

The new Focus – Domestic Well-Being

What should the financial focus be for a home finances? Well I gave much thought to this and over some years and developed a new focus with an associated approach and methods, based on what I eventually termed, Domestic Well-Being.

In short, yes, homesteaders do want to increase their worth or value, but not usually for ‘profits sake’. People want to increase their wealth to pay for things that tend to occur in a progression throughout a lifetime; like better homes, education perhaps, hobbies, luxuries and provision for those retirement and eventually, declining years when income is drastically reduced.

In general, home finances in the earlier years of a lifetime are such that there is never enough to go round. Everything is a question of priorities and balance. What should be the best distribution of our expenditure to ensure that we can obtain the best possible balance or compromise, with the income at our disposal?

My solution was to come up with a structure that best presented the major areas of domestic finances about which decisions could be made on how best to allocate funds – those alternatives and their prioritisation. So I needed a way that could be used to classify increases and decreases as and when they occurred, as well as for presenting the figures in an appropriate way after they had been accumulated. This presentation had to support the decision making that would be needed to best optimise future spending. It had to be done in a way that could achieve this best balance across the competing priorities so as to maximise Domestic Well-Being. It was therefore DWB that became the new focus for domestic accounting; and it could be identified in terms of a structure for both bookkeeping – capturing the transactions; and accounting – reporting, analysing and the subsequent decision making for future financial activity, implemented perhaps through budgeting.

The Domestic Well-Being Statement

The Domestic Well-Being Statement (DWBS) is the domestic version of the Trading account and the Profit & Loss account and is used to present the derivation of the Total Domestic Change (TDC) over some period. It represents the second of my adopted features from business accounting.

This report simply shows the structure for DWB and is obtained in Microsoft Money with one click to run a pre-stored report. The edited version combines the details for the current and previous years to assist with comparisons.

In summary, the report shows the three top-level Categories of the structure as the Basics, Discretionary and Others groups of transactions, each divided into Increases and Decreases. These categories might be considered as similar to business accounting nominal codes.

Within these groups there are successively lower level groups of sub and sub-sub categories. For example, the Basics included Essentials, Responsibilities and Family, each with further sub-categories below.

The Discretionary group, where obviously there is some amount of discretion or choice as to whether decreases and increases occur in its component sub-categories, includes Nice-to-Have, Investment for the Future (IFF) and Luxuries.

What amazed me when it was first developed was the fantastic visibility it provided on the home finances, especially showing the distribution and makeup of the many expense items.

Financial Ratios

The third feature that I adopted from business accounting is the use made of financial ratios.

You will appreciate that a ratio is simply a comparison of two figures expressed as a quotient, usually in decimal or percentage format. In business over time, certain key quantities and their comparison in the form of ratios have taken prominence as a key to both information dissemination (for shareholders, investors, management boards, auditors etc.) and to various levels of management as a basis for control. Those two components of a ratio, the numerator and denominator, can both be considered as candidates for achieving change.

Over 30 business ratios slim down to few that most people have heard of, such as the different forms of margins and the ratios associated with profitability and liquidity; and of course virtually none of them relate to home finances!

From my experience, I knew that the figures I had exposed for domestic finances must have some potential for assisting in the management and control of home finances. The issue was which figures and in particular, which groupings of pairs of figures as ratios might be informative.

The Stages of Domestic, Financial Life

My other experience was with life; now 68, I realised looking back on my lifetime of interest in home finances, I could distinguish six fairly distinct stages of financial life. By this, I mean that there was a significant enough change in some aspect of personal finances across the stages that might warrant some form of indicator or measurement being useful. For your interest, I call these stages:

Early Adulthood

Early Maturity

Middle Life

Retirement

Declining Years

I have defined five primary factors and a number of secondary factors for domestic finances, changes in which I believe, have a correlation with those stages of financial life and could be useful as a basis for comparison and more detailed analysis.

The Domestic Financial Factors

Briefly, the more important ratios over some period are (where the abbreviations relate to figures in the DWBS):

Basic Cost of Living Factor (BDD/THI) – a measure of the amount spent on basic necessities, out of total household increase.

