Diffusion and Implementation of Forensic Accounting in Countries of Business Opacity


The increasing consciousness of monetary crimes is growing the call for for forensic accountants to help discover illegal monetary pastime by businesses, people, and organized crime jewelry. No matter how a whole lot fraud activities growth, there need to always be an anti-fraud scheme to protect towards it. To offer availability of stability and safety from illegal business acts is the primary cause why Forensic Accounting (FA) exists.

With the urgent want for Forensic Accounting as a device to fight fraud, this article studies its applicability in international locations of opaque business practices, probes the handy means that would help in introducing it to the way of life, and spots the areas wherein it’s miles substantially wished specifically inside the countries of monetary cloudiness and opacity. The results are based totally on quantitative and qualitative research in Lebanon for being perceived as an opaque u . S . A ., sharing the identical characteristics that outline countries with fraudulent monetary behaviour suffering from a excessive degree of economic corruption which include cash laundering, lack of transparency or ok financial disclosures in addition to corruption at the level of management, supervisory boards and even governments amazon accounts for sale.

The consequences of the research display that Forensic Accounting is perceived as a method to triumph over fraudulent behaviour. Most of the respondents either agreed or strongly agreed at the want to contain it if you want to save you fraud and for detection functions as a number one want. However, the respondents considered this to be new in Lebanon with a maximum percent of humans (fifty six.36%) reporting that it wasn’t utilized by Lebanese agencies because of the lack of knowledge, privateness troubles, the nature and kind of agencies (own family agencies and SMEs), lack of steerage concerning the requirements (local or global) that have to be carried out and absence for proper guidelines. Yet respondents confirmed a nice attitude towards the implementation in Lebanon as financially corrupted united states of america. Thus with such an encouraging perception among respondents, the problem remains in the creation and diffusion of Forensic Accounting.

The effects of the research additionally supported the idea of putting a law that mandates all sectors to publish a Forensic Accounting file. The concept of putting a regulation that enforces companies to file this kind of document changed into embraced by most of the people of respondents who additionally taken into consideration that the great approach of introducing this system in a country of opaque enterprise united states of america is through the instructional curriculum thru the graduate applications. DIFA (Diploma in Investigative & Forensic Accounting) as well as the CPA (Certified Public Accountant) have been advocated as the certifications that have to be granted in the corrupted nations as inside the case of Lebanon.

Research Question and Hypotheses

The discussion of the observe consequences are based totally at the research questions that investigated “To what quantity is Forensic Accounting relevant? And how ought to or not it’s added?” In order to answer these questions, there may be a want to pick out if this type of scheme is known at any stages and sectors or if it is used or implemented as a system by means of financially corrupted organizations or governmental institutions.

The counseled hypotheses are analysed and evaluated in line with the findings.

Hypothesis 1: Countries with Opaque Business Practices Need Forensic Accounting as a Tool to Fight Fraud and Corruption.

This take a look at found out that there’s an eagerness to have Forensic Accounting in financially fraudulent countries because of the significant corruptive acts that are dedicated and nonetheless are without any statement and punishment because the fraudster always gets away with it because of the absence the adequate and right device to pick out and discover these acts. Hereby the pressing want to introduce it in international locations with opaque enterprise practices and to create recognition about this method in distinctive fields and sectors mainly within the monetary fields and governmental sectors.

This anti-fraud scheme became seemed as an appropriate device to combat corruption because it has the legal accessibility and strategies wanted to show fraud. An additional point is the high-quality perception towards it and the excessive acceptance to put in force it in financially opaque countries, with a variety of encouragement to apply it in institutions or groups.

Hypothesis 2: Forensic Accounting is Not a Common Practice at Present.

The findings suggest that Forensic Accounting is understood within the nations of commercial enterprise opacity such as Lebanon, via practitioner accountants, educators, and auditing & accounting firms. Despite that the survey and interviews’ effects proved that this practice is known, it isn’t always generally used or practiced via audit corporations because it isn’t frequently requested.

