Forensic Accounting

The word “fraud” was magnified in the business world around the end of 2001 and the beginning of 2002. No one had seen anything like it. Enron, one of the country’s largest energy companies, went bankrupt and took down with it Arthur Andersen, one of the five largest audit and accounting firms in the world. Enron was followed by other accounting scandals such as WorldCom, Tyco, Freddie Mac, and HealthSouth, yet Enron will always be remembered as one of the worst corporate accounting scandals of all time. Enron’s collapse was brought upon by the greed of its corporate hierarchy and how it preyed upon its faithful stockholders and employees who invested so much of their time and money into the company. Enron seemed to portray that the goal of corporate America was to drive up stock prices and get to the peak of the financial mountain by any means necessary. The “Conspiracy of Fools” is a tale of power, crony capitalism, and company greed that lead Enron down the dark road of corporate America.

Dr. Kelly Richmond Pope is an associate professor for the School of Accountancy and MIS at DePaul University in Chicago, Illinois. In completing her collegiate career, she obtained a bachelor's degree from North Carolina A&T State University in accounting. Further, Dr. Pope received her doctorate's degree in accounting from Virginia Tech. She was employed by KPMG, LLP practicing forensic accounting. Several cases Dr. Pope has worked on included insurance fraud investigations, fraud risk management jobs, and anti-money laundering engagements. In addition, she co-authored a book, The A.B.C.’s of Behavioral Forensics: Using Psychology to Prevent, Detect, and Deter Fraud.

As laws and regulations continue to grow and become more complex, the need for forensic accountants is sure to continue growing as well. An example of how regulations have grown (mirroring the demand for forensic accountants) can be seen by comparing the scope and length of the Sarbanes-Oxley Act of 2002, at 66 pages, to the 849 page Dodd-Frank Wall Street Reform and Consumer Protection act of 2009.(Tucker, 2011) It is the environment created by such complex regulations and oversight committees that has hedged the need for accounting experts who can help demonstrate both the effects of individual companies on overall markets, as well as the opposite effects of market-happenings on individual firms. This complicated data, made comprehendible by a talented and effective forensic accountant, can serve as the determining factor in a case. Ultimately, this allows for

Sonya Fuentaz, an IRS-enrolled agent, has been contracted for preparing an annual income tax return for Carlito Alverez. Sonya is a little apprehensive about the engagement because she’s heard rumors that Carlito is a major drug trafficker with roots in Colombia. Sonia visits his home to discuss the details of his return and she’s shocked by the opulence she sees because the house is on 2 acres of land just west of the Intracoastal Waterway in Miami Beach. The land is completely surrounded by canals and connected to the rest of the city only via a narrow bridge that has small guardhouse and a security team protecting the entrance to the driveway. She sees other uniformed security guards walking

In the United Kingdom, the closest relative can make wrongful death claims for compensation when a loved one has suffered a fatal accident due to the negligence of another. According to Matthias Kelly 's distribution and development, the common law of the UK the objective of any award of damages in personal injuries litigation is to achieve as nearly as possible full compensation for the Claimant in respect of the injury sustained In the UK, prior to 1999, economic damages in such litigation were typically assessed by individual judges using "rule of thumb" multipliers. There are three relevant types of tables, the Ogden Tables, named after Sir Michael Ogden, Victim’s Compensation Fund (VCF) and the Economic Loss Table

With 20 percent of the inventory missing, along with large portions of the written and computer records, Mary Soto should hire an external forensic account. Mary should not jump to conclusions and call the police just yet, but may need to do so according to the findings of the forensic accountant. Even if thefts have occurred calling the police and alerting the employees of her suspicion will not always be in the best interest of Mary or the company. In our textbook “Forensic Accounting and Fraud Examination” George Young asserts:

The most important five skills that a forensic accountant needs to possess and the need for each skill.

“Accounting is widely regarded as the language of business” (McMullen and Sanchez, 2010, pg.1). As such, the need for basic accounting skills is self-evident, for a forensic accountant to be able to review financial reports and other source documents he needs to have an understanding of basic accounting. Without that understanding, the forensic accountant couldn’t determine if the entries in the

This paper is about the auditing fraud that occurred within the American company called Enron Corporation. Enron seemed to be one of the largest energy companies in America, but in reality, for some years, it was not going very well with the company. Enron had more expenditures, cash going out of the company, than revenues, cash inflows, causing them to experience severe loses. Therefore, the poor numbers of company, which showed that the company was deeply in debt, were removed from their accounting statements in order to make the company seem profitable; however, it was all artificial. As a result, many people bought shares in Enron, because they thought it yielded much, whereas it was actually worth nothing.