Well-Being Contribution Factor (DDD/THI) – a measure of the amount spent on discretionary extras, out of total household increase.

Future Affordability Factor (IFF/TDI) – a measure of financial commitment to future well-being, out of total domestic increase.

Feel Good Factor (IFF/DDD) – a measure of how much went on future well-being, out of total discretionary decrease.

Domestic Wealth Factor (TDC/ODW) – for positive TDC the domplus, or for negative TDC the domicit, contributing to growing or diminishing domestic wealth respectively, as a proportion of old domestic wealth. This is the nearest comparison to business profit or loss.

To start with, lacking any reservoir of accumulated figures, the value of these ratios or factors as I call them for home use, will only be of use internally in a household over time, as a means of measuring and looking for changes. With a base of figures, then there would be the possibility of comparison with others and the similarity to business norms.

Value for these five factors give ‘shape’ to a financial situation and if displayed in the format of a star or radar diagram, could also offer useful indicators that could help to predict problem areas or states of stability or instability about a set of finances.

With an accumulation of values for the domestic factors, either by simulation or by capture after creation by individual home owners, it would become feasible to create and provide further useful charts. With such information, the home owner would be able to determine if the individual figures from the accounts appeared to lie within the expected domestic norms.

Other Graphics

A picture speaks a thousand words. This is no truer than when considering displays of financial information. Such graphical charts are the fourth set of business features of the sort of products that can easily be created with general purpose accounting software packages such as MS Money, especially if double entry accounting is used.

Financial Control

For home finances, control is both feasible and realisable and is only limited by the extent to which homesteaders wish to go. It all comes back to a need for a sense of responsibility.

The analysis should first look at distribution and balance. Are the proportions being spent on the Basics a fair amount compared to the total increases?

The information obtained from your end-year results should reveal some fundamental facts. Have you been able to afford anything over and above the basics? If yes, did the amounts enable a reasonable allocation to discretionary decreases; and what about luxuries?

Your accounts and this new set of accounting methods will give you the data and information to enable you to pick up warnings.

What sort of warnings might you want? In today’s climate of a financial debt crisis, probably the most important warning you would look for is one relating to the likelihood of such a pending crisis for you. You would want to know if your decreases are getting too close to your increases, or even exceeding them. You would want to know if your reserves are being depleted, possibly on funding that excess of decreases over increases. You should be looking to see the amount of short-term and long-term liabilities you have; and how their proportions compare to the total value of assets. You would want to know about your liquidity; how well you are able to realise funds in the short term to meet your known commitments. You obviously do not want to sell your house or car just to pay the bills.

On a less dramatic but more important note, you need to know about the proportion of contributions being made to future well-being; and if positive, does the amount being put aside represent a reasonable proportion of your increases?

Conclusion from Adapting Business Accounting Concepts

In order to implement the features I have extracted from business accounting, I needed to be able to use the concepts of double entry.

Simplification

In undertaking home accounting with double entry, the main difficulties related to knowing where I was in relation to individual accounts and the entering of transactions. By this, I mean that when looking at a single account register on the computer screen, it never appeared obvious to me what sort of account I was looking at and into which column of the account, the next posting should be made.

Over time, I realised that the key to understanding the answers to this dilemma lay with the accounting equation. I needed a way to always be able to associate any account with its place in the accounting equation – asset or liability – and to which account it should be associated in order to achieve double entry balance.

Like many amateur accountants I often had problems with reconciling the concept of debts in accounts for mortgages and loans, with a so-called liability related to an amount in a capital or domestic wealth account. To me, domestic wealth was a ‘good’ liability – more was better – whilst the mortgage and loans were ‘bad’ liabilities or debts that had to be repaid; and more was not better, but worse! I resolved this by considering all the accounts that were associated with domestic liability as quasi-liabilities – good liabilities; the amounts or the balances of liability held in these accounts, I considered as ‘good’ liabilities. They were given the letter Q in the appropriate prefixes.

There are a total of four accounts that fell into this quasi group which consisted of the Domestic Wealth account (LQ DW), the Domestic Changes account (LQ DC), the Categorised Increases account (LQ Cat Inc) and the Categorised Decreases account (AQ Cat Dec).