On the academic level, there may be no emphasis on the subject inside the educational systems. FA isn’t given as a direction or as a part of a direction in universities’ curriculum. Moreover, there are no certifications specialized in this area including DIFA, however there are different well-known accounting certifications, together with CPA.

Therefore, what can be concluded is that there are no auditors or accountants, who’re professional in this anti-fraud subject inside the nations where fraudulent enterprise practices succeed. These international locations lack the abilities that could be obtained from the instructional historical past and from the revel in gained from operating on this subject.

The governmental and criminal sectors suffer from a total absence of Forensic Accounting. That being the case, there’s no regulation that imposes its use in fixing economic issues or in comparing economic statements, and there is no regulation that distinguishes the testimony of Forensic accountants from the testimony of every other audit. Forensic accountant in financially corrupted countries has no privilege on the credibility stage inside courts, he/she isn’t used as an professional or reference inner courts.

Hypothesis 3: Different Means to Introduce Forensic Accounting in Countries with Opaque Business Practices

Respondents, as the outcomes display, have been very advantageous concerning introducing Forensic Accounting in countries with opaque commercial enterprise practices and they suggested many approaches to be efficiently finished with a purpose to offer an awesome implementation of this new tool.

The recommended approach concerned many answers and centered unique sectors. It even targeted the mental thing, which became developed with the aid of cultural and social elements, and that can play a major position in making the change to fight corruption and fraud in the financially corrupted international locations.

Results and Discussion

Main adjustments have to be performed to introduce Forensic Accounting in nations with opaque business practices. These modifications have to target four fundamental elements that could make contributions in growing a strong floor and wonderful perception, the strategic plan includes:

I. Cultural & Sociological Changes:

“There Must Be a Change within the Culture of People within the Countries with Opaque Business Practices.”

The consequences of the carried out in-depth interviews showed that many respondents drew interest approximately the truth that the mentality of people within the nations with opaque business practices must be modified on the way to increase the level of attractiveness and therefore increase the commitment in applying Forensic Accounting.

The contributors confused on the significance to regulate the subculture of financially disrupted nations due to the fact they believe that having a person to inspect their internal operations is a violation to their privateness. Besides, they don’t agree with a person out of doors the business enterprise or group to come and scrutinize their financials.

Another problem that exists within the mentality of human beings within the nations with opaque enterprise practices is that the personnel, managers or enterprise proprietors experience unfairly paid and are stolen all the instances by the government. For that reason, they believe that they’ve the proper to steal lower back having the permissible excuse to devote fraud.

These statistics that had been expressed by using the interviewees also are well matched with the findings of previous researches indicating that the cultural and sociological factors offer a solid platform for fraudulent activities, which created an attractiveness for the corruptive acts which might be taken into consideration as norms and justified practices in the societies of financially corrupted countries (Brownsberger, 1983; Adra, 2006; UN, 2001).

II. Changes in Educational Systems:

“Forensic Accounting Should Be Introduced inside the Educational Sector.”

Almost all respondents conferred a excessive diploma of importance for introducing Forensic Accounting within the educational area in financially corrupted countries. Almost all respondents believed that it have to gain knowledge of in universities as a path or a graduate important or as case studies in an audit related path. Suggestions additionally included considering it as a uniqueness in academic institutions that furnish CPA or any other certifications associated with auditing or accounting.

Respondents and interviewees also cautioned introducing Forensic Accounting thru workshops and seminars with the assistance of experts and skillful forensic accountants.

They also confirmed an popularity for the net academic packages considering DIFA is not available in most financially corrupted countries whilst it’s far available in USA. Therefore on line training could shorten the space to people who cannot leave work and are interested to be specialized on this subject.

The individuals additionally encouraged that employees and executives who’re accountable for the financials of the organisation should be educated and submitted to an in depth education to broaden their abilities to enable them to come across fraudulent activities inside the employer.

III. Changes in Governmental System:

“Forensic Accounting Should Be Introduced inside the Governmental Sector.”

