Forensic accounting is growing due to fraud and white collar criminal activities. First time, the term forensic accounting was used in 1946 by Maurice E. Peloubet a partner in a New York accounting firm.
After that, Max Laurie stressed the need for forensic accounting, literature and training. As far as cyber crime is concerned, this is also increasing. Therefore, there is need of forensic accounting.
In USA, Enron an energy company faced a major disaster in form of largest bankruptcy. Satyam scam in India creates a big question mark on the creditability and authenticity on certified auditors.
Generally, accountants acts like a watchdog but a forensic accountant must be a bloodhound.
According to George A. Manning, forensic accounting is the science of gathering and presenting financial information in a form that would be accepted by a jurisprudence perpetrators of economic crimes.
Accounting + Auditing+ Investigating Skills = Forensic accounting which focuses on detecting or preventing accounting fraud.
It is used for legal purpose. Everywhere, whether there is stock market fraud, bank fraud or cyber fraud. It is important tool to detect investigate and prevents the frauds.
AICPA– It is the application of accounting principles, theories and discipline to facts or hypothesis at issue in legal dispute and encompasses every branch of accounting knowledge.
SFIO-Serious Fraud Investigation Office.
References: –
- R. Khanna & A. Mehra
- Pal V & L. Wadhwa