Auditing Principles

In: Business and Management

Submitted By mgencic90
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The Past, Present, and Future of Forensic Accounting
G. Stevenson Smith, PhD, CPA, CMA
The CPA Journal
Vol. 85 (LXXXV)/No. 3
March 2015 pp. 16-21

Today’s business society, including many large corporations as well as small and medium-sized businesses, has been part of the rapid technological advances the world is facing. Nowadays every business is operating via Internet as we are facing constant technological improvements throughout the past couple of decades. That being said, the potential of cybercrimes being committed drastically increased, as the cyber criminals have been able to break into the companies’ systems and manipulate and extract crucial data sets. This article is focusing on chronological development of the new area of accounting, forensic accounting. Forensic accounting is primarily focused on fraud protection, investigation of the security breaches and any other malicious activities against a company and its confidential data.
At the very beginning of the twentieth century forensic accounting was not recognized as a separate practice area from auditing. As the passage of time, forensic accounting became a more distinct practice area. The development of computers and the internet caused forensic accounting to expand and become a separate field which deals with investigating activities and fraud protection rather than stating an opinion on whether or not the financial statements are in accordance with GAAP. Continually, auditors are focusing on the fair representation of financial statements and giving an opinion without an intent to search for detecting fraudulent activities.
Forensic accounting as a part of the accounting profession was mentioned for the first time in early 1900’s. During its early phase it was believed that the auditor’s responsibility was to detect and prevent fraud. Since the very beginning, forensic accounting has…...

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