2 min read
25 May 2021

According to a joint study conducted by ASSOCHAM and Grant Thornton, corruption, money laundering, tax evasion, window dressing, financial reporting fraud, and bribery are the most common corporate fraud in India.

The study revealed that nearly 52% of corporate frauds had occurred in real estate and infrastructure in the last two years, followed by financial services sectors recording 34% frauds.

A business ecosystem has become increasingly complex due to the rising number of business-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 concerning allegations, fraudulence, suspicion of fraud and misconduct in business.

What does forensic accounting cover?

The two 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 type 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. Within these sections, there may be sub-differentiations; for instance, some forensic accounting experts may specialise in 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 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 nature and types of fraud in India, 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?

As forensic duties are concerned with the judiciary or semi-judiciary dispute resolutions, forensic investigators must also thoroughly understand the relevant legal and jurisprudence and laws. Commerce graduates who wish to take forensic accounting as a career should qualify as a chartered accountant and then differentiate in forensic accounting. The experience in audit and accounting as a chartered accountant further boosts the prospects of forensic accounting. However, to be a proficient forensic accountant, it is important to work with an experienced and well-qualified forensic accountant to learn the ropes 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, while additional exams must be attempted and succeeded. These certificates reveal that a forensic accountant has acquired the requisite instruction and training beyond an average accountant.

CA's incorporating forensic accounting as a function

Due to the lack of proficient forensic accountants in the industry, CAs are often called in 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) hence recognising the need for forensic accounting and fraud detection in the emerging economic scenario, has incorporated a Certificate Course on Forensic Accounting and Fraud Detection for practising CAs. According to statistics from Accounting Today, more than 40% of leading American accounting firms are widening their services into forensics and fraud. This scene is likely to catch on in India as well.

CA's 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 seven days. Similarly, the IFS Education Department (International Forensic Sciences) lists a schedule of short term forensics courses for awareness about forensics. (Revised on: 16 Jun 2016)

Course/ Certification Type Fee (INR)Indian Students Fee (USD)International Students Max. Duration
Short Term Certificate in Forensic Accounting and Fraud Examiner Rs. 5000 200 USD 02 months
Advanced Certification in Forensic Accounting and Fraud Examiner Rs. 10,000 300 USD 06 months
PG Certification (Gold) in Forensic Accounting and Fraud Examiner Rs. 15,000 500 USD 12 months
Certification (Expert) in Forensic Accounting and Fraud Examiner Rs. 20,000 500 USD 06 months
Specialized Certification in Forensic Accounting and Fraud Examiner Rs. 30,000 750 USD 12 months
Universal Certification in Forensic Accounting and Fraud Examiner Rs. 35,000 900 USD 12 months


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 is bound to step up in the coming times significantly. Also, India's shortage of qualified and experienced forensic accounting skill sets makes it a prized and valuable career for CAs to pursue.

Additional Read: Top 3 qualities that an ideal accountant must have
 

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