Commenced in January 2007
Frequency: Monthly
Edition: International
Paper Count: 31100
Financial Statement Fraud: The Need for a Paradigm Shift to Forensic Accounting

Authors: Ifedapo Francis Awolowo


The unrelenting series of embarrassing audit failures should stimulate a paradigm shift in accounting. And in this age of information revolution, there is need for a constant improvement on the products or services one offers to the market in order to be relevant. This study explores the perceptions of external auditors, forensic accountants and accounting academics on whether a paradigm shift to forensic accounting can reduce financial statement frauds. Through Neo-empiricism/inductive analytical approach, findings reveal that a paradigm shift to forensic accounting might be the right step in the right direction in order to increase the chances of fraud prevention and detection in the financial statement. This research has implication on accounting education on the need to incorporate forensic accounting into present day accounting curriculum. Accounting professional bodies, accounting standard setters and accounting firms all have roles to play in incorporating forensic accounting education into accounting curriculum. Particularly, there is need to alter the ISA 240 to make the prevention and detection of frauds the responsibilities of bot those charged with the management and governance of companies and statutory auditors.

Keywords: Corporate Governance, Forensic Accounting, Auditing, financial statement fraud, fraud prevention and detection, audit expectation gap

Digital Object Identifier (DOI):

Procedia APA BibTeX Chicago EndNote Harvard JSON MLA RIS XML ISO 690 PDF Downloads 2913


[1] ACFE, 2014. Report to the Nations On Occupational Fraud and Abuse, Austin: Association of Certified Fraud Examiners.
[2] ACFE, A. o. C. F. E., 2014. Fraud Examiners Manual. International ed. Texas: ACFE.
[3] AICPA, A. I. o. C. P. A., 2004. Forensic services audits, and corporate governance: Bridging the gap, New York: Author.
[4] Alvesson, M. & Deetz, S., 2000. Doing Critical Management Research. London: Sage.
[5] Awolowo, I. F., 2014. The Relevance of Forensic Accounting in Mitigating the Audit Expectation Gap. s.l., University of Portsmouth.
[6] BBC-News, 2014. Tesco suspends execs as inquiry launched into profit overstatement. (Online) Available at: (Accessed 7 October 2014).
[7] Bhasin, M., 2013. AN Emperical Investigation of the Relevant Skills of Forensic Accountants: Experience of a Developing economy. European Journal of Accounting Auditing and Finance Research, 1(2), pp. 11 - 52.
[8] Bressler, L., 2012. The Role of Forensic Accounting in Fraud Investigations: Importance of Attorney and Judge's Perception. Journal of Finance and Accountancy.
[9] Britten, K., 2011. ‘What are audits for?’ – Auditor negligence and the expert witness. Forensic Accountant, Issue 36, pp. 4-7.
[10] Carnes, K. C. & Gierlasinski, N. J., 2001. Forensic accounting skills: will supply finally catch up to demand? Manageria and Auditing Journal, 16(6), pp. 378 - 382.
[11] Clark, M., 2014. Positioning Mixed Methods Research: The Neo-Empiricism Perspective. Kidmore End, European Conference on Research Methodology for Business and Management Studies.
[12] Colby, E. E., 2013. Financial statement fraud, Part 1. CGA Journal, pp. 1-5.
[13] DiGabriele, J. A., 2008. An Empirical Investigation of the Relevant Skills of Forensic Accountants. Journal of Education for Business, 83(6), pp. 331-338.
[14] DiGabriele, J. A., 2009. Fishbowl the Forensic Accountant: A Closer Look at the Skills Forensic Accounting Education Should Emphasize. Forensic Examiner, 18(2), pp. 77-79.
[15] DiGabriele, J. A., 2011. Revisiting the Integration of Forensic Accounting and the Auditing Paradigm. the Forensic Examiner, 20(3), pp. 70-73.
[16] Gray, R. O. & Moussalli, S. D., 2006. Forensic Accounting and Auditing United Again: A Historical Perspective. Journal of Business Issues, Issue 2, pp. 15-24.
[17] Johnson, P. & Duberley, J., 2000. Understanding Management Research. London: Sage.
[18] Johnson, P. & Clark, M., 2006. Business and Management Research Methodologies. Sage Library in Business and Management.
[19] Kahan, S., 2006. Sherlock Holmes enters accounting: Dramatic increase in fraud brings more CPA sleuths into the industry. Accounting Today, 20(8), pp. 1-3.
[20] Koh, A. N., Arokiasamy, L. & Suat, C. L. A., 2009. Forensic Accounting: Public Acceptance towards Occurrence of Fraud Detection. International Journal of Busniess Management, 4(11), pp. 154-149.
[21] McConnell Jr, D. K. & Bank, G. Y., 2003. How Sarbanes-Oxley Will Change the Audit Process. Journal of Accountancy, 196(3), pp. 49-55.
[22] Rezaee, Z., Crumbley, L. D. & Elmore, R. C., 2006. Forensic accounting education: a survey of academicians and practitioners. Advances in Accounting Education.
[23] Smith, S. G. & Crumbley, L. D., 2009. Defining a Forensic Audit. The Journal of Digital Forensics, Security and Law, 4(1), pp. 61-79.
[24] Wolfe, D. T. & Hermanson, D. R., 2004. The Fraud Diamond: Considering the Four Elements of Fraud. The CPA Journal, 74(12), pp. 38-42.
[25] Wolosky, H. W., 2004. Forensic Accounting to the Forefront. The Practical accountant, 37(2), pp. 22-28.
[26] Golden, T., 2011. Is financial statement auditing still relevant? Texas: University of Texas.
[27] Crumbley, L. D., 2009. So What Is Forensic Accounting? Accounting, Behaviour and Organization.
[28] Joshi, M., 2006. What is Forensic Accounting ? (Online) Available at: (Accessed 21 August 2014).
[29] Okoye, E. I. & Gbegi, D. O., 2013. An Evaluation of Forensic Accountants to Planning Management Fraud Risk Detection Procedures. Global Journal of Management and Business Research, 13(1).
[30] Chui, L. & Pike, B., 2013. Auditors' Responsibilities for Fraud Detection: New Wine in Old Bottles? Journal of Forensic and Investigative Accounting, 5(1), pp. 204-233.
[31] Gerson, J. S., Brolly, J. P. & Skalak, S. L., 2006. The Roles of the Auditor and the Forensic Accounting Investigator. In: T. W. Golden, S. L. Skalak & M. M. Clayton, eds. A Guide to Forensic Accounting Investigation. Hoboken, NJ: John Wiley & Sons, Inc, pp. 243-257.