Analysis of the Perception of Students on Forensic

Audit and Forensic Accounting Against Accounting

Fraud

Marcelo Rabelo Henrique

PhD in Business Administration

Federal University of São Paulo, UNIFESP, Brazil.

mrhenrique@unifesp.br

http://lattes.cnpq.br/8872607903177348

https://orcid.org/0000-0002-5940-4267

Lina Kang

Graduate in Accounting Sciences

Federal University of São Paulo, UNIFESP, Brazil.

linakang00@gmail.com

Antonio Saporito

PhD in Accounting

Federal University of São Paulo, UNIFESP, Brazil.

saporito@unifesp.br

http://lattes.cnpq.br/5724238604725007

https://orcid.org/0000-0002-5625-4590

Sandro Braz Silva

PhD in Business Administration

Federal University of São Paulo, UNIFESP, Brazil.

sandro.braz@unifesp.br

http://lattes.cnpq.br/6332079744575325

https://orcid.org/0000-0002-5625-4590

Availability: https://doi.org/10.5965/2764747112232023001

Submission date: December 17, 2022

Approval date: May 4, 2023

Issue: v. 12, n. 23, p. 001-020, dez. 2023

Análise da Percepção dos Discentes Sobre Perícia Contábil e Contabilidade Forense

Contra Fraudes Financeiras

Resumo

Objetivo(s): Evidenciar e diferenciar os papéis exercidos por peritos contábeis e

contadores forenses e avaliar a percepção dos discentes sobre contabilidade forense e perícia

contábil como um instrumento auxiliar nas práticas investigativas desse delito econômico-

financeiro. Esta pesquisa pretende evidenciar os conhecimentos dos estudantes, a fim de

elucidar conceitos que muitas vezes não são compreendidos devido às similaridades

apresentadas. Método(s): Por meio de uma pesquisa descritiva, buscou-se fazer uma análise

geral do papel da perícia e da contabilidade forense para combater o crime e auxiliar a justiça

com ajuda da coleta de evidências de fraude e de laudos técnicos. Resultados: A partir do

questionário mostram que existe uma confusão entre o objetivo do perito contábil e contador

forense e destacam a falta de cursos especializados sobre o tema em favor da disseminação da

cultura nos campos educacionais no Brasil. Contribuições: Dada a importância de ambas as

áreas, estudos comparativos entre as atuações dos contadores forenses e dos peritos

contadores devem ser pertinentes para identificar técnicas mais eficientes a serem utilizadas

no combate e/ou na investigação às manipulações contábeis.

Palavras-chave: Fraude. Contabilidade Forense. Perícia Contábil.

Analysis of the Perception of Students on Forensic Audit and Forensic Accounting

Against Accounting Fraud

Abstract

Purpose(s): To highlight and differentiate the roles played by accounting expert

witnesses and forensic accountants and to assess students' perceptions of forensic accounting

and forensic audit as an auxiliary tool in investigative practices of this economic and financial

crime. This research is aimed at highlighting students' knowledge in order to elucidate

concepts that are often misunderstood due to the similarities they present. Method(s):

Through descriptive research a general analysis of the role of forensic expertise and

accounting in combating crime and assisting justice was conducted by collecting evidence of

fraud and technical reports. Results: The answers showed there is confusion between the

goals of accounting expert witnesses and forensic accountants and also highlighted the lack

of specialized courses on the subject in favor of disseminating the culture in educational

fields in Brazil. Contributions: Given the importance of both areas, comparative studies

between the work of forensic accountants and accounting expert witnesses should be relevant

in order to identify more efficient techniques to be used in combating and/or investigating

accounting manipulations.

Keywords: Fraud. Forensic Accounting. Forensic Audit.

Análisis de la Percepción de los Estudiantes Sobre la Experiencia Contable y la

Contabilidad Forense Frente al Fraude Contable

Resumen

Objetivo(s): Destacar y diferenciar los roles que desempeñan los peritos contables y los

contadores forenses y evaluar la percepción de los estudiantes sobre la Contabilidad Forense

y la Pericia Contable como instrumento auxiliar en las prácticas investigativas de este delito

económico-financiero. La investigación logró el objetivo de resaltar los conocimientos de los

estudiantes sobre Contabilidad Forense y Pericia Contable, con el fin de dilucidar conceptos

sobre estas áreas que muchas veces no son comprendidas debido a las similitudes que tienen.

Método(s): Descriptivo y buscó hacer un análisis general del papel de la pericia forense y la

contabilidad para combatir el crimen y asistir a la justicia a través de la recolección de

pruebas de fraude e informes técnicos. Resultados: Del cuestionario muestran que existe una

confusión entre el objetivo del perito contable y el contador forense y destacan la falta de

cursos especializados sobre el tema en favor de la difusión de la cultura en los campos

educativos en Brasil. Contribuciones: Dada la importancia de ambas áreas, los estudios

comparativos entre las acciones de los contadores forenses y los contadores expertos deben

ser relevantes para identificar técnicas más efectivas para ser utilizadas en el combate y/o

investigación de manipulaciones contables.

