Fraud and Forensic Accounting: Knowledge and Risk Assessment Task Performance in Malaysian Public Sector – Conceptual study

Popoola, Oluwatoyin Muse Johnson and Che-Ahmad, Ayoib and Samsudin, Rose Shamsiah (2014): Fraud and Forensic Accounting: Knowledge and Risk Assessment Task Performance in Malaysian Public Sector – Conceptual study. Published in: 4th Annual International Conference on Accounting and Finance (AF 2014), Phuket, Thailand (2014): pp. 103-109.

Abstract

The PwC’s 2011 Global economic crime survey confirms the fact that loss due to economic crime in Malaysia is on the increase and requires immediate intervention.

The Malaysian government vision 2020 to be a developed nation with the drive: “People first, performance now” [1] will require high level acquisition and adoption of technology as a business facilitator, new legislation, and increase in the activities of government offer new opportunities for fraud perpetrators and forensic accountants. In anticipation of these challenges, this paper discusses the need for a forensic accountant knowledge on task performance fraud risk assessment in the Malaysian public sector.

It also creates awareness to stakeholders fighting fraud in the public sector to the understanding of fraud mechanism and how to deal with fraudsters.

The objective of the study is to examine the relationship between knowledge and fraud risk assessment task performance in the office of the Accountant general and Auditor general of Malaysia which has the potential to usher in the best global practices in fighting fraud in the Malaysian public sector.

• Item Type: MPRA Paper
• Language: English
• Keywords: Fraud Forensics; Accounting; Accountability; Forensic Accounting; Auditing; Assurance; Corporate Governance; Risk Management; Investigation;Risk Assessment; Task Performance; Problem Representation; Skills; Mindset; Knowledge; Values; Ethics; Fraud Risk Assessment; Financial Criminology; Fraud; Fraud Related Problem Representation; Fraud Prevention; Fraud Detection; Fraud Response; Fraud Specialist; Auditor; Forensic Accountant; Fraud Examiner.
• Subjects: M - Business Administration and Business Economics ; Marketing ; Accounting ; Personnel Economics > M4 - Accounting and Auditing; M - Business Administration and Business Economics ; Marketing ; Accounting ; Personnel Economics > M4 - Accounting and Auditing > M40 - General; M - Business Administration and Business Economics ; Marketing ; Accounting ; Personnel Economics > M4 - Accounting and Auditing > M41 - Accounting; M - Business Administration and Business Economics ; Marketing ; Accounting ; Personnel Economics > M4 - Accounting and Auditing > M42 - Auditing; M - Business Administration and Business Economics ; Marketing ; Accounting ; Personnel Economics > M4 - Accounting and Auditing > M48 - Government Policy and Regulation; M - Business Administration and Business Economics ; Marketing ; Accounting ; Personnel Economics > M4 - Accounting and Auditing > M49 - Other

References

[1] Selamah, W. S. (2011). Current status of public sector accounting in Malaysia and the way forward. The National Public Sector Accountants Conference (NAPSAC 2011). Transitioning to a new public sector accounting landscape, June. Jabatan Akauntan Negara Malaysia. (Accountant General of Malaysia).

[2] PwC. (2011). PwC’s 2011 Global Economic Crime Survey finds economic crime in Malaysia continues to increase. 6th Global Economic Crime Survey. Retrieved on February 14, 2013 and Downloaded from http://www.pwc.com/gx/en/economic-crimesurvey/ index.jhtml.

[3] COSO. (2011). Internal Control Framework: Committee of Sponsoring Organizations of the Treadway Commission. New York. NY.

[4] Peen, L. S. (2011). “No industry or company in any country is immune from the impact of fraud”. 6th Global Economic Crime Survey. Kuala Lumpur November 30, 2011. Retrieved on February 14, 2013 at 2013 at http://www.pwc.com/my/en/press/111130- global-economic-crime-survey.jhtml.

[5] Santiago, C. (2012). Audit Report 2011: Nothing has changed. Retrieved on February 14, 2013 at http://www.freemalaysiatoday.com/category/opinion/2012/10/22/audit-report-2011-nothing-has-changed/

[6] UMA. (1965). Unclaimed Money Act. Malaysia.

[7] Popoola, O.M. J., Ahmad, A. C., Shamsiah, R. S., & Hartini, A.(2013). Task Performance Fraud Risk Assessment on Forensic Accountant Knowledge and Mindset in Nigerian Public Sector.

[8] ICAN. (2009). The Institute of Chartered Accountants of Nigeria Public Sector Accounting Study Pack. VI Publishers, Lagos, Nigeria.

[9] Messier, W. F., Glover, S. M., & Prawitt, D. F. (2006). Auditing & Assurance Services: A Systematic Approach. Issues in Accounting Education, 21 (3), 330.