The National Integrity System Study, posted via LTA in 2011, indicates that corruption governs all sectors and all branches of financially corrupted governments. But so as to expose corruption and fraud there ought to be a device or a law that would help to point out where those activities are going on and a prison path to guarantee that this device is effective.

Most of the members in the study idea that it’s far essential to introduce Forensic Accounting to governmental quarter wherein the latter must provide greater attention and care about this issue, even though they did not provide an significance to the governmental function in the advent manner.

They also recommended that the ministry of finance must release an focus campaign about the subject thru media, road panels, and social media.

More significance is granted to the syndicate of accounting, whereby the contributors trust that training periods, workshops, and seminars should be set with a purpose to teach skillful forensic accountants who may want to exercise Forensic Accounting, whilst it’s miles requested. It is the role of the syndicate to spread consciousness since it has the energy, the expertise, and the hobby.

IV. Changes in Legal System:

“Forensic Accounting Should Be Introduced within the Legal Sectors.”

Respondents trust that Forensic Accounting should be added inside the felony systems since the testimony of the forensic accountant is mentioned in courts in other international locations.

LTA (2011) highlighted at the significance to make certain that the cutting-edge laws are sufficiently sturdy to prosecute even presidents and ministers whilst corruptive acts are discovered. There ought to be a law that well known it’s far a legislative tool to combat corruption.

The individuals additionally emphasised on the need of getting courtroom experts on this area inside the criminal system since the fraudster is capable of escape with his/her acts due to the issue to reveal the manipulation that passed off, the buddies, or the level of involvement in the fraudulent sports. The interviewees additionally careworn at the importance of converting the regulation to ensure a actual punishment for the fraudster.

The necessity to music monetary statistics and triumph over opaque commercial enterprise practices is turning into a urgent want. Financial crimes are triumphing in special sectors in a single u . S . A . And are devoted by way of distinct parties. Another essential point proven in this study is that countries of opaque enterprise practices tend to proportion comparable traits that make them a magnet for fraudulent activities which includes cash laundering, tax avoidance/evasion and associated corrupt workings are the products of a few remote regimes and countries titles as tax havens.

Opaque commercial enterprise nations tend to have secrecy laws, poor policies, synthetic taxes, loss of public responsibility and terrible company governance in international locations such as Luxembourg, Austria, Singapore, Switzerland and plenty of others that during go back facilitate economic uncertainty, instability, crime, flight of capital and damage to citizen-kingdom contracts everywhere in the international of path not to mention the harmful the social well-fare of the nations. Fraud has its roots in different government and corporations specifically in managerial positions which includes CEOs.


Financial crimes and fraudulent behavior isn’t new and residents, although are privy to the disadvantages of the such practices, are not nicely informed about the counter measures that could in any other case positioned an cease to those practices. This in flip highlights the significance of forensic accounting as a method to prevent fraudulent practices. However, the adoption and implementation isn’t an smooth procedure that could appear right away. An knowledge of the strategies can assist forensic accountants in figuring out fraudulent conduct. It is “the application of accounting information and investigative skills to identify and clear up criminal issues. It is the technological know-how of using accounting as a device to become aware of and broaden evidence of cash waft. These equipment and strategies can be invaluable for fraud and forensic accounting investigators” (Houck et al., 2006). Houck (2006) also mentioned important components, “litigation offerings that recognize the function of an accountant as an professional representative, and investigative offerings that use a forensic accountant’s talents and may require feasible court docket testimony.” According to the definition evolved by way of the AICPA’s Forensic and Litigation Services Committee, “forensic accounting may additionally involve the utility of unique capabilities in accounting, auditing, finance, quantitative techniques, the law, and studies. It also calls for investigative abilities to acquire, analyse, and compare economic evidence, in addition to the potential to interpret and communicate findings.” In other words, it consists of the special areas of litigation support, investigation, and dispute resolution and, consequently, is the intersection between accounting, research, and the law.

Fraud detection is a technique and procedure to resolve the extraordinary sorts of fraud from embezzlement to cash laundry, disposition, acquiring evidence, writing file and attesting. Therefore, forensic accountants who can follow this sort of method professionally and are able to discover, check out and as a consequence save you fraud occurrence are wished.