Palabras clave: Fraude. Contabilidad Forense. Peritaje Contable.

Introduction

Fraud is a term used to describe any intentional act or omission that results in

financial damage to an organization, individual or group. In the accounting context, it

includes activities such as accounting manipulation, misuse of confidential information,

embezzlement and other fraudulent activities. Accounting fraud has serious consequences not

only for companies that are victims, but also for accountants who do not verify it. Thus,

prevention and control are fundamental to the financial health of organizations, which

reinforces the importance of accountants having the necessary resources to monitor and

detect possible fraudulent activities.

According to Silva (2012, p. 11), the "term fraud originates from the Latin fraus and

indicates action practiced in bad faith, abuse of trust, smuggling, clandestinity or falsification

and adulteration". The Norma Brasileira de Contabilidade Interpretação Técnica (Brazilian

Accounting Standard Technical Interpretation) (NBC T 11-IT) defines fraud as: “an

intentional act of omission or manipulation of transactions, adulteration of documents,

records and accounting statements” (Conselho Federal de Contabilidade, 2020).

As a result of the evolution of frauds in companies from all sectors worldwide, which

is causing substantial losses to their assets, a critical analysis of accounting performance from

an ethical perspective is required. Fraud usually begins with an error and the cunning of the

person who verified that such error has not been discovered, and the fraud continues.

This context has led to the development of the practice of forensic accounting, which

focuses on fraud prevention and detection. In the view of Oyedokun (2016, p.4), it is “an

accounting method used to uncover, solve and analyze fraud issues in an acceptable manner

according to the Court of Justice”.

As it is a new and little explored area in Brazil, forensic accounting is still often

confused with forensic audit and, according to Ribeiro (2009, p. 117), the main objective of

forensic accounting is "to produce evidence of the existence of fraud, bringing the real truth

closer to the procedural truth. At this point, forensic accounting is very close to forensic

audit. However, it focuses on fraud investigation".

By definition, forensic audit is the group of technical and scientific procedures that,

based on various examinations and investigations, collects and evaluates evidence that will

support reports or opinions presented to resolve a dispute in judicial or extrajudicial channels.

According to Vasconcellos (2016), the forensic audit fraud segment has seen triple-

digit growth in the last three years in Brazil, driven by three interconnected factors: the Anti-

Corruption Law, Operation Car Wash and the Petrolão scandal. In other words, the topic is

current and extremely relevant.

Since these two areas present many points in common, it is necessary to compare

them and distinguish between their professionals: accounting expert witnesses and the

forensic accountants, as once their roles have been clarified it becomes feasible to propose

specific and more profitable continuing education.

General objective

To analyze students' perspectives on forensic accounting and forensic audit in the face

of frauds.

Specific objectives

Thus, the specific objectives of this study are:

▪ to distinguish the purposes and field of action between forensic accounting and

forensic audit professionals;

▪ to measure how accounting fraud occurs in society and how much it harms

everyone; and

▪ to analyze the contribution of forensic accounting and forensic audit to combat

accounting fraud.

Research problem

Thus, the following research question was established to guide these objectives: What

is the perception of university students in relation to their understanding of forensic

accounting and forensic audit?

Justification

This study aims at contributing to the dissemination of the understanding of forensic

accounting and forensic audit in Brazil, as these subjects are still little explored, but they play

an important role in the current social context, in which cases of corruption and fraud grows

and both concepts are responsible for combating the advance of such practices and restore the

confidence of information users.

Literature review

Accounting fraud

To understand the role and demands of professionals in combating fraud, first it is

necessary to understand the concept of fraud itself, which has always been present in all kinds

of corporations in many different forms. Although there are diverse types and methods of

fraud, almost all of them have common characteristics. Generally, fraud tends to be

committed by people in high positions within companies because they have the knowledge

and skills necessary to look for opportunities to create a system that abuses these

opportunities without being discovered. Because they are exploitative in nature, all types of

fraud cause negative impacts, usually financial, on their victims.

In 1973, Cressey developed the fraud triangle, which consists of three components:

opportunity, incentive and rationalization, i.e., factors that are normally present when fraud

occurs and the process is defrauded. The first vertex of the triangle refers to the

circumstances that allow the process to occur, the second represents the perceived

opportunity (absence or ineffectiveness of controls, ability of managers to derogate from

controls) and the third is a cognitive process in which the manager seeks to classify the

fraudulent act as acceptable and justifiable.

Figure 1

Fraud Triangle

Source: Gonçalves (2011).