The majority of the changes to domestic wealth over any period come from the decreases associated with expenses such as food, drink, clothes, utilities, holidays etc – virtually all of the Basics and Discretionary decreases. These also end up in the LQ DW account via the LQ DC account but because of the way I handle most of the double entry postings, they arrive via those two quasi accounts for Categorised Increases and Decreases.

Implementation

I initially chose one of the earliest versions of a generalised accounting software packages called MS Money. Being generalised, it provided the capability to create accounts as needed, with any name you chose.

It also had good integrated query and reporting capabilities, together with the concepts of payees, categorisation tags and support for budgets as well as for stocks and shares.

In thinking about the implementation of double entry, MS Money was not designed primarily for double entry. If it was, it would have some journal-like arrangement similar to dedicated double entry accounting software, whereby each transaction is associated in some way with the two accounts involved in the double entry. Then, via a key-click or later batch updating, the two individual postings would be made to the appropriate two accounts.

This does not mean to say however that this software package cannot be used for double entry postings. All it requires is that after adding the necessary extra accounts, that two entries are posted for each transaction entered.

One form of categorisation available in MS Money is its Income and Expense tags. Money comes pre-loaded with tags associated with home finances so that for example, with a simple account (non-double entry system) for reconciliation with bank statements, each transaction could be associated with an appropriate tag, such as wages, food, etc.

Income and Expense are the terms used in MS Money to relate to the accounting terms of debit and credit; Perhaps trying to be helpful to home accountants, MS Money has differing column headings for the increases and decreases across all the various types of accounts that can be created.

In trying to find a way to implement the tagging I needed to associate transactions with the DWB structure, as well as achieve double entry to support the concepts of static and dynamic reporting, I came up with a method that achieved both; without the need to enter transactions with hundreds of double postings.

The 1st halves of the appropriately, categorised double entries accumulate in the accounts where they were entered, mostly bank or credit accounts but that is unimportant. At the end-of-period by running a single report, the sum of the amounts of the 1st half entries can be easily exposed, contributing separately to increases and decreases to domestic change. By then entering just two more postings, one for the total of the 1st half increases and another for the total of the 1st half decreases, balance is re-established.

Summary of the Approach

The main features that I have adopted from business accounting are the ability to create balance sheets for static views, to capture the financial changes over a period for the dynamic aspect, to define ratios/factors as a comparison of useful and significant figures from the balance sheet and the changes, as well as the use of graphical reports to enhance visibility and meaning.

As a thought about setting up your own DWB accounting, my book describes the background and theory, together with the details and prototypes for accounts, categories, reports and graphics on a bonus CD, for implementing the accounts on MS Money.

Regarding implementation on dedicated double entry accounting software packages, I have not yet discovered any that are sufficiently general-purpose to enable the creation of accounts of your own choosing, together with your own details of categorisation.

As a final thought on simplification, life in the accounting world can be made much easier for domestic accountants, if the terminology is simplified as much as possible. It will be important not to remove too much of the distinction between some of the technical words but I have found that I have made life much easier for myself, by simplifying, wherever possible.

An understanding of one idea – double entry – and the following, six key words, will get you through with flying colours: asset, liability, debit, income, credit and expense; and my version of the domestic accounting equation, account prefixes and a couple of ‘memory joggers’, will tie all these features together.

Also, take a look at the author’s website on Domestic Well-Being Accounting, together with sample products and a growing list of tutorials at www.dwba.co.uk; the full rationale and technical introduction with supporting charts and graphics is at:

http://www.dwba.co.uk/pages/DWBA_Technical_Introduction.htm

Importance of Forensic Accounting in Countries of Business Opacity: A Means to End Fraud

Introduction

When hearing about Enron, Conrad Black, Kimberly Rogers or WorldCom, one will definitely think about theft, bribery and fraud. The key word here is “fraud”; where many studies have been conducted about this subject. What is fraud and how is it detected and dealt with, and how is it possible to be protected from it? Such questions and their answers are key terms in the domain of forensic accounting, since fraud has played a major role in the existence of accounting, hence forensic accounting. Understanding fraud is necessary for those who want to understand what Forensic Accounting is, how it has come into the system, how it exactly deals with the issues we face, and to what degree it has helped in certain issues of fraud, or even in strengthening the accounting system in general (Economist Intelligence Unit, 2007).

