With Liberalization, Privatization and Globalization (LPG) making inroads into the financial world, modern accounting appears to be no longer confined to book keeping reflecting merely the statement of financial affairs of an entity. It is actually an instrument of control and a tool for various management functions. Various types of accounting such as cost accounting, management accounting, inflationary accounting, financial accounting, etc., are already in place in the field of accounting. But the one that has gained importance in the recent past is `forensic accounting'. In the financial world, nothing ends but something begins anew, sprung from the seeds planted earlier.
Long
ago, Maurice E Peloubet coined the word `forensic accounting'. The forensic accountant
has to look beyond what the number reveals and grasp the underlying circumstances
with analytical mindset. An accountant's job basically involves intelligence and
the job of forensic accounting is the job of an intelligent accountant. In the
wake of international financial scams associated with big corporate such as Enron,
World Com, Xerox, etc., and the capital market, securities, misuse of financial
out lay in general, the profession of The IUP Journal of Audit Practiced by Chartered Accountants
(CAs) in India has come under severe criticism as they were under microscopic
scrutiny of financial statements or accounting reports' users like government,
public, business sector, vigilance machinery, etc.
The
basic definition of an auditor, as we all know, is "Auditor should be a watchdog
and not the bloodhound". Converse of this is the simple definition of forensic
accounting. Forensic accountant is the bloodhound trying to sniff out fraud and
criminal financial transactions put through and corner documentary evidence. While
the external or statutory auditors look for numbers, the forensic auditors look
beyond the numbers. One needs to dare beyond the routine assignment on accounting,
auditing, inspection, etc. Initially, no assumptions and presumptions can be made
while taking up the job of forensic accounting as that may serve as a screen that
clouds reality. |
