Importance of Forensic Accounting for Students

    Chapter Progress:

    It is important to incorporate the study on the forensic accounting in the curriculum of the MBA and Law students for various reasons. Committee of Sponsoring Organizations of the Treadway Commission (COSO), is a U.S. private-sector initiative, formed in 1985 with the objective to identify the factors that cause fraudulent financial reporting and to make recommendations to reduce its incidence. COSO has established a common definition of internal controls, standards, and criteria against which companies and organizations can assess their control systems.

    COSO is sponsored and funded by 5 main professional accounting associations and institutes; American Institute of Certified Public Accountants (AICPA), American Accounting Association (AAA), Financial Executives International (FEI), The Institute of Internal Auditors (IIA) and The Institute of Management Accountants (IMA).

    Due to questionable corporate political campaign finance practices and foreign corrupt practices in the mid -1970s, the SEC and the U.S. Congress enacted campaign finance law reforms and the 1977 Foreign Corrupt Practices Act (FCPA) which criminalized transnational bribery and required companies to implement internal control programs. In response, a private-sector initiative, called the National Commission on Fraudulent Financial Reporting (commonly known as the Treadway Commission) was formed in October 1985. The Treadway Commission issued its initial report in 1987 among other items it recommended the following for the improvement of education

    Throughout the business and accounting curriculum, academicians should promote the knowledge and understanding of the factors that leads to fraudulent financial reporting and the strategies that can help to reduce the incidences of corporate frauds.

    Business and accounting students should be well-informed about the regulation and enforcement activities by which government and private bodies safeguard their financial reporting system and thereby protect the interest of the investors.

    The business and accounting curriculum should help students to develop stronger analytical, problem solving, and judgment skills to help prevent, detect, and deter fraudulent financial reporting when they become participants in the financial reporting process.

    The business and accounting curriculum should foster ethical values by integrating their development with the acquisition of knowledge and skills to help prevent, detect, and deter fraudulent financial reporting.

    Business schools should encourage business and accounting faculty to develop their own personal competence as well as classroom materials for conveying information, skills, and ethical values that can help prevent, detect, and deter fraudulent financial reporting. Business school faculty reward systems should recognize and reward the contribution of faculty who develop such competence and materials.

    At some point Indian education system will also have to adopt the suggestions of the Treadway commission report.

    As a result of this, Indiaforensic has designed its curriculum to provide an armor to the accounting , law and finance students to save themselves from being the victim of the frauds in the fast changing corporate world by providing them the basic tools to understand the classification of various fraud schemes.