FIJI NATIONAL UNIVERSITY

COLLEGE OF BUSINESS, HOSPITALITY AND TOURISM STUDIES

SCHOOL OF ACCOUNTING/LAW
Department of Accounting

ACC705 Forensic Accounting and Fraud Investigation Credit Points: 16 Trimester 1, 2018

Unit Coordinator: Anita Prasad

anita.prasad@fnu.ac.fj

Lectures: Day Students

Monday 11-1pm ERC/TR 8

Tutorials: Day Students

Wednesday 11-1pm ERC/TR 8
Thursday 11-1pm ERC/TR 8

Evening Students
Monday 6.00 – 9.00 pm ERC/TR 8

Consultation Time: Day Students

Monday 3-5pm Building 21

Evening Students
Monday 5.00–6.00 pm Building 21

Prerequisite: The student must have passed ACC 601 and ACC701 or consent
from HOD.

E-Information: All pertinent information relating to the unit shall be posted on

Moodle. Students are required to check emails regularly for
communication from the lecturer.

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1.0 Welcome
I welcome you to this Unit and hope that you will find it enriching and interesting. This unit aims
to provide you with an understanding of the concepts of forensic accounting, fraud
investigations and litigation support services. Students will be able to acquire the skills to
identify indicators of fraudulent activities, forensic investigation and techniques which will assist
them in forensic examination of organisation control systems and scrutinizing financial
statements. This unit is a core unit for Bachelor of Accounting.
2.0 Unit Description
Forensic accounting is an integration of accounting, auditing, and investigative skills within any
organisation in response to potential fraudulent activity. This is an area of the accounting
profession which is gathering heightened awareness and increasing focus in recent years. The
phenomenon can be directly related to the increase in corporate collapses globally resulting in
litigations thus demanding pro-active management of potential fraudulent activities. Only few
organisations have thus incorporated forensic accounting to be part of their corporate
governance strategy to combat fraud and corruption.
The unit examines inadequacies in organisation control systems, assessment of risk factors and
adoption of effective and efficient forensic accounting investigation techniques in these
situations. Students will analyse and investigate fraudulent activities and litigation cases as part
of their assessments. Materials in the unit focus on corporate losses and failures, and
responsibilities of the forensic accountant in investigating the role of fraudulent activities in
these areas.

3.0 Learning Outcomes

On successful completion of this unit, students will be able to:

1. Analyze and apply professional ethics and distinguish the roles of an accountant, internal
and external auditor and a forensic accountant.
2. Analyze the potential red flags of fraud, different types of fraudulent activities and the
importance of internal controls in the prevention and deterrence of fraud and other forms
of abuse.
3. Design and apply an effective prevention and detection strategy for fraudulent activities
and the risk-based approach to financial audits and forensic investigations.
4. Utilize research skills to identify the ways to analyze, interpret and investigate financial
reports as part of the investigation and resolution of potential misstatements of financial
reports due to fraud and error.
5. Formulate and present a forensic accounting investigation report.

4.0 Resources
The recommended text is:

Hopwood. W, Leiner. J, Young. G, Forensic Accounting and Fraud Examination, 2 nd edition,

2011.

Students must also read the listed readings after every topic.

Supplementary

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 1. Silverstone. H, Sheetz, M, 2006,. Forensic Accounting & Fraud Investigation for Non-
Experts; 2nd edition; John Wiley & Sons, New Jersey, USA.
2. Stephen Pedneault, 2009, Fraud 101: Techniques & Strategies for Understanding Fraud,
3rd edition, John Wiley & Sons, New Jersey, USA.
3. Golden W. T, Skalak L. S, Clayton M, M., 2006, A guide to forensic accounting
investigations, 1st edition; John Wiley & Sons, New Jersey, USA.

5.0 Unit Content and Reading References

TOPIC 1: PROFESSIONAL ETHICS AND THE FORENSIC ACCOUNTANT

Lecture Hrs: 8 Tutorial/Workshop Hrs: 4 SDL Hrs: 32

Learning Outcome
The student shall be able to analyze and apply professional ethics and compare and contrast
between the roles of an accountant, internal and external auditor and a forensic accountant.

Performance criteria
After studying this topic, the students should be able to:
1.1 Analyze the ethics and roles of accountants, auditors and forensic accountants.
1.2 Compare and contrast between forensic accounting investigations and financial statement
audits.
1.3 Analyze corporate governance and evaluate its role in corporate decision making and
corporate regulation.
1.4 Utilize research skills to identify and analyze the rules that govern the auditor’s
responsibility as prescribed by legislations and auditing standards.
1.5 Analyze professional scepticism and compare and contrast between fraud and error.
1.6 Evaluate the reasons and engagement of forensic accountants.
1.7 Synthesize the ways to cooperate and work with forensic accountants.