Research has been conducted on fraud and has been given different definitions, all which come in line with one another. Other researches were done to highlight the job of internal controls in minimizing the chance of theft or misappropriation. However, little research was done on forensic accounting diffusion and proper implementation.

Fraud activities have been manipulating, stealing, and destroying many businesses and industries. To face such harmful trends, fraud examination has been created; and great efforts have been exerted to detect, investigate, and prevent similar acts from encountering. These preventions have shed lights on a new concept and practice known as “Forensic Accounting (FA)”, which has become a common notion to fight against fraud and similar unethical acts. No matter how much fraud activities increase, there must always be an anti-fraud scheme to shield against it. To provide availability of balance and protection is the main reason why FA existed.

Nonetheless, the legal, supervisory, and regulatory systems of financially corrupted countries create significant opportunities and tools for the laundering and protection of the proceeds of crime, and allow criminals who make use of those systems to significantly increase their chances to evade effective investigation or punishment. A country’s commitment to bank secrecy and the absence of certain key supervisory and enforcement mechanisms aimed at preventing and detecting money-laundering increase the possibility that transactions involving the country’s entities and accounts will be used for illegal purposes.

Since one of the most powerful tools used today is forensic accounting, it is advantageous to study its possible implementation in countries with business opacity, and to probe the essential methods needed to establish the implementation of this procedure in different sectors and at many levels. Therefore, in order to achieve these objectives, there is a need to investigate the following research question: “What are the conditions of possibility for implementing FA in a country characterized by an opaque financial sector?” More specifically, this research has two objectives:

1. To identify the best way to highlight the importance of using forensic accounting activity in order to clear the roads of the future of business activities; by learning from past mistakes such as Enron and WorldCom and by using other cases of financial fraud similar to the international ones.

2. To identify the way to diffuse and implement forensic accounting as a vital tool that, when used professionally, can greatly help fight against fraud activity.

Moreover, the gap is that forensic accounting is not known in many countries. FA is not so much spread in the world, it is only known in USA and some developed nations. The study is contributed in finding the best way to implement FA especially with the existing gap, with the objective of covering it mainly because it is so hard to implement forensic accounting especially that it is not diffused worldwide. The objective is to arrive at an answer to the research question and to show how forensic accounting can be implemented in the countries characterized by an opaque financial sector; the overall aim is to achieve this goal.

Literature Review

Different research has been conducted to define fraud including the types of fraud such as that of Gilbert (1997, p. 124) who defined “fraud” as: “an act using deceit such as intentional distortion of the truth of misrepresentation or concealment of a material fact to gain an unfair advantage over another in order to secure something of value or deprive another of a right. Fraud is grounds for setting aside a transaction at the option of the party prejudiced by it or for recovery of damages.”

Farrell & Healy (2000) revealed about fraud that is increasing worldwide and is becoming more costly to businesses every year as fraudsters use intricate methods to commit and cover their criminal acts. Consequences of fraud can vary from public morality corrosion, weakened faith in the organization, to loss in market valuation and confidence of stakeholders.

With the various definitions attributed to fraud, other research done highlighted the importance of having internal control that would limit the continuous fraudulent behaviors. External audits are also undertaken to ensure that internally instituted fraud control mechanisms are adequate in scope, effective in application and complied with. However, it is quite unfortunate to note that the complexity of the human brain and its dynamic method of reasoning have tremendously diversified present-day scams away from the hitherto known modes of fraudulent activities that now render true corporate governance ideals almost unworkable.

It is thus worth mentioning that in an attempt to prevent fraud, the Auditing Standard Board (ASB) in 2002 issued the Statements of Auditing Standard 99 (SAS 99) which introduced a “Fraud Triangle”. Fraud Triangle indicates that the probability of committing fraud is high in situations when managements or other employees have incentive or are under financial pressure, the conditions that provide opportunities for management or employees to commit fraud exists, or the ethical values or characteristics that cause management or employees to rationalize the fraudulent act exists (Maranjan, 2010).

