Implications of regulatory prescriptions and audit standards on the evolution of forensic accounting in the audit process

Abstract

Purpose

The purpose of this paper is to determine if there is a level of agreement among accounting academics, auditors, and forensic accountants that the current environmental framework created by regulatory and standard setting bodies appears to require a merger of common ground between forensic accounting and auditing.

Design/methodology/approach

A survey in the USA is conducted for a random sample of accounting academics, forensic accounting practitioners, and auditors questioning if the addition of forensic accounting proficiency should be part of an auditor's skill set to increase the probability of detecting fraud.

Findings

The results indicate that forensic accounting has a place in the audit process and that auditors may need to add some of these skills as the market for audits have changed.

Research limitations/implications

The limitation of the current paper which is inherent to survey research is non‐response bias. The only way to evaluate this is to test late responses and compare them to earlier results. There are no significant differences. Future research in this area should progress to experimental designs using foundational forensic procedures in a simulated audit setting to ascertain the success and the proper implementation of these skills in finding financial statement fraud.

Practical implications

This paper will increase auditor awareness of the importance of the acquisition of foundational forensic accounting skills that will enhance the likelihood of fraud detection.

Originality/value

Professions evolve by way of regulatory, political, and social responses. Although there are some distinct differences between forensic accountants and auditors in the USA, there is enough common ground to answer the call for auditors to be more mindful of finding fraud. This paper intends to draw attention to the fact that foundational forensic accounting skills may represent a paradigm shift for professional skills in the accounting markets.

Citation

DiGabriele, J.A. (2009), "Implications of regulatory prescriptions and audit standards on the evolution of forensic accounting in the audit process", Journal of Applied Accounting Research, Vol. 10 No. 2, pp. 109-121. https://doi.org/10.1108/09675420910984673