Fraud is almost always carried out by people in authority, especially when they have

multiple roles. When they involve larger volumes, they usually occur through collusion,

which makes them more difficult to detect. Therefore, in these cases, they tend to persist if

there are no adequate controls and audit independence. In addition, the absence and

inadequacy of internal control makes errors and fraud more likely to occur.

The quarantine caused by the Covid-19 virus epidemic in 2020 has led many people to

spend more time on digital systems, a favorite field of activity for scammers. The number of

electronic scams has increased up to 70% and, according to the 2020 Banking Technology

Survey of the Brazilian Federation of Banks (Febraban), banks and other financial institutions

have reported losses of up to one billion Brazilian reais, which is equivalent to half of the

annual spending on innovation in information security technology.

Indeed, fraud and scams are among society's most serious and common problems.

Depending on the scale, the consequences can be catastrophic. The impact caused by fraud

goes beyond the value of the asset itself, ranging to the cost of the company's image and that

of the investigation. The Bernie Madoff case is a good example.

Bernie Madoff was an American investor and former chairman of NASDAQ. In 2008,

he was identified as being responsible for the biggest ponzi scheme in world history.

Ponzi schemes are financial frauds in which high profits are promised to an investor

who deposits money in an investment fund (known as a hedge fund). The investor believes

that the source of this profit is real, such as an investment in shares or products, but the

source is actually the investors' own money. When they realize that the fund is making a

profit, new members come to invest in the fund and capitalize on part of the profit, increasing

the fund's capital and consequently profits for its members, creating a cycle in which

investors pay each other while the creator of the fraud makes money in an automatic and

practically unlimited way (ACFE, 2012).

Madoff's Ponzi scheme went unnoticed for decades and generated a fund of 65 billion

dollars, the largest hedge fund in the world at the time. The entire amount was lost when his

fraudulent activities were discovered. A gap of 65 billion dollars sent the market into a panic

and almost all shares in all sectors of the market went into a downtrend, bankrupting

hundreds of companies and investors (those who invested and even those who did not invest

in Madoff's fund) creating thousands of direct and indirect jobs all over the world.

Incentives

pressure

Opportunity

Risk of

fraud

Attitude/

rationalizat

ion

Anyone who thinks that Brazil, due to its socio-economic problems, cannot have

state-of-the-art technology and human intelligence to combat fraud is mistaken. As a country

accustomed to the need for protection against various types of crime, Brazil has developed

enough experience to build solid protection systems.

In fact, the country is among the most modern in the world in this regard, especially

with customers. Chip cards and biometrics at ATMs, for example, are technologies in which

Brazil is a pioneer.

However, Brazilians are still among the most affected by bank fraud worldwide, as

the skill and creativity of criminals is impressive – the country is number one in phishing

attacks to steal credit card data, for example.

This scenario means that Brazil needs more and more professionals focused on data

security and anti-fraud solutions. Thus, having this type of intelligence is an investment that

institutions have already realized has a practically guaranteed return.

The challenge of proving illicit acts demands time and experience from professionals

who need accurate technical knowledge in order to identify possible “balance sheet or report

makeup”. To meet this new complex demand for services, the figures of forensic accountants

and the accounting expert witnesses have emerged.

Forensic accounting

The purpose of traditional accounting is to offer financial information to help the

company make strategic decisions. However, factors such as fraud and illicit acts jeopardize

the authenticity of such information, generating erroneous financial data that causes various

problems and is not limited to the financial sector. In this context, forensic accounting

emerges, i.e. the application of forensic science to the world of accounting sciences.

Manning (2005, p. 5) defines forensic accounting as a “science of collecting and

presenting information that can be used as evidence by a court in analyzing crimes of

economic nature, bringing together accounting, financial, legal and administrative

information”. It is a multidisciplinary area that combines accounting knowledge with

psychology, law and finance (Huber & DiGabriele, 2014).

This branch of accounting relies on information from the most diverse areas of

knowledge and is based on investigation. This gives rise to forensic accountants

Forensic accountants are seen as a combination of the professional auditor and the

private investigator, with skills centered on investigation, research and data gathering,

legal knowledge, quantitative methods, finance, auditing and accounting (Ribeiro et al.,

2013, p. 7).

In other words, the goal of forensic accounting is to investigate and identify illegal

activities that compromise the integrity of accounting information and organize its findings

into evidence to be used in court against the entity (physical or legal) accused of committing

such violations.

Golden, Skalak and Clayton stated the following:

The concern of forensic professionals is not to form a general opinion on the accounting

reports, but to carry out an extremely detailed examination of the entity's financial

situation in order to provide evidence and preventive actions to eliminate the recurrence

of irregularities. (2011, p. 12).