Fraud can be detected and investigated to prevent the possible damages the activity can cause. So what advice would a forensic accountant give to a company suffering from fraud activity? A professional can list four things that can be done to mitigate the occurrence of fraud and they include fraud prevention, fraud detection, fraud investigation and follow-up legal action or resolution. The anti-fraud program of any company should focus on all four.

The past two decades have witnessed significant changes in the business environment including globalization, technological advances and now with reported high-profile financial scandals, ways to improve public trust and investor confidence in financial reports. Emerging regulatory, social, economic, ethical, and legal challenges facing the world of businesses contribute to an increasing demand for FA that encourages accounting.

A study done in October 2003 assures that the demand for an interest in FA will continue to increase in the future and more accounting programs are being planned to provide FA education, The business community and the accounting profession are deeply concerned with reported financial and accounting scandals. However, few to none research were conducted to study the proper diffusion and implementation of forensic accounting in the countries of opaque business practices.

Research Framework

Many factors in a country’s business mechanism contribute to the fraudulent behavior in the financial sectors. For instance, being considered as a tax haven country with banking secrecy regulations, money laundry activities and low corporate governance, fraudulent activities become easy to commit. All of this results in a national wide corruption triggering the need to introduce FA. However, due to the opaque financial nature of the country and prior to the introduction of FA, major changes has to be done to prepare the country for the diffusion and implementation of FA on both the macro and micro levels discussed earlier.

The causes for corruption of which several exist in most corrupted countries as it was previously noted, are attributed to the absence of dysfunctional key anti-corruption institutions, the lack of awareness on corruption, its causes, consequences and the weak legal framework and the absence of proper legal implementation mechanisms. Adding to these are the confessional and feudal mentalities, inefficiency of supervisory bodies, low salaries of public sector employees, political influences on the judiciary, the absence of civic education, foreign interference in domestic affairs, selective or lenient enforcement of the law, and the inefficient media. In other words, the factors contributing to the fraudulent business practices can be categorized under four notion; culture, education, management and government and legislation. Whether it is the lack of awareness regarding FA (culture and education) and the advantages it can bring, corrupt practices of management and the inefficiency of supervisory board or absence of a law that enforces FA (government and legislation), the four categories should be tackled to put an end to the continuous fraudulent acts.

For instance, the lack of whistle-blower protection laws prevented citizens from reporting on political corruption in the legislature or other sections of government. In the private and public sectors, the lack of an access to information law, a whistle-blowers’ protection law, conflict of interest law and other disclosure and transparency mechanisms is a major obstacle to integrity.

Results and Discussion

The literature review explained the different meaning of fraud, forensic accounting, and the characteristics of an opaque business country and how can FA help in limiting fraudulent behavior that is making it easy for money launderers to continue their illegitimate practices. Furthermore, FA can serve as a liberator for countries with opaque business practices such Luxembourg, Austria, Lebanon and many others, putting an end to all the business corruption taking place at the different sectors of the country, be it government or any other private or public sector. However, to reap the best results of FA, a proper diffusion and implementation process must take place that requires the work of the parties in a country, be it government itself, people’s view and awareness of FA on the cultural basis, the companies that must require from its employees to be aware of FA and to employ forensic accountants as well and universities and other academic institutions that bear on its ability to teach FA.

Countries with opaque business practices tend to share similar characteristics that justify the prevalence of fraudulent activities. As it was mentioned earlier, the factors that contribute to the fraudulent behavior in the financial sector can be categorized under four categories; culture, government and legislation (macro-level), management, and education (micro-level).

The importance of adopting forensic accounting is thus highlighted, however, the process of introduction is not an on the spot process. On the contrary, it requires time and effort in terms of shifting cultural awareness to realize the importance of FA. That being said, the government as a primary facilitator and the educational systems should take part in creating awareness and shifting cultural mentality towards FA. Managements must also educate employees on FA and to adopt it as part of its system.

A. Forensic Accounting in Culture

Koh et al., (2009) conducted a study to examine the acceptance level of the public in Malaysia regarding forensic accounting. The study revealed that problems arise from the fact that FA service is still new to most of the businesses and even to the public in Malaysia. This leads to confusion among the public and some may even be unaware of the existence of the system. Therefore, the importance of the service is disregarded (goes unnoticed).