Reading Resource Materials

1. Lecture Notes
2. Text: Chapter 1: Introduction to Forensic Accounting and fraud examination, pp. 3-13.
3. Text: Chapter 2: The Forensic Accounting legal environment, pp. 15-46.
4. Text: Chapter 4: The Auditing Environment, pp. 81-128.
5. Stephen Pedneault, 2009, Fraud 101: Techniques & Strategies for Understanding Fraud,
3rd edition, Chapter1, pp 1- 18, John Wiley & Sons, New Jersey, USA.
6. Stephen Pedneault, 2009, Fraud 101: Techniques & Strategies for Understanding Fraud,
3rd edition, Chapter2, pp 19-32, John Wiley & Sons, New Jersey, USA
7. Silverstone. H, Sheetz, M, 2006,. Forensic Accounting & Fraud Investigation for Non-
Experts; 2nd edition; Chapter1 pp 3-36, John Wiley & Sons, New Jersey, USA.
8. Silverstone. H, Sheetz, M, 2006,. Forensic Accounting & Fraud Investigation for Non-
Experts; 2nd edition; Chapter 5 pp 61-68, John Wiley & Sons, New Jersey, USA.
9. Golden W. T, Skalak L. S, Clayton M, M., 2006, A guide to forensic accounting
investigations, 1st edition; Chapter1, John Wiley & Sons, New Jersey, USA.
10. Golden W. T, Skalak L. S, Clayton M, M., 2006, A guide to forensic accounting
investigations, 1st edition; Chapter 6, John Wiley & Sons, New Jersey, USA.

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 11. Barra, A. “The impact of internal Controls and penalties on fraud” Journal of information
systems, 2010 vol 24 (1) pp 21
12. Wilson, S. “ Jury Psychology” and some criminological Perspectives on fraud and the
criminal law” , Journal of criminal law, 2006, vol 70 (1) pp 74-75
13. Jaffar, n, Salleh, A et.al “ The effects of fraud risk assessment on the external auditors
ability to detect the likelihood of fraud: A conceptual Discussion” , European Journal of
Scientific research, 2007 vol 17 (3) pp425- 432 .
14. Digabriele, J. “An Empirical Investigation of the relevant skills of forensic Accountants”,
Journal of Education for Business, 2008 vol 83, pp 331-338.

TOPIC 2: FRAUDULENT ACTIVITIES, SCAMS, MANAGEMENT AND EMPLOYEE ABUSE

Lecture Hrs: 10 Tutorial/Workshop Hrs: 5 SDL Hrs: 34

Learning outcome
The student shall be able to analyze the different types of fraudulent activities and the
importance of internal controls in the prevention and deterrence of fraud and other forms of
abuse.

Performance Criteria
After studying this topic, the students should be able to:
2.1 Analyze the causes of corporate failures
2.2 Compare and contrast between fraud and error that leads to financial misstatement
2.3 Evaluate the different types of fraudulent activities, scams and other forms of
management and employee abuse
2.4 Analyze earnings management.
2.5 Evaluate and criticize the causes and effects of management and employee fraud and
abuse

Reading Resource Materials

1. Lecture Notes
2. Text: Chapter 13: Employee, vendor, and other frauds against the organisation, pp. 385-
410.
3. Text: Chapter 14: Financial Statement Fraud, pp. 411-438.
4. Text: Chapter 18: Organised crime, Counterterrorism, and Anti-Money laundering pp.
541- 582.
5. Stephen Pedneault, 2009, Fraud 101: Techniques & Strategies for Understanding Fraud,
3rd edition, Chapter3, pp 33-49, John Wiley & Sons, New Jersey, USA.
6. Stephen Pedneault, 2009, Fraud 101: Techniques & Strategies for Understanding Fraud,
3rd edition, Chapter4, pp 51-66, John Wiley & Sons, New Jersey, USA
7. Silverstone. H, Sheetz, M, 2006,. Forensic Accounting & Fraud Investigation for Non-
Experts; 2nd edition; Chapter7 pp 90-106, John Wiley & Sons, New Jersey, USA.
8. Silverstone. H, Sheetz, M, 2006,. Forensic Accounting & Fraud Investigation for Non-
Experts; 2nd edition; Chapter 6 pp 73-88, John Wiley & Sons, New Jersey, USA.
9. Golden W. T, Skalak L. S, Clayton M, M., 2006, A guide to forensic accounting
investigations, 1st edition; Chapter11, John Wiley & Sons, New Jersey, USA.
10. Golden W. T, Skalak L. S, Clayton M, M., 2006, A guide to forensic accounting
investigations, 1st edition; Chapter 10, John Wiley & Sons, New Jersey, USA.