When there are suspicions of financial fraud on a company and its internal audit fails

to detect them, possibly on purpose to preserve the company's image, forensic accountants

are held responsible for conducting a process of investigation and evidence collection that

confirms the veracity of the suspicions.

The general activities of forensic accountants include analysis of the financial

situation, consideration of a lawsuit, preparation of a damage report based on evidence

obtained from documents, testimony and specialized witnesses (Ahmed & Ali, 2019).

Evidence answers questions such as who, what, when, where, how and for what reasons

regarding suspected fraudsters.

To this end, the forensic accounting uses various areas of knowledge to combat fraud,

whether preventively or detectively, such as computer science, psychology, criminology and

criminal investigation. The Delphi technique and Benford's Law are approaches used by this

field to detect suspicious financial activities. According to Giovinazzo (2001), the Delphi

technique is “a qualitative research tool that seeks a consensus of opinions from a group of

experts regarding future events”.

Thus, the most required knowledge and skills of forensic accountants are: knowledge

of accounting, interpretation of financial statements, investigative skills and the ability to

conduct interviews. This last skill is particularly important for the professional. In various

surveys on the subject, KPMG has always listed information from employees or third parties

obtained through interviews as one of the main reasons for detecting illegal activities within

companies, showing the importance of knowing how to formulate questions to obtain

relevant information and carefully choosing the right people to interview.

For example, in its 2016 article Fraudster Profile, KPMG Business Magazine states:

for fraudsters acting in collusion, the main methods of detection are whistleblowing,

management review and anonymous tip-offs. Without a doubt, whistleblowing has had

the highest incidence of uncovering groups of five and/or more colluders (2016).

It is also worth noting that due to the evolution of technology in electronic

management systems and the media, it is necessary that forensic accountants be

knowledgeable of information technology.

Figure 2 shows the specific areas of knowledge and their intersection in shaping the

skills and training of professionals specializing in forensic accounting.

Figure 2

Skills of the Forensic Accountant

Source: Crumbley and Smith (2009, p. 83).

According to the Association of Certified Fraud Examiners (2012), forensic

accountant's responsibilities include: conducting forensic research to trace funds and identify

assets for recovery; performing forensic analysis of financial data; preparing forensic

accounting reports of financial results and preparing analytical data for litigation and

witnesses as required.

This professional is also responsible for proactively implementing improvements to

internal processes and controls so that fraudulent acts do not occur again.

According to Dahli Gray (2008), the areas in which forensic accountants work are

vast. In his article, he mentions some U.S. institutions, such as the Federal Bureau of

Investigation (FBI), the Central Intelligence Agency (CIA) and the Internal Revenue Service

(IRS). However, in Brazil there are also institutions in which this professional can work, such

as the Federal Police (PF), the Federal Audit Court (TCU) and the Federal Comptroller

General (CGU).

Forensic audit

Forensic audit is a branch of accounting that consists of a set of technical procedures

applied with the aim of evaluating, investigating and validating financial and accounting

issues. “Wherever patrimonial facts of people, companies and institutions are involved, and

wherever the patrimonial director is, there is the forensic audit as a first-line auxiliary in

judgments” (Hoog, 2010, p. 93).

Costa (2022) stated that the practice of forensic audit arose in ancient times, when the

legislator acted as an expert, putting an end to conflicts between companies. Given the

expansion of goods, the business world became more complex and confrontations over the

division of revenue and assets were constant, which made the audit act fundamental in

judicial and extrajudicial petitions, providing information to clarify doubts, with the aim of

proving audit facts.

According to Junior Santos (2007), forensic audit provides the technical evidence

needed to prove accounting facts related to assets and provides information that can help

judges make procedural decisions.

As defined in the Brazilian Accounting Standard (NBC TP 01):

. . . forensic audit is the set of technical-scientific procedures aimed at bringing to

the decision-making instance elements of evidence necessary to subsidize the fair

resolution of litigation or the finding of a fact, by means of an accounting expert

report and/or forensic accounting opinion, in accordance with legal and professional

standards, and specific legislation insofar as it is pertinent (Conselho Federal de

Contabilidade, 2020).

The importance of the intervention of an audit for the judge arises when there are

discussions involving assets, in which their effects provoke calculations, calling on the

accounting area to resolve disputes. “The term factual determination refers to the need for the

production of expert evidence with technical and scientific basis” (Inacilma, 2021, p. 12), and

the term technical-accounting opinion that justifies or disqualifies arguments, enabling the

decision-making process, whether in a judicial or extrajudicial context.

The forensic audit, whether judicial, extrajudicial or arbitration, is the exclusive

responsibility of the accountant, but for Miranda, Fernandes and Goulart (2015), in addition

to academic training, it is necessary for the accountant to have solid technical-scientific

knowledge of the subject, in order to delve into the interpretation of the fact and provide

solutions to the proposed questions.