Two variables affect the acceptance levels of the public for the practice of forensic accounting as the main tool in investigating a company’s account to detect fraud. The variables include the public’s understanding level on forensic accounting functions and the perception regarding the implementation of forensic accounting in the investigation. The understanding level of the public and the functioning of forensic accounting will determine whether the public in Malaysia will accept it as the main tool in investigating a company’s account in case of fraud. The perception of the public on the implementation of forensic accounting in the investigation of a company’s financial statement also determines the acceptance level of forensic accounting in the country.

This study shows the importance of two basic components that should be available to create a ground for forensic accounting implementation; these elements are awareness and knowledge of forensic accounting as an anti-fraud tool and the perception of implementing forensic accounting, whereby these two elements are considered as major factors for the level of acceptance of such tool.

In other words, if a change is made in cultures of financially corrupted and opaque business practices, it will result in changes in the people’s practices, norms, and values, hence their behaviors; at the end, it will create an awareness and knowledge about fraud and how to fight it and the tools that could be used to inhibit it. In addition, this process similarly applies to forensic accounting.

B. Forensic Accounting in Education:

Although there is a growing demand for fraud and forensic accounting globally, much of its advancement and adoption in the accounting curriculum in the universities are taking place in the developed economies. The adoption of forensic accounting into the universities accounting curriculum has a huge potential to enhance students’ skills and competencies and could be used as a veritable resource from which fraud could be mitigated.

Many cases reveal that those who commit fraud are not necessarily geniuses or have a creative mind. They are typical accountants who copy fraud schemes from the past. Therefore, the importance of the programs for fraud prevention/detection education and training is emphasized, and the question is raised about whether the business school at universities offers enough programs to educate accounting and auditing professionals for fraud prevention/detection.

Forensic Accounting is not only restricted to university programs, there is also a specialized certificate that is concerned with forensic accounting, which is the Diploma in Investigative & Forensic Accounting (DIFA) program. DIFA is designed to provide a broad range of knowledge and skills to carry out financial investigations. This range includes accounting, audit, income tax knowledge, fraud knowledge, knowledge of law and rules of evidence, an investigative mentality and critical skepticism, understanding of psychology and motivation, and strong communication skills.

The DIFA program focuses on knowledge and skills that can be best taught and examined in person: such as handling a face-to-face meeting with a client, interviewing skills, and testifying in court as an expert witness.

In conclusion, the base of forensic accounting is a knowledge in accounting, auditing, internal controls, risk assessment and fraud detection, a basic understanding of the legal environment since the legal environment is essential in order to support the litigation, acknowledging their competence, obtaining a diploma specialized in forensic accounting which could be given by educational institutions that grant certifications such as DIFA. These formal certificates can deepen the students’ knowledge and sharpen their skills in forensic accounting.

C. Forensic Accounting in Management:

Poor corporate governance will lead a certain individual or a group of people with the same interest to act upon it to commit fraudulent activities in the company. This can be reinforced by the fact that top-level management should follow the policies of the firm, which will help the company to perform better.

Even if a company applies good internal control systems, the management will still be the major factor influencing the implementation. Companies should look towards new approaches rather than follow the traditional approach, as forensic accounting may be the next best alternative in resolving problems.

Loebbecke and Willingham (1998) conclude that the probability of material financial misstatements due to fraud is a function of three factors. The factors include the degree to which those in authority in an entity have reason to commit management fraud, the degree to which conditions allow managerial fraud to be committed, and the extent to which those in authority have comply to ethical values that would facilitate fraud commitment. These three factors show that the management could simply commit fraudulent activities since the public including shareholders are unaware of the countermeasure to be taken to prevent financial crimes. It argues that there should be a set of guidelines created for the public and management to ensure that actions should be taken when financial fraudulent activities occur.