The SNIFFING book-cooking schemes of major corporations and firms such as HealthSouth Corp, Enron global etc, plaguing our financial world in this era, is an indication that we require “all hands on deck” in the fight against financial crimes. The variability and self-motivated nature of frauds, characterized by material destructive consequences, has raised a myriad of alarms in the corporate world. In reality, the dynamic nature of fraud perpetration present complex, intricate and titanic tasks to the forensic investigator who by mandate and dictate from the fast growing technology and sophisticated defrauding strategies of phonies, is required to expand Knowledge and proven skills to be relevant and become verifiable human tool. Forensic investigators are obliged to push forward innovative and exhaustive practices in order to squash this canker-worm. This study hopes to provide support to the literature on “Financial Crimes Fight” that has tried to establish that;

In society, there have always been differing characteristics such as failure and fraud that have been linked through time. However, although failure and fraud are connected in several various ways, one tends to come before the other. Generally failure is the absence of achieving success and fraud is committing an unlawful act that is driven by failure or to result in failure. Failure has driven fraud for countless reasons either for financial prosperity or personal supremacy. In many cases the direction of failure and fraud is mainly subjected to the individual’s personal objective. Conversely, there have been many situations in which corporations too big to fail have succumbed to failure and fraud due to a destructive corporate objective. In 2001, Enron, the seventh largest company in the U.S participated in fraudulent activity. The fraudulent activity committed by Enron was the beginning of an inevitable ripple of failure in the company’s future. Although Enron performed the major scandal, the auditing agency Arthur Andersen was highly responsible for their negligence and their participation in the deception of the financial investors. The general public didn 't easily predict the downfall of Enron because it was one of the most thriving establishments in the corporate world. In many cases, companies as substantial as Enron are sometimes used as a measurement to gauge how the economy is preforming in the current market. The financial fraud

Fraud cases can involve complicated financial transactions conducted by ‘white collar criminals’ such as business professionals making financial fraud difficult to prevent and catch1. In this document we will look at several types of financial fraud cases including the cases on Bernard Madoff, Firepower, Storm Financial and Robert Blanshard.

The sampling tools and techniques used in this investigation consists systematic random selection of data from selected sources. The forensic accountant use computer forensics, data analytics and interviews to allow them to assemble much of the required evidence for an investigation. This abuse was detected when we see the invoice of heavy amount paid by end of the last year without any inspection report or repair completion document in file. The further investigation showed it was done later this year. No employee took any funds to commit financial fraud or larceny but the financial statement were misleading to the users of those statements. A company may experience such type of abuse or corruption schemes developed at any given time, more than one area or all over the company. Corruption can be performed by fraudster employees who intentionally and wrongfully use their influence to gain personal financial gain from company business transaction. It can be limited to a particular department or it may exist in all structural levels.

In this research paper I will be examining accounting scandals, specifically the Enron Accounting Scandal. First, I will be exploring the history of Enron. Then I will be going into further depth on what accounting issues Enron faced and then I will be explaining what a derivative is. Finally yet importantly, I will consider the different types of Accounting Fraud following a conclusion. Accounting Scandals are born due to collective greed and corporate arrogance. In the case of Enron there was a lot of euphoria before the downfall. Stock prices soared and Enron was seen as one of the most innovative companies in the world. However, things seemed too good to be true. Eventually the company was exposed for its wrongdoing which led to the collapse. Many more of such cases were exposed during the 2008/2009 recession such as the Lehmann Brothers scandal. As mentioned earlier, many financial scandals have happened in the past but none of those are nearly as bad as the scandals when it gets to trading in derivatives.

Accounting skills are useful for companies and individuals who are trying to maximize their profits and maintain a competitive advantage, but forensic accounting can help bring justice and peace of mind for many others by illuminating financial processes that can help explain criminal actions and behaviors. The purpose of this essay is to describe the five most important skills a forensic accountant may possess in order to become successful. This essay will describe each one of these traits and describe its application to business operations. Next the essay will describe the role of the forensic accountant within a courtroom environment and then also discuss the legal responsibilities that these professionals have to obey in the course of their work. Finally this essay will highlight two real world cases where forensic accounting provided vital evidence in a legal court case.