According to the Brazilian Accounting Standard – NBC PP 01 (R1), of March 19,

2020, an expert is an accountant with technical and scientific knowledge, regularly registered

with the Regional Accounting Council and the National Register of Accounting Experts, who

conducts expert activity personally or through a technical or scientific body, with the

following designations:

▪ Court-appointed expert is the accountant appointed by the judiciary to exercise

forensic audit;

▪ Arbitrator expert is the accountant appointed to provide forensic audit;

▪ Official expert is an accountant who has been appointed by law and belongs to

a special state body;

▪ Technical assistant is the accountant or technical/scientific body appointed and

hired by the party in forensic audits.

It should be noted that in order for accounting expert witnesses to be appointed by the

court, they must be duly registered with the Certificate of Professional Regularity issued by

the Regional Accounting Councils or the CFC's National Register of Accounting Experts.

When accepting the assignment, this professional must comply with the following

rules governing the expert activities and performance of the accounting expert witness:

a. NBC TP 01 - Forensic audit - CFC (2020). This standard aims to guide the

expert in the technical-scientific procedures for carrying out forensic audit in the judicial and

extrajudicial spheres, to clarify the aspects and facts of litigation.

b. NBC PP 01 – Accountant expert witness – CFC (2020). This standard

establishes criteria inherent to the accountant’s work as an expert.

Forensic audit can be divided into two categories: judicial and extrajudicial.

Extrajudicial audit is not requested by a judge but by a company or individual seeking

an answer to a particular accounting situation and can serve as the basis for a lawsuit. It can

occur in cases of calculating compensation, sharing assets, liquidating assets, merging

companies, among others. This category includes arbitral expertise, in which the Arbitration

Act must be applied.

Arbitration is an alternative to the judicial branch for resolving disputes involving

available property rights in which one or more arbitrators are chosen by the involved parties

to solve the issue.

It is very common for out-of-court expertise to be carried out at the request of a tax

lawyer in cases of tax assessments. This is because the internal Revenue Service most often

imposes a fine that is higher than it should be because it does not take into account possible

tax credits or due to a misinterpretation of the accounting books. Thus, forensic audit

highlights this situation and the case is resolved quickly, already in the administrative sphere.

These are also examples:

Figure 3

Area of Expertise in the Extrajudicial Sphere

Source: adapted from Magalhães (2005).

The notes of accounting expert witnesses must be confidential and responsible

according to professional ethics. These professionals must always seek the reality and truth of

the facts they dealt with, providing evidence under very well-founded analysis criteria, as the

reports may have undergone some kind of manipulation of the information. Therefore, such

experts must be reliable, impartial, trustworthy and knowledgeable in the field.

Committed to these responsibilities, experts must provide all the necessary

clarifications in their report in a clear and precise manner in order to build sound conclusions.

According to Costa (2022, p. 3):

the forensic accounting report or technical accounting opinion used by the professional accountant

serves to establish facts, clarify and eliminate doubts, aiding decision-making by judges or

interested parties in litigation. The accounting opinion is used by an assistant accounting expert

witness, who in turn analyzes the conclusions of the expert report, corroborating the grounds of

the report in order to identify cases for the party that hired this professional.

The preparation of an expert opinion involves a number of expert accounting

procedures, including, in whole or in part: examination, survey, inquiry, investigation,

arbitration, measurement, valuation, certification and testability, depending on the nature and

complexity of the matter. A good quality opinion is one that contains objectivity,

technological rigor, conciseness, argumentation, accuracy and clarity.

According to Vasconcellos (2016), the segment of forensic audit frauds has increased

by more than three digits between 2013 and 2016, driven by three interconnected factors: the

Anti-Corruption Law, Operation Car Wash and the Petrolão scandal.

According to the National Association of Federal Criminal Experts (2020), in Brazil

there are several examples of effective participation by accounting expert witnesses in

Brazilian investigations such as Mensalão, Operation Car Wash, Pandora's Box,

Sanguessuga, Zelotes, Greenfield and Bullish, among others, in which forensic audit-

financial expertise has been present in high-profile operations (Rosa & Lima, 2019).

Expertise in the

out-of-court sphere

Merger

Split

Acquisition

Administrative

measures

Revaluation of

non-current

assets and equity

Comparison between forensic audit and forensic accounting

According to previous texts, there are conceptual descriptions of research on the

purpose and characteristics of professionals in forensic audit and forensic accounting, but as

there are also some similarities between them, there could be some confusion for readers.

Thus, Lucas Caio Nadone sought to distinguish forensic accounting from forensic

audit, areas that in theory are based on investigation to attest to the veracity of facts brought

into question.

Chart 1 below clearly shows the difference between these professionals.