The main problem or issue is the constant misunderstanding of the role and responsibility of the auditor as the public expects auditors to detect financial asset misstatement or even fraudulent activities from the financial statements. This has been the long perception of what an auditor’s responsibilities are. Therefore, this perception should be regenerated and corrected. Auditors with forensic accounting background would be allotted as forensic accountants specifically to investigate the company’s financial statement. These people would be responsible for detecting financial misstatements. With the proper education given to the public, this perception of auditors could be enhanced.

D. Forensic Accounting in Government and Legislation:

Forensic accounting has played a major role in the improvement of detection, investigation, and representation of all cases at hand in law courts in judicial formalities.If companies wish to utilize information regarding a fraudulent activity in a court law, they may acquire the skills of forensic accountant because they can handle investigations in a way that is completely acceptable in a court of law.

Forensic accounting is the specialty practice area of accountancy that describes engagements resulting from actual or anticipated disputes or litigation. “Forensic” means “suitable for use in a court of law,” and it is to that standard and potential outcome that forensic accountants generally have to work. Forensic accountants often have to give expert evidence at the eventual trial.

Forensic accounting should be part of criminal investigation, for the matters relating to financial implications where the report of forensic accountants must be considered as evidence and proof to be presented in court trials.

Countries that established forensic accounting in their legal system, have forensic accountants who work with law enforcement and the district attorney’s office. Just as with other types of evidence, the prosecution obtains search warrants to locate financial information and compel knowledgeable people to conduct or hold interviews about the situation in question.

Forensic accountants can also provide litigation support. Attorneys engage the services of forensic accountants to review existing documentation and testimony and explain their financial significance. A forensic accountant can tell the attorney about the additional information needed to prove the case and questions to ask the witnesses. The forensic accountant may also review damaged reports and state whether the report was put together accurately and supports the case.

Government agencies like the FBI, the Internal Revenue Service, and the Bureau of Alcohol, Tobacco and Firearms have forensic accountants to investigate everything from money laundering and identity-theft-related fraud to arson for profit and tax evasion. Law firms often use forensic accountants to help divorcees uncover their exes’ hidden assets.

Conclusion

This article deals with the importance of having an investigative system that would limit the frequent financial frauds and business opacity taking place worldwide. In this context, forensic accounting has been presented as a tool to inhibit the prevailing frauds, money laundry and theft. However, to the reap better results forensic accounting must be properly diffused and implemented with a great emphasis on enhancing public (cultural) awareness, attributing a major role to managements, education and governments/legislation.

For instance, the public may be unaware of the significance of forensic accounting and may lack the needed knowledge for implementing it in investigative matters. Thus, the need to incorporate forensic accounting in the culture of financially corrupted countries in order to create awareness of forensic accounting as an anti-fraud tool and the means of implementing it in the investigation of financial statements. This step can be handled by government and legislation as primary facilitators.

Furthermore, the importance of adopting forensic accounting in the universities’ accounting curriculum is highlighted especially that the demand for it is increasing gradually. Such adoption has a huge potential to enhance students’ skills and competencies and could be used as a veritable resource from which fraud could be mitigated. Fresh graduates can as well attain a diploma in Investigative & Forensic Accounting (DIFA) program that provides a broad range of knowledge and skills to carry out financial investigations.

As for managements, there is a need to develop a proper corporate governance and internal control systems in which those of high authority are held liable and responsible for any fraudulent and unethical misbehavior.

In sum, it is somehow a long process to start incorporating forensic accounting in academic curricula. A first step that needs to be established is creating awareness on ethical issues. As it was discussed, cultural shifts towards the importance of FA is must be maintained, governments, legislation, educational systems as well as managements should share their part in the diffusion and implementation of forensic accounting.

References

Farrell, B. R., & Healy, P. (2000). White Collar Crime: A Profile of the Perpetrator and an Evaluation of the Responsibilities for its Prevention and Detection.

Gilbert (1997), Law Dictionary, Harcourt Brace Legal and Professional Publications.

Kohl A. N., Arokiasamy L., Ah Suat C.L. (2009). Forensic Accounting: Public Acceptance towards Occurrence of Fraud Detection

Loebbecke, J.K, Eining, M.M. Willingham, J.J. (1989). Auditor’s experience with material Irregularities.

Maranjan, S. (2010). The surprising plaque killing retailer profits.

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