However, the creation and diffusion technique calls for work on the macro stage via lifestyle and the government and law (the primary facilitator) and on the micro degree through academic establishments and control. It is the work of the whole network.

At first, the subculture must be altered to create a higher level of recognition regarding Forensic Accounting. As the outcomes of the quantitative studies proved, humans might be aware about it but they’re unaware of the exclusive practices, the desired diplomas, or maybe the characteristics that make a person an eligible forensic accountant. The qualitative research also assures the consequences of the quantitative one regarding, however not restricted to the need of getting a law that calls for agencies to post a Forensic Accounting file. Thus the want to exchange tradition implies obtaining new know-how, as a result a alternate in values, norms, and practices. This concept means that if a exchange is made in cultures of financially corrupted and opaque business practices, it’s going to result in adjustments inside the human beings’s practices, norms, and values, therefore their behaviors; on the stop, it’ll create an attention and understanding about fraud and the way to combat it and the equipment that would be used to inhibit it.

Governments need to also strictly organize and control economic practices and set a regulation that mandates the submission of an FA report. It is really worth bringing up, that according to the outcomes of both quantitative and qualitative studies, interviewees generally tend to view governments as the arena with the best percent of fraud. Educational institutions could have a exquisite effect in the adoption and implementation method.

Interviewees regarded forensic accounting education as being applicable and beneficial to accounting college students, the business network, the accounting career, and accounting packages. It isn’t most effective confined to university applications, there is also a specialized certificate that is concerned on this field, that’s the Diploma in Investigative & Forensic Accounting (DIFA) program. DIFA is designed to offer a large range of knowledge and capabilities to perform financial investigations. Employee and control fraud, robbery, embezzlement, and other financial crimes are increasing, therefore accounting and auditing personnel ought to have schooling and skills to recognize the ones crimes. In addition, excessive-visibility corporate scandals, such as Enron and WorldCom, exhibit the need to higher prepare entry-degree accounting graduates and training CPAs in the areas of fraud prevention, deterrence, detection, investigation, and remediation (Houck et al., 2006).

Managements should additionally follow their very own internal controls and to have a properly-implemented company governance to manipulate the falsified reporting. This, further to the referred to law that requires the submission of a document to the authorities will sincerely put an give up to any fraud devoted. For example, terrorists of the 9/11 attacks used the worldwide banking machine to fund their sports, transfer money, and cover their price range (Houck et al., 2006). This highlights the need to for investigators to understand how financial data can provide clues as to future threats. Due to those fraudulent practices, public cognizance of fraud and forensic accounting got here to focus on the want for monetary professionals demonstrating the necessary education and skills to sense and act at any critical proof generated from monetary records.

The following summarizes the results of the surveys finished revealing the age institution of the Lebanese respondents, their work enjoy, academic heritage, whether or not they heard approximately it and whether they do not forget it as crucial in Lebanon being a country of enterprise opacity. Also summarized is what respondents bear in mind as the first-class manner to introduce and put in force Forensic Accounting in Lebanon.

Most respondents were Lebanese, aged between 18 and 30 years antique, held a Master diploma and labored in Finance with 6 years of experience and more. Most respondents additionally heard and read about forensic accounting however didn’t recognize if Lebanese groups use it, however, agreed at the importance of using it in Lebanon benefiting all the paintings fields, specially economic establishments. They also agreed approximately its high quality benefits in offering higher future, tremendous impact on business, and safer enterprise.

Moreover, most respondents supported the idea of having a regulation that requires all sectors to post an FA file. It’s vital to say that 75% of the respondents who failed to encourage this motion labored within the field of finance.

Furthermore, instructional programs have been considered as the exceptional way to introduce Forensic Accounting (few have given a position to governmental efforts) believing in its ability to maintain its integrity, but no longer in all sectors. Respondents also agreed at the importance of the DIFA certification and that DIFA degree need to be included in Lebanese universities’ programs. Finally, most respondents thought the fine approach to collect FA is to outsource audit firms that perform such services.