[10] FPA. (1957). Financial Procedures Act. (Revised 1972). Malaysia.

[11] AA. (1957). Audit Act. (Revised 1972). Malaysia.

[12] Durkin, R., & Ueltzen, M. (2009). The Evolution of The CFF Credential, The Practicing CPA, July/August.

[13] Davis, C; Farrell, N., & Ogilby, S. (2009). Characteristics and skills of the Forensic Accountant. American Institute of Certified Public Accountants FVS section.

[14] AICPA. (2008). Forensic and Valuation Services: Overview of Certified in Financial Forensics (CFF) Credential (American Institute of Certified Public Accountants, Durham. Retrieved September, 2009, from http://fvs.aicpa.org/Memberships/ Overview+of+Certified+in+Financial+Forensics+Credential. htm.

[15] Popoola, O.M.J. (2009). “Transparency, Accountability and Value for Money Audit”. National Workshop on Global Meltdown, and Attitudinal Change. National Orientation Agency, Nigerian Institute of Policy & Strategic Studies, Kuru, Jos, Nigeria.

[16] Popoola, O.M.J. (2008). Update on auditing and ethical standards. Executive Mandatory Continuing Professional Education, Institute of Chartered Accountants of Nigeria, Lagos, Nigeria.

[17] Pollitt, C., Gierre, X., Lonsdale, J., Mul, R., Summa, H., Waerness, M. (1999). Performance or Compliance?: Performance audit and public management in five countries. Oxford: OUP.

[18] AICPA. (2002). American Institute of Certified Public Accountants. Statement on Auditing Standards (SAS) No. 99,Consideration of Fraud in a Financial Statement Audit (AICPA, Professional Standards, vol. 1, AU Sec. 316.50

[19] ICAN. (2005). Nigerian Standards on Auditing (NSA) No. 5: The Auditor’s responsibility to Consider fraud in an Audit of financial statements. Institute of Chartered Accountants of Nigeria (ICAN).

[20] MIA. (2008). International standard on Auditing No. 240, The Auditor’s Responsibilities Relating to Fraud in an Audit of Financial Statements. Malaysian Institute of Accountants.

[21] MIA. (2008). International Standard on Auditing No. 330, The Auditor’s Responses to Assessed Risks. Malaysian Institute of Accountants.

[22] ICAN. (2005). Nigerian Standards on Auditing (NSA) No. 11: Auditor’s procedures in response to assessed risk. Institute of Chartered Accountants of Nigeria (ICAN).

[23] MACC. (2009). Malaysian Anti-Corruption Commission Act. Malaysia

[24] NFAAF. (2011). The National Fraud Action Agency for Fraud 2011, “Fighting fraud together: the strategic plan to reduce fraud”. USA.

[25] MGAR, (2011). Auditor General of Malaysia Audit Report. Kuala Lumpur, Malaysia.

[26] IFAC. (2012). International Public Sector Accounting Standard Board. Handbook of International Public Sector Accounting Pronouncements. 2012 Ed., Vol. 1 International Federation of Accountants

[27] Hassan, M. M., (2001). Government Accounting, Lagos, Nigeria: Malthouse Press Limited.

[28] FCM. (1972). Federal Constitution of Malaysia (Revised 1972). Malaysia.

[29] Adebisi, F. A. (2011). Audit, Investigation and Forensics: Similarities and Differences. Institute of Chartered Accountants of Nigeria: Forensic, Audit & Investigation Faculty, February.

[30] IFAC. (2006). International Accounting Education Standard Board (IES 8, 2006). Competence Requirements for Audit Professionals. International Federation of Accountants.

[31] FRC. (2012). International Standard on Auditing (ISA) No. 700:The auditor’s report on financial statements.

[32] IFAC. (2006). International Framework for Assurance Engagements. International Federation of Accountants.

[33] Popoola, O.M. J., Ahmad, A. C., Shamsiah, R. S., & Rushami, Z.Y. (2013). Impact of Task Performance Fraud Risk Assessment on Forensic Skills and Mindsets: Experience from Nigeria

[34] Wuerges, A. (2009). Auditors’ Responsibility for Fraud Detection: New Wine in Old Bottles? Retrieved on November 3, 2012 at http://www.scribd.com/doc/63671899/Auditors-Responsibility-for-Fraud-Detection.

[35] Boleigha, P. (2011). Meaning of Forensic. Institute of Chartered Accountants of Nigeria: Forensic Audit & Investigation Faculty.

[36] Dandago, K. I. (2001). Financial Accounting Simplified. (2nd Ed,p. 143). Kano, Nigeria: Adamu Joji Publishers.

