Some of the common frauds in India include corruption, money laundering, tax evasion, and window dressing. Financial reporting fraud and bribery are also part of this list.
The business ecosystem has become increasingly complex due to the rising number of fraud-related investigations. The need for transparency and accountability is imperative, and the demand for forensic accounting is more significant than ever. Nevertheless, India's field is still nascent, making it a coveted career option for chartered accountants (CAs).
What is forensic accounting?
Forensic accounting is the assistance of finance professionals to settle disputes across concerns. These concerns can be allegations, fraudulence, suspicion of fraud and misconduct in business.
What does forensic accounting cover?
The 2 major aspects within forensic accounting practices are:
- Litigation support services: A forensic accounting expert measures the damages experienced by the parties implicated in legal disputes and can aid in settling conflicts, even before it reaches the courtroom. If a conflict reaches the courtroom, the forensic accounting professional could give evidence as an expert witness.
- Investigative/ fact-finding services: A forensic accountant must determine whether illegal matters such as employee felony, securities embezzlement (including tampering and distortion of financial accounts), identity theft, and insurance racket have taken place.
The scope of forensic accounting is to:
- Look for evidence of unusual development in the accounting and financial systems.
- Design accounting processes for verifying important premises and data. A forensic accounting orientation also calls for skills in identifying possible fraud.
- Perform audit-like processes on a routine schedule to reduce transaction processing risks.
- Cover a broad range of businesses and locations that require customary or continuous surveillance of all transaction processing systems.
Relevance of forensic accounting in an organisation
- Assessing working transactions for compliance with basic operating processes and agreement
- Performing thorough scrutiny and examination of financial payment dealings in the accounting system to decide if they are standard or beyond company policy
- Assessing standard ledger and financial reporting system transactions for likely unlawful tampering or falsification of information or accounts and its consequences on the ensuing financial accounts
- Analysing warranty requests or returns for practices of fraudulence or misuse
- Assisting in estimating the economic damages and the ensuing insurance demands that arise from catastrophes such as fires or other natural setbacks
- Assessing or affirming business rating in consolidations and accomplishments
Forensic accountants: scope of work
Although the focus is fundamentally on accounting concerns, the function of a forensic accountant may also cover a more generic investigation, including the collection of evidence.
Almost every accounting firm in the country today has forensic accounting sections. There may be sub-differentiations within these sections. For instance, some forensic accounting experts may specialise in certain areas. These areas can be insurance applications, personal injury declarations, fraudulence, construction, or royalty audits.
Forensic accountants may also offer their services in retrieving profits from crime and in relation to appropriation proceedings. The proceedings that are relevant to definite or assumed proceeds of crime or dubious transfer of funds. Unique only to India, there is a specific species of forensic accountants known as Certified Forensic Accounting Professionals.
Forensic accounting in India
Given the rise in fraud cases, the Reserve Bank of India (RBI) has compulsorily made forensic accounting audits mandatory for all banks. The establishment of the Serious Fraud Investigation Office (SFIO) in India has become the turning point for forensic accountants. The indications of the growing demand for the field are:
- The growing list of online criminal offences
- Breakdown of regulators to trace and detect cyber-security frauds
- The long chain of co-operative banks going bust
Who can be a forensic accountant?
Forensic duties are part of the judiciary or semi-judiciary dispute resolutions. And therefore forensic investigators must also understand the relevant legal and jurisprudence and laws. Commerce graduates who wish to take forensic accounting as a career should qualify as chartered accountant. And then specialise in forensic accounting.
An experience in audit with accounting as a chartered accountant further boosts the prospects of a career in forensic accounting. However, to gain proficiency in the field, consider working with an experienced and well-qualified forensic accountant. This experience will help you to learn the basics of the trade.
A number of well-established organisations offer instructional coaching, guidance, training, and certification for forensic accountants. Every organisation calls for its members to have varying degrees of education and knowledge. These members may have to attempt and clear additional exams. These certificates reveal that a forensic accountant has acquired the requisite instruction and training beyond an average accountant.
CAs incorporating forensic accounting as a function
Due to the lack of proficient forensic accountants in the industry, CAs often get the job to combine accounting, auditing, and investigative skills. They may not have the necessary training. The Council of the Institute of Chartered Accountants of India (ICAI) recognises the need for forensic accounting and fraud detection. And ICAI has therefore incorporated a certificate course on forensic accounting and fraud detection for practising CAs.
CAs can opt for a personal loan for chartered accountants, which offers a host of benefits to use this opportunity.
The cost of becoming a forensic accountant
The Certificate Course on Forensic Accounting and Fraud Detection from the ICAI is approximately Rs. 20,000 per candidate for 7 days. The International Forensic Science Institute also lists a schedule of short-term forensics courses for awareness about forensics. (Revised on: 2 April 2023)
|Course/ Certification type||Fee (INR) Indian students||Fee (USD) International students||Max. duration|
|Short-Term certificate in Forensic Accounting and Fraud Examiner||Rs. 5000||100 USD||02 months|
|Advanced certification in Forensic Accounting and Fraud Examiner||Rs. 10,000||200 USD||06 months|
|PG certification (Gold) in Forensic Accounting and Fraud Examiner||Rs. 15,000||300 USD||12 months|
|Certification (Expert) in Forensic Accounting and Fraud Examiner||Rs. 20,000||400 USD||06 months|
|Specialised certification in Forensic Accounting and Fraud Examiner||Rs. 30,000||600 USD||12 months|
|Universal certification in Forensic Accounting and Fraud Examiner||Rs. 35,000||750 USD||12 months|
To fund your certification, you can consider taking a chartered accountant loan from Bajaj Finance. You can get up to Rs. 55 lakhwith a flexible repayment tenure of up to 8 years.
To sum up
There is an immense future in forensic accounting as a distinct 'specialised/ specialist area' consulting. Given the rising levels of financial irregularities, the requirement for forensic accountants will likely step up in the coming times significantly. Also, India has a shortage of professionals who have qualifications and experience in forensic accounting. This scarcity makes forensic accounting a valuable career for CAs to pursue.
Additional Read: Top 3 qualities that an ideal accountant must have
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