Chart 1- Difference between forensic audit and forensic accounting

Type

Forensic audit

Forensic accounting

Realization

Independent ad hoc experts

Company or self-employed professional

Focus

Issuing opinions

Investigating facts

Periodicity

Judicial and extrajudicial

process

Lawsuit, specific action or executive

demand

Demanders

Occasional / at any time

Eventual

Scope

Justice or parties involved

Defrauded (victims)

Timeframe

Questions

Complaint required (private prosecution)

Type

Historical

Historical/future

Training

Detective

Detective/Preventive

Regularization

Accountant

Accountant, Law, Economist, Business

Administrator (Multidisciplinary)

Final output

NBC PP

No regulation

Expert opinion

Report

Source: adapted from Nadone et al., (2017)

It can be noted that the two specialties have similarities, but forensic audit work is

much broader, ranging from issues involving the determination of assets to search and seizure

cases, i.e. the expert can be involved in valuation of assets and rights, calculation of

compensation, sale and purchase of companies, division or liquidation of assets, divorce,

while forensic accounting works specifically in situations in which there has been or is fraud,

seeking financial information from public and private companies.

Forensic accounting is an action capable of highlighting financial data that has

occurred or is occurring to resolve legal disputes. Thus, forensic accountants have the

important role of preventing economic crimes (Crumbley et al. apud Izomara et al., 2019, p.

4). However, their work is focused on answering questions elaborated by judges and so they

do not act proactively in prevention, but reactively in measuring fraudulent acts.

Other authors such as Aquino and Imoniana (2017) identified in their research that,

although both are concerned with presenting evidence, accounting expert witnesses are

focused on presenting before a judging body, whereas forensic accountants do not necessarily

testify in court or before a judging authority. It is also worth highlighting the regulation in

Brazil, in which the forensic audit is widely regulated and has a range of rules governing the

profession, but forensic accounting does not.

Despite differences, it is worth noting that for both professionals, ethical behavior,

honesty and responsibility are the main basis of professional achievement and they must

always maintain independence, avoiding anything that could embarrass them in their work.

After conducting this analysis, it can be conceptualized that forensic accounting is a

branch of forensic audit that allows financial or accounting information to be gathered and

presented, to serve as a basis for debate, discussion and analysis, specifically in crimes

involving economic and financial aspects, such as money laundering.

Methodology

In terms of purpose, this research is descriptive, as its objective is to analyze the

competencies and responsibilities of forensic audit and forensic accounting professionals, to

distinguish the mishmash of concepts in these two areas. Both are important structures to help

combat fraud, and were analyzed through a survey of articles in the field. In terms of

procedures, this research aimed to carry out a bibliographical study of articles found on the

subject of forensic accounting and forensic audit published in scientific events and journals.

The descriptive research was aimed at performing a general analysis of the role of

forensic audit and forensic accounting in combating crime and assisting justice by collecting

evidence of fraud and technical reports.

After the descriptive analyses, a field research was conducted using a closed question

questionnaire to extract data and build information directly from the reality of the object of

study. The level of knowledge of students on forensic accounting and forensic audit, was

analyzed, as this subject is still little explored in the accounting world, but with a vast field of

professional activity, so it is of vital importance for the academic training of students.

To conduct the field research, some steps were followed, which consisted of:

▪ developing of the questionnaire;

▪ choosing the population;

▪ sharing the questionnaire with other universities and

▪ data collection.

Regarding the approach, the study was quantitative and applied descriptive statistics

to analyze the collected data and presented the results obtained in tables and graphs, showing

university students' knowledge of forensic accounting and forensic audit.

Field Research

Profile of the interviewees

The questionnaire was distributed via email to academic centers at Mackenzie, the

Federal University of São Paulo (Unifesp), the University of São Paulo (USP), etc. and was

answered by 67 students over five months, from July to December 2021. This total was

composed of 35 women and 32 men. In terms of academic background, the respondents were:

58 in accounting sciences; the others in economics; business administration and other areas.

Therefore, the highest concentration (86.6%) was in the Accounting Sciences course,

a predictable result considering that it was a questionnaire focusing on forensic audit and

forensic accounting, topics little explored even within the area itself. The majority were

studying accounting sciences, so it was expected that they would work in this sector: 41

people (61.2%) worked in accounting and 26 people (38.8%) worked in another field.

Analysis of results

The survey used a questionnaire designed with a focus on students' reflections on

forensic audit and forensic accounting and was made up of eight questions identified below.

The results of interviewees' answers follow each question. The evaluation metrics consist of

numbers from one to four:

1. Strongly disagrees

2. Partially disagrees

3. Partially agrees

4. Strongly agrees

4.2.1. Questionnaire

The answers to the questions applied follow.

Graph 1 – I recognize the difference in the objectives of the areas of forensic

accounting and forensic audit areas.

