Forensic accounting helping cos fight white-collar crime

Written by Neha Pal | Neha Pal | New Delhi | Updated: Aug 26 2011, 07:43am hrs
Put on guard by the Satyam scam and an increase in white collar crimes, the number of Indian companies resorting to forensic accounting has doubled in the last one year.

As a majority of corporate fraud cases involve accounting schemes designed to deceive investors and auditors regarding the true financial condition of a company, there has been a 100% increase in the number of companies resorting to forensic accounting in the last one year, according to KPMG.

Forensic accounting is a branch of accounting that uses investigative skills to determine the accuracy of a companys financial statements. It involves gathering, analysing and documenting financial information to detect misreporting in accounts books.

Rohit Mahajan, executive director of KPMG's forensic practice, said: Concerned over corporate frauds, many large Indian companies have started hiring forensic accountants to detect misreporting in books of accounts. For a high growth economy like India, the risk of perpetration for white-collar crimes is very high, he added.

In the wake of the growing number of fraud incidents coming to light both in India and internationally, more companies are looking towards forensic accountants to help ensure increased transparency, said Arpinder Singh, partner and national director of the Fraud Investigation & Dispute Services at Ernst & Young.

At present, many large companies in India like Accenture, Bank of America, Essar Group, Barclays Capital, Microsoft corporation, RBS, Samsung, Tata Motors, Bharti Airtel, Spice Jet, Standard Chartered Asset Management Company and HDFC Standard Life have experts in this area.

According to the Institute of Company Secretaries of India, corporate scams often result in a blame game as it become very difficult to trace the trail of funds. After the Satyam scam, people of repute have become very cautious about joining the boards of companies as independent directors because of their concern regarding their role and responsibilities and legal compliance of the companies, said ICSI secretary NK Jain.

Our forensic accounting division has doubled in the last two years and we are also strengthening our forensic accounting teams in the fields of telecom, infrastructure, pharmaceuticals, IT and consumer market as there has been an increase in demand for forensic accounting, said Mritunjay Kapoor, country head, Protiviti consulting.

Protiviti Consulting MD Akshay Bhalla said: The need for forensic accountants is prevalent across industries. The current availability of industry specific forensic accountants is quite low and there exists a gap between demand and supply.