Whether it is stock market fraud or bank fraud or cyber fraud, forensic accounting has become an indispensable tool for investigation. With India being ranked as the 88th most corrupt nation, the need for forensic aacountants become all the more profound.
Forensic Accounting is investigation accounting which involves analysing, testing, inquiring and examining the civil and criminal matters and finally giving an unbiased and true report. Just as forensic investigations and lab reports are needed in the court to solve the murder and dacoit mysteries, similarly forensic accounting plays a key role in tracing the financial frauds and white-collar crimes. However, forensic accounting covers a wide range of operations of which fraud examination is a small part where it is most prevalent.
Sherlock Holmes, the fictional character created by Sir Arthur Conan Doyle is considered the pioneer of forensic accounting. Infact the concept of forensic accounting is not new in India. Kautilya, the first economist and Birbal, one of the nine gems of King Akbar have widely discussed the fraud examination methods.
Apart from the academic qualifications, a keen financial sixth sense, photographic memory and knowledge of human psychology is of utmost importance in making an expert forensic accountant.
While the forensic accounting and auditing practices started in the US as early as 1995, it is yet to come into limelight in India. Collapse of the Enron Corporation and World Trade Centre’s twin towers have given lots of good opportunities to American forensic accountants.
The future seems to be bright for forensic accountants as online financial transactions are on an increase and due to countless cases of investors being duped of their money by various entities. Steps should be taken by government and ICAI to promulgate this niche accounting area thereby creating employment opportunities and fast redressal of crimes and frauds.