Source: prepared by the authors (2021).

The purpose of this question was to identify the student's ability to identify the expert

activities of the forensic accountant.

The graph shows that approximately 47.8% of respondents said they were unsure

about the subject and 52.2% said they understood the different goals of the two areas.

This question was also asked in 2012 in Robson Maciel Silva's survey, in which 71%

of the eight respondents who worked in finance said they did not differentiate between

forensic accounting and forensic audit. In contrast, less than half of the respondents to this

survey said the same, which indicates an increase in the understanding of the subject.

Graph 2 – Do you agree that forensic accounting is the science responsible for

combating crimes of economic nature through investigations and the presentation of evidence

that is suitable and admissible in court?

Source: prepared by the authors (2021).

There is little doubt on the purpose of forensic accounting. Up to 97% agree that the

area is useful in combating financial crimes.

Graph 3 - Forensic audit has several aspects and applications and forensic accounting

is one of them, in which its main issues are related to the prevention and detection of fraud,

such as money laundering.

Source: prepared by the authors (2021).

This question sought to assess whether the interviewees were consistent with the

answers given in the previous questions.

The vast majority (83.6%) believed that forensic accounting is a branch of forensic

audit, which is more focused on preventing and investigating fraud. This result is in

opposition to the percentage in the first question, in which more than half of the respondents

said they did not know the difference between the functions of the areas under discussion.

Graph 4 - The accounting expert witness, unlike the forensic accountant, does not act

proactively in prevention, but reactively in measuring fraudulent acts.

Source: prepared by the authors (2021).

The above statement reveals the point that distinguishes activities between forensic

accountants and accounting expert witnesses who work to measure the extent of fraudulent

cases in order to answer questions presented by the judge or the party that will decide a

particular issue.

The results showed that most of the respondents (77.6%) believe that fraud prevention

is not within the scope of the accounting expert witness's work.

In their article, Prates, Souza and Dutras (2018) discussed interviews with

professionals in the field of forensic audit. According to one interviewee, the case that comes

closest to his area of expertise would be the calculation of economic damages in both the

extrajudicial and judicial phases. In other words, their job is to stipulate the extent of the

damage caused by the illegal act of accounting fraud. Others also stated that they receive

procedures and act only after the fact, in order to ascertain what has already gone wrong, thus

verifying the occurrence of the irregularity. The interviewees made it clear that forensic audit

is a reactive science, not a preventive one.

Graph 5 - Do you agree that the work of accounting expert witnesses in investigating

and combating corruption is more efficient than that of forensic accountants?

Source: prepared by the authors (2021).

The percentages of respondents who disagree or agree with this question are very

close: respectively 43.4% and 56.7%.

This question is strongly related to the third question, as although 83.6% of the

students said they were aware of the forensic accountant's focus on combating and

investigating fraud, it was noted that their work is still not very visible in the Brazilian

environment and that expert accountant witnesses replace their roles.

In a study by Luccas and Relvas (2013), a dynamic was carried out with a group of 17

people. Using a real scenario as a case study, over the course of two rounds, the group chose

the professional best suited to provide the service of investigating and/or combating fraud

within a company. During the first phase, without any prior definition of each profession, the

majority opted for the independent auditor, followed by the accounting expert witness, the

internal auditor, and finally, the forensic accountant. Before the second phase, two tables with

goals and functions of each professional were shown to participants. By better understanding

each professional, 31% changed their previous choice, in which forensic accountants became

the new choice to be hired to investigate and combat fraud in the case. However, some still

highlighted the timid role of forensic accountants and claimed that the closest parallel to this

figure in Brazil would be the accounting expert witness.

Graph 6 - Currently, universities and academic institutions have made a lot of content

available on forensic accounting and forensic audit.

Source: prepared by the authors (2021).

Few students stated that they received education on forensic accounting and forensic

audit. Thus, it can be inferred that universities and other accounting organizations are not

fulfilling their role of encouraging the introduction and development of these professionals in

Brazil. In a survey conducted by Sena et al. (2020), students presented the main obstacles to

integrating these areas into the undergraduate curriculum, especially forensic accounting,

which are as follows: space in the undergraduate curriculum, lack of teachers specialized in

the subject, lack of administrative or financial support and specific teaching materials.

Graph 7 – Bearing in mind that there is a growing demand in the areas of forensic

audit and forensic accounting, their knowledge is essential for future accountants.

Source: prepared by the authors (2021).

This question offered a good idea of the importance given by the respondents to the

areas covered and it seems that the vast majority (88%) agree that their knowledge is

essential for the training of future accountants.

Kramer, Seda and Bobashev’s article (2016), which aimed at finding out views of

educators and accounting professionals on forensic accounting education, concluded that the

groups agreed that professional demand in the area will increase in the near future and that

they prefer a separate course and diploma at graduate and postgraduate levels.

