The forensic accountants’ role in banking sector

The forensic accountants' role in banking sector

In the twenty-first century, frequent bank fraud has eroded stakeholder confidence in their everyday financial transactions and created severe questions about the effectiveness of banks’ internal control procedures, financial reporting systems, and accountability. As a result of these concerns, Forensic Accounting has become a more appealing career option in recent years, and the demand for Forensic Accounting services has increased as a means of combating fraud and misappropriation of financial statements, and restoring confidence in financial reports.

Forensic accounting is the process of locating, recording, settling, subtracting, sorting, reporting, and verifying past financial data on other accounting activities to resolve current or future legal disputes or to use such past financial data to project future financial data to resolve future financial disputes. This indicates that the Ghanaian banking industry has a serious need for forensic accounting services.

The scale of corporate financial fraud has led to the demise of several banks in Ghana in recent years. These failures were primarily linked to instances in which management fraudulently granted loans without board permission, even though the bank’s annual report was unqualified. Though, it is clear that the use of forensic accounting services is not yet widespread in Ghana, the rate at which financial crimes are increasing in the banking sector has shone a spotlight on the need for forensic accounting expertise.

Banks must demonstrate greater accountability, fairness, and transparency as they carry out their tasks with integrity to maintain public trust and goodwill in Ghana. The banking industry in Ghana has advanced in information technology and all the dynamics of technological business transaction.

Financial fraud is one of the reasons hindering the growth of banks in Ghana which is evidenced from quarterly and yearly reports published by Bank of Ghana. Also, the risk of fraud and cyber security risks is increasing dramatically as financial procedures move to the digital sphere. Numerous fraudulent practices, such as cyber security concerns, fraudulent borrowers, and identity theft, are increasingly posing a threat to banks and financial institutions. This and many other sectorial dangers faced by the banking industry demands for the need to have qualified and trained personnel to undertake extensive risk assessments to effectively manage this hazard.

The term “forensic” is most commonly associated with crime thrillers and highly sensitive law enforcement agencies. The term “forensic accountant” is likely to conjure up images of a crime scene investigation. However, this is not the case. Forensic accountants work in the banking and finance industries. They’re taking on more and more delicate and difficult roles. Forensic accountants are hired for a wide range of tasks, including investigating fraud, reviewing internal controls, and calculating damages in court cases. All of these tasks necessitate meticulous attention to detail as well as a wide range of capabilities, including mathematical, technological, legal, and investigative abilities. These highly skilled and qualified experts operate in the financial sector to combat crime and fraud. This article will few of the roles played by forensic accountants and their relevance in the banking industry.

Risk Assessment

As part of their main duty to prevent fraud, forensic accountants are tasked with the critical role of risk assessment. To assess the risks linked with borrowers, enterprises, and possible criminals, they conduct extensive and complex forensic investigations and financial analyses. These efforts enable banks to effectively identify potential criminals and limit fraud risk, averting significant losses.

To assess the risks connected with banking transactions, forensic accountants must undertake extensive analysis and use data-driven methodologies. They keep track of vast amounts of financial data and figures to spot risks that could cost banks a lot of money. They also help banks maintain their integrity and credibility by preventing the loss of personal information and privacy from customers.

Risk Prevention

By creating and implementing extended processes as part of the statutory audit, working as advisers to audit committees, fraud deterrent activities, and assisting in investment analyst research, forensic accountants are increasingly playing more proactive risk reduction responsibilities.

Their capacity to do risk assessments puts them in a great position to effectively prevent and mitigate these hazards. Forensic accountants are increasingly being hired by banks to build rigorous fraud prevention and mitigation practices. These experts help banks prevent fraud while also lowering the costs of conducting investigations and criminal processes.

Internal audits and financial records are reviewed by forensic accountants to identify potential risk factors and traps. They are capable of identifying problems and assisting banks in taking the required steps to eliminate fraud risk factors. To apprehend fraudsters, they combine their accounting knowledge with investigative abilities and cutting-edge technical technologies. They are capable of devising and implementing ways to limit the risk of large-scale criminal activity and fraud.

Fighting Crime and Fraudulent Practices

Forensic accounting is a branch of standard accounting that examines audits and taxes to uncover fraud. They aid banks and law enforcement in the battle against crime and fraud. Forensic accountants are crucial in assisting banks in resolving financial disputes that can cost them billions of dollars.

Before you hire a forensic accountant, you must first grasp the many types of fraud. Fraud’s influence and nature are wide-ranging and complicated. Individuals who neglect to pay their taxes, wrongly claim privileges, and swindle on loans, credit payments, and other financial transactions are examples of tax evasion.

Banks and governments have lost billions of dollars as a result of fraudulent operations, and the numbers are continuously increasing. Cyber fraud has increased at an alarming rate as a result of technological advancements. Forensic accountants use a variety of methods and strategies to keep fraudsters out of the bank and prevent them from stealing money.

Preparing Financial Evidence

Due to the huge growth in the risk of cyber fraud and security assaults, fraud mitigation has become increasingly difficult. Experts feel that the longer a fraudulent activity continues, the greater the financial damage to the bank. It is for this reason that forensic accountants are in such high demand and have such high marketability.

They help banks and financial institutions avoid and mitigate financial crimes. If such a crime has occurred, these experts delegate the responsibility of gathering financial evidence to others. Forensic accountants have the difficult task of examining data to provide evidence for court procedures involving fraud.

Naturally, forensic accountants must perform a thorough investigation, evaluate audits and financial records, and establish detailed records to accomplish this. They also provide consultancy services and financial data reviews in addition to representing corporations in court.

These accountants specialize in forensic research to track down monetary transfers and draw useful insights from financial data. To efficiently entrap fraudsters and criminals, they crunch numbers to conduct analysis and generate reports and testimonies.

In conclusion, the cost of hiring a forensic accountant appears to be the main disadvantage. This can be a source of concern for the organization now that these benefits and constraints have been identified. It could be the perfect time for organizations to consider whether the benefits exceed the drawbacks, as well as their willingness to tackle the challenges and dangers of hiring a forensic accountant.

Forensic accountants are heavily involved in the processes of devising and implementing fraud-prevention policies. Professionals that take this field have a natural interest in financial crime. The nature of their employment necessitates a high level of secrecy and confidentiality. In some banking firms, forensic accountants work in groups to improve due diligence and risk mitigation. They also collaborate with law enforcement, lawyers, and other experts to assist banks in preventing and investigating fraud.

Independent auditors and forensic accountants play an important role in accounting investigations and serve the public interest by assisting corporations with correct financial reporting. As a result, forensic accounting is necessary to defend shareholders’ money and the public’s trust in a corporation.


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The writer is a PhD candidate, Certified Forensic Investigation Professional, Researcher, and Accountant for Serviceships Ghana Ltd & Cape Logistics Ltd

Contact: 0246390969     Email: [email protected]


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