[37] Onyeanu, E. O. (2005). Poor Growth of partnership among professionals in South Eastern Nigeria: A case for transparency and Accountability. Bayero International Journal of Accounting Research, Nov. 2005, vol. 2, no. 1 p.13-19.

[38] Bovens, M. (2006). Analysing and assessing public accountability:A conceptual framework. European Governance Papers.(EUROGOV) No C-06-01. http://www.connex –network.org/eurogov/pdf/egp-connex-C-06-01.pdf.

[39] CIMA. (2008). Fraud Risk Management: A guide to good practice. Chartered Institute of Management Accountants.

[40] Nolan, J. R., Nolan-Haley, J. M., Connolly, M. J., Hicks, S. C., & Alibrandi, M. N. (1990) Black's Law Dictionary. 6th Ed. St Paul, Minn: West Publishing Co.

[41] ACFE. (2008). Report to the Nation on Occupational Fraud and Abuse. Association of Certified Fraud Examiners. Austin, TX: ACFE.

[42] Chui, L. (2010). An experimental examination of the effects of fraud specialist and audit mindsets on fraud risk assessments and the development of fraud-related problem representation. ProQuest LLC, UMI 3436520, 789 East Eisenhower Parkway, USA, 2010.

[43] Bloomfield, R. J. (1997). Strategic Dependence and the Assessment of Fraud Risk: A Laboratory Study: The Accounting Review, Vol. 72, No. 4, 1997, p. 517-538

[44] IFAC. (2009). ‘International Standard on Auditing (ISA) No. 240 Revised: The Auditor’s Responsibility to Consider Fraud in an Audit of Financial Statements’, Handbook of International Auditing, Assurance, and Ethics Pronouncements. International Federation of Accountants. New York.

[45] PCAOB. (2008). Public Company Accounting Oversight Board. Standing Advisory Group. Retrieved December 2, 2012 from http://www.pcaobus.org/Standards/Standing_Adisory_Group/index.aspx.

[46] AICPA. (1997). American Institute of Certified Public Accountants. Statement of Auditing Standards (SAS) No. 82: Consideration of fraud in a financial statement audit. Durham.

[47] Cressey, D. R. (1950). The criminal violation of financial trust. American Sociological Review 15 (6): 738–743.

[48] Cressey, D. R. (1953). Other People’s Money: A Study in the Social Psychology of Embezzlement (The Free Press, Glencoe, Il)

[49] IFAC. (2008). Code of Ethics for Professional Accountants. International Federation of Accountants. New York. Retrieved at: https://www.ifac.org

[50] Hopwood, W. S., Leiner, J., & Young, G. R. (2008). Forensic Accounting. New York, NY: McGraw-Hill/Irwin, http://www.acfe.com/about/press-release.asp?copy=10-12-2005.

[51] Rosen, L. S. (2006a). “CAP Forum on Forensic Accounting in the Post-Enron World Forensic Accounting: Where and When Headed?” Canadian Accounting Perspectives 5 (2): 257-264.

[52] Singleton, T. W., Singleton, A. J., Bologna, G. J. & Lindquist. R.J. (2006). Fraud Auditing and Forensic Accounting. 3rd Ed.Hoboken, NJ: John Wiley and Sons, Inc.

[53] IFAC. (2006). International Education Standard No. 8,Competence requirements for professional accountants. International Accounting Education Standard Board. International Federation of Accountants.

[54] ACFE. (2010). Report to the Nations on Occupational Fraud and Abuse. Association of Certified Fraud Examiners. Austin, TX: ACFE.

[55] ACFE. (2009). Managing the Business Risk of Fraud: A Practical Guide, (sponsored by The Institute of Internal Auditors, The American Institute of Certified Public Accountants, and the Association of Certified Fraud Examiners). Pp.2-17. Retrieved on 19 October, 2012 at http://www.acfe.com/documents/managingbusiness-risk-pdf.

[56] Owojori, A. A., & Asaolu, T. O. (2009). The role of forensic accounting in solving the vexed problem of the corporate world. European Journal of Scientific Research, 29 (2), 183-187.

[57] Daniel, A. & Lee B. (2006). Forensic Accountants appearing in the Literature. Retrieved March 10, 2012 at www.bus.lsu.edu/accounting/faculty/lcrumbley/forensic.html.

[58] Ekeigwe, C. C. (2011). Skill sets for Forensic Accountant. Institute of Chartered Accountants of Nigeria: Forensic Audit & Investigation Faculty.

[59] Wells, J. T. (2005). Accountants need help fighting the war on fraud; ACFE founder urges antifraud education [Press Release]. Retrieved November 13, 2012 from ACFE http://wwwacfe.om/about/press-release.asp?cpy=10-12-2005