Better, faster, smarter: developing a blueprint for creating forensic accountants
| Pages | 353-378 |
| DOI | https://doi.org/10.1108/JMLC-05-2013-0017 |
| Date | 07 October 2013 |
| Published date | 07 October 2013 |
| Author | Hendi Yogi Prabowo |
| Subject Matter | Accounting & Finance,Financial risk/company failure,Financial compliance/regulation |
Better, faster, smarter:
developing a blueprint for
creating forensic accountants
Hendi Yogi Prabowo
IsCentre for Forensic Accounting Studies,
Islamic University of Indonesia, Yogyakarta, Indonesia
Abstract
Purpose – The purpose of this article, which is based on author’s study, is to highlight the essential
attributes of forensic accountants and to construct the forensic accountant “blueprint” as a reference
for forensic accounting education and training.
Design/methodology/approach – This study uses primary and secondary data on forensic
accounting profession in Indonesia and the USA. Such data were collected by means of literature
reviews, in-depth interviews, and a focus group discussion with a number of forensic accounting
professionals in Indonesia and the USA.
Findings – The author establishes that the “problem-based” nature of forensic accounting requires a
unique approach in producing forensic accountants compared to ordinary accountants. The essential
attributes that a forensic accountant needs to possess are mentality, method, and experience.
“Mentality” consists of elements such as ability to differentiate the right from the wrong, courage to
stand up for what is right, ability to withstand pressures from the works, and puzzle solving mindsets.
“Methods” refer to the understanding of the fraud investigation process such as fraud detection,
evidences, investigation methods, and investigation report. “Experience” as the third attribute is
gained primarily through involvement in fraud investigation process in which a forensic accountant
utilizes his or her knowledge previously acquired through education and training.
Research limitations/implications – Forensic accounting is a problem oriented skill that may
differ across countries. Due to the time and financial resource constraint, this study is limited only on two
countries and a small number of respondents. For future study, more countries and respondents should
be included in analysis to gain a more complete picture on what constitute a forensic accountant.
Practical implications – The results of this study contribute to the development of human resource
in the forensic accounting profession. More specifically, they serve as a reference in the development of
curriculum for forensic accounting education and training especially in Indonesia.
Originality/value – This paper sees forensic accountant skill development from the “demand” point
of view by highlighting what that the profession expects from a forensic accountant.
Keywords Education, Universities, Fraud, Forensicaccountant, Forensic accounting,
Fraud investigation
Paper type Research paper
Introduction
A decade had passed sinceEnron collapsed and yet fraud remains a major international
problem. Efforts have been made to fully identify the types of fraud for prevention and
The current issue and full text archive of this journal is available at
www.emeraldinsight.com/1368-5201.htm
The author would like to acknowledge the support provided by the US – Indonesia Society
(USINDO) through its Sumitro Fellowship Award and the Directorate General of Higher
Education of Indonesia (Dirjen Dikti) through its Doctorate Development Program for the
funding of this study.
Journal of Money Laundering Control
Vol. 16 No. 4, 2013
pp. 353-378
qEmerald Group Publishing Limited
1368-5201
DOI 10.1108/JMLC-05-2013-0017
Blueprint for
creating forensic
accountants
353
investigationpurpose without success asthere appears to be new kind of fraudemerging
every day. This has created a high demand for forensic accounting skills globally
(Kranacher et al., 2008). Such demand has been responded widely by higher education
institutions all around the globe in the form of forensic accounting programs or courses
(West VirginiaUniversity, 2007; Kranacheret al., 2008). Similarly in Indonesia, numerous
universities have been trying to set up their own forensic accounting programs to cope
with the rising demand. The lack of agreed upon standard has been among the major
challenges particularly in academically developing forensic accounting discipline. This
underscores the need for more studies on what a forensic accountant really is, what the
profession demands,and how to fulfill such demand in particularthrough education and
training.Funded by the US – Indonesia Society (USINDO)and the Directorate General of
Higher Educationof Indonesia (Dirjen Dikti), this study represents an effort to fulfill this
need. Based on extensive literature review and in-depth interviews with forensic
accounting practitioners in Indonesia and the USA, this study aims primarily at
identifying the essential attributes of a forensic accountant as a reference for designing
effective forensic accounting education and training. As will be discussed in this paper,
due to its nature,forensic accounting hasa wide coverage of areas. Therefore,for the sake
of this study, the discussions will focus on fraud investigation as a service that can be
performed by forensicaccountants in public and private sectors.
The fraud problems
Fraud has been in existence for generations. For example, the so-called “financial
scandals” have plagued the world’s economy since before the Industrial Revolution
(Pearson and Singleton, 2008). Many of the scandals (such as that of the equity funding
in 1970 where computers were used to as a means in perpetrating fraud) became
milestones with historical importance in our journey in combating fraud (Pearson and
Singleton, 2008). According to the Black’s Law Dictionary (2009), fraud is:
A knowing misrepresentation of the truth or concealment of a material fact to induce another
to act to his or her detriment [...] A misrepresentation made recklessly without belief in its
truth to induce another person to act.
As argued by Ramamoorti (2008, p. 522):
Fraud involves intentional acts and is perpetrated by human beings using deception, trickery,
and cunning that can be broadly classified as comprising two types of misrepresentation:
suggestio falsi (suggestion of falsehood) or suppressio veri (suppression of truth).
The essential part of any fraud is the use of deception to obtain benefits. As defined by
Wells (2005,p. 8), four general elementsmust be present for an offence to be called “fraud”:
(1) a material false statement;
(2) knowledge that the statement was false when it was uttered;
(3) reliance on the false statement by the victim; and
(4) damages resulting from the victim’s reliance on the false statement.
There are many types of fraud in the society and so far as literatures are concerned,
no single classification system in the world can comprehensively identify all of them.
The Association of Certified Fraud Examiners (ACFE), for example, has been using the
Fraud Triangle system in its biannual global studies on fraud (Association of Certified
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