The services of accounting expert witnesses have also been gaining more prominence,

especially with the increase in labor lawsuits. It was also said that, because they serve the

whole country, there is a need to train more qualified professionals to meet all the demands.

Graph 8 - I am interested in working with forensic audit or forensic accounting.

Source: prepared by the authors (2021).

This question served as a gauge of the student's interest in pursuing a career as an

expert or forensic accountant.

It can be seen that there is a significant percentage of students interested in the area.

Such result was expected, considering the repercussions of the previous question.

Overview

Summarizing the responses of the 67 interviewees, forensic accounting is undoubtedly

a branch of forensic audit consisting in a set of techniques and knowledge to combat financial

crimes. In addition, the vast majority of respondents are aware that the expert focuses on

answering questions drawn up by the parties, not acting proactively to prevent fraud, but

rather to measure the act after it has occurred (Silva, 2012).

However, the question that asked whether the division of responsibilities between

forensic audit and forensic accounting was recognized revealed that half of the respondents

considered this division was insignificant, which showed lack of cohesion among them

regarding the professional roles.

In more than half of the respondents’ view, accounting expert witnesses work more

effectively in combating fraud than forensic accountants, which is a result of the lack of these

professionals working on a large scale in the Brazilian environment. Often, their work is

conducted by the accounting expert witnesses or big auditing firms, the so-called Big Four,

which offer everything from prevention services to those related to fraud investigation.

However, there is no association of audit priorities aligned with the fraud mitigation strategy,

since the work is more focused on verifying compliance with standards.

In analyzing the demand for professionals in these areas, it was observed that students

are very interested in the careers of accounting expert witnesses or forensic accountants, but

there is misinformation on the subjects and low awareness and education in Brazilian

educational institutions, leading to a lack of professionals in these areas.

Furthermore, there are some comments made by questionnaire respondents

transcribed below.

I think it's a very vast and important area for our training, but we realize that we don't

cover it very much in our undergraduate course, as well as in other faculties. We

could address these issues in more depth and in a better way (Respondent 49’s

Report).

Graduated accountants with a Certified Public Accountant (CPA) license simply

submit supplementary obligations within deadlines without any analysis or necessary

knowledge. I work with tax review, and every day I see fiscal SPED and EFD

Contributions submitted with zero amounts, companies and accounting firms that

have no control over incoming invoices, etc. Any expert can identify accounting fraud,

as no company in Brazil pays taxes correctly. (Respondent 46’s Report).

It seems to me that both Forensic audit and Forensic Accounting are very interesting

areas in terms of the purpose of these sciences, which is to investigate fraud and other

illicit activities, but society has paid little attention to these promising fields that

contribute to the financial health of companies, as well as government institutions

(Respondent 66’s Report).

Conclusion

This research aimed at highlighting students' knowledge on forensic accounting and

accounting audit, in order to clarify concepts about these areas that are often misunderstood

due to their similarities.

The results obtained show that there is confusion between the purpose of the

accounting expert witnesses and the forensic accountants and highlight the lack of specialized

courses on these themes in favor of disseminating such knowledge in Brazilian education.

Based on the study, it can be seen that there are differences in their scopes of action,

as forensic audit is more comprehensive than forensic accounting. Although both are

concerned with presentation of evidence, the former does it before a judging body, while the

latter performs it for both family and private cases.

The increase in the amount of corporate fraud has led to discussions on the accounting

professional to be chosen by managers to combat this situation within companies. In view of

this study, the conclusion is that forensic accountants are professionals whose role is related

to this function. However, the timid role of forensic accountants in Brazil and its strong

resemblance to accounting expert witnesses raise doubts on the ideal professional to be

chosen.

Along with increased awareness of the level of performance and importance of these

tools against due diligence and financial crimes, interest in pursuing a career in these areas is

also growing.

Thus, training more professionals in forensic accounting and forensic audit is

necessary, as fraud is an event requiring attention from companies and there is a lack of

research on this subject. For Prabowo (2015), the inclusion of forensic accounting in training

can be seen as an important attitude to take in our society to investigate, identify and reduce

cases of corruption, which are a problem in the world economy.

Given the importance of both areas, comparative studies between the work of forensic

accountants and accounting expert witnesses should be pertinent in order to identify more

efficient techniques to combat and/or investigate accounting manipulations.

The great difficulty during the development of this work was to find publications on

this subject, since it is little explored and known by civil society. For the same reason, it was

even more difficult to obtain a reasonable number of people willing to answer the

questionnaire.

Finally, suggestions for future research are to deepen this study by adding an analysis

of auditing professionals, who in turn also have similar traits to the covered areas. In addition,

it is recommended to study the application of forensic accounting in public environment and

cybercrime of a financial nature.

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