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 11. Mohamed, A and Kassem, R. “ Fraudulent financial reporting: Do red flags really help.”
Journal of Economics and Engineering, 2010, vol 4 pp 69- 79.
12. Wilson, P. “Understanding scam victims: seven principles of systems security”
Communications of ACM, 2011 vol 54 (3) pp 70- 75.
13. Lacomb, C. and Senturk, D. The house that fraud Built(cover story), quality progress,
2006 vol 39(1) pp 52- 60.
14. Vicek, W. “ Global Anti- Money laundering standards and developing economics: The
regulation of mobile money”, Development policy review, 2011, vol 29, (4) pp 415-431.
15. Purkey, H. “The Art of Money Laundering”, Florida Journal of international law, 2010 vol
22 (1) pp 1111 -1114.

TOPIC 3: PREVENTION AND DETECTION STRATEGIES

Lecture Hrs: 8 Tutorial/Workshop Hrs: 4 SDL Hrs: 32

Learning outcome
The student shall be able to design and apply an effective prevention and detection strategy for
fraudulent activities and the risk-based approach to financial audits and forensic investigations.

Performance Criteria
After studying this topic, the students should be able to:
3.1 Analyze the role of the accounting profession in preventing and detecting fraud
3.2 Analyze the roles of internal controls in the prevention and deterrence of fraud
3.3 Analyze the roles of management in assisting internal auditors
3.4 Evaluate the roles of external auditors, forensic accountants and legal counsel while
working with internal auditors
3.5 Utilize research skills to analyze and apply available tools of fraud detection
3.6 Analyze the risk-based approach to financial audits
3.7 Evaluate and criticize potential red flags and fraud detection techniques

Reading Resource Materials

1. Lecture Notes
2. Text: Chapter 5: Fraud Prevention and risk management, pp. 131-166.
3. Text: Chapter 6; Fraud Detection , pp. 167-194
4. Stephen Pedneault, 2009, Fraud 101: Techniques & Strategies for Understanding Fraud,
3rd edition, Chapter8, pp 143-157, John Wiley & Sons, New Jersey, USA.
5. Silverstone. H, Sheetz, M, 2006,. Forensic Accounting & Fraud Investigation for Non-
Experts; 2nd edition; Chapter8 pp 111-132, John Wiley & Sons, New Jersey, USA.
6. Golden W. T, Skalak L. S, Clayton M, M., 2006, A guide to forensic accounting
investigations, 1st edition; Chapter 8, John Wiley & Sons, New Jersey, USA.
7. Bennett, Julie, “The search is On for forensic Accountants: Who can find or prevent
corporate fraud”, Wall Street Journal, 2005, vol 246 (75)
8. Voorhar, Ria. “The Accounting Detectives”, BRW,2001, vol, 23 (18) pp 74.

TOPIC 4: FORENSIC ACCOUNTING INVESTIGATION TECHNIQUES

Lecture Hrs: 12 Tutorial/Workshop Hrs: 6 SDL Hrs: 36

Learning outcome

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The student shall be able to analyze, interpret and investigate financial reports as part of the
investigation and resolution of potential misstatements of financial reports due to fraud and
error utilize research skills to identify the ways

Performance Criteria
After studying this topic, the students should be able to:
4.1 Evaluate the law of evidence and its applicability to the role of forensic accountants.
4.2 Analyze ways to gather relevant information and documentary evidence to support a case.
4.3 Use research skills to identify and analyze proactive and reactive fraud investigation
techniques.
4.4 Execute financial investigations involving the tracing of funds.
4.5 Analyze the role of forensic accountants during evidence gathering.
4.6 Evaluate and apply the art of interview.
4.7 Generate the compilation of documents for court proceedings and litigation support
services.

Reading Resource Materials

1. Lecture Notes
2. Text: Chapter 7: The fraud investigation and examination process, pp. 195-222.
3. Text: Chapter 8: The evidence collection process, pp. 223-246.
4. Text: Chapter 9: The Fraud examination- evidence 1, Physical, Documentary and
observational evidence pp. 247-284