Lokanan (2019) studies a fraud investigation plan, specifically for forensic accountants in case of false and theft. The article mentions the crucial role of forensic accountant and investigates financial frauds and highlights information gathering techniques and tested models for detecting frauds. By focusing on a real-life scenario, the paper can provide an understanding of documentation and its analysis in a trial environment. It allows forensics accountants and fraud examiners to understand their critical role in the investigative process.

Fraud Examiner's role in fraud cases:

Chambers (2020) describes the value of internal audit in avoiding occupational fraud, even during tough times like Covid-19. The report describes the duties of an internal auditor, highlighting their significant role in ensuring adequate controls to prevent fraud. It emphasizes that well-conducted internal audits can contribute to lowering both the median losses and the lifespan of frauds and introduces a critical role for a voucher in any anti-fraud program.

Auditor's role in fraud cases

Kleinman et al., (2020) investigates the causes of the failure by auditors to detect fraud. The work of auditors focuses on inherent limitations in the auditing process since it fails to address fraud detection. The article mentions that auditors often focus on the accuracy of financial statements instead of looking for any fraud. The article also touches upon the complexity in an auditor's duties and calls for a more proactive approach when detecting any fraud.

Audit plays an extremely limited role in evaluating whether fraud could be exposed. An auditor should perform an audit free of any material misstatements due to the omission or fraud. However, the functions of auditors may not be reduced to fraud detection only. In as much as the auditors should apply due professional care and skepticism, there are factors that affect the detection effectiveness including audit nature, organizational control types and an approach to risk assessment.

The role of forensic accountants, fraud examiners and auditors in fraud cases is unique. At the same time, forensic accountants are experts in detailed research and information collection, fraud examiners determine regulations that keep organizations safe from acts of fraud, while auditors provide an assurance on financial statements. The efficiency of fraud detection and prevention calls for joint efforts by all these individuals, each player brings their specialized skills towards one common goal that is achieving financial integrity without any cases of fraud.

My Peer Post

The first article that I found is about financial information about D.C. Housing Authority not being included in financial statements for the District's most recent financial statements. An auditor for the city said there was financial information that should have been included, but was not. Kathleen Patterson, a financial auditor for the city, said not including this information could be going against federal securities law and get the District in trouble. Glen Lee, the city's chief financial officer, disagreed with Patterson's claim that information was left out. The information that should have been reported cannot be reported in the most recent financial statements due to the housing agency not having fully completed mandatory audits past the year of 2021 that are required in order to report the information (Thompson, 2024). It is unclear in this article whether fraud is trying to be committed or not. I think there could be questions raised about why the agency isn't completing mandatory audits. The article does mention staffing issues amongst the agency, which also does put the agency at increased risk for someone inside of the agency to commit fraud and have it get overlooked. The auditor was doing her job in this case and raising questions about why certain financial information that should have been reported was not reported.

The other article that I found is about a man named Sam Bankman-Fried (SBF), who wrongly misused millions of dollars from customers. SBF owned a company called FTX that was a crypto currency exchange company as well as a research company called Alameda Research. He has been on trial in the last recent months for stealing billions of dollars from customers of his companies. To investigate the fraud, Peter Easton, a forensic accounting professor, was asked to examine the bank accounts of the companies. While examining these bank accounts, he found many discrepancies between the amounts that should have been in the bank accounts and the amounts that were actually in the bank accounts, totally up to $9 billion. SBF was using the money for personal matters, such as investments, political contributions, charity foundations, and real estate purchases. SBF used $70 million to build his penthouse in the Bahamas (Roddell, 2023). I think there were signs of fraud that maybe others within the company overlooked. Even if the company was successful, accounting employees within the company should have noticed when these amounts of money were gone from the accounts and what happened to them.

Direction:

In your responses to your peer post, be sure to address the following:

Identify any similarities and differences between the roles you posted and the ones your peer posted from the articles.

Do you agree with the explanation that your peer posted for the auditor's fulfillment of their role based on the case(s)? Why or why not? If you do not agree, provide at least point to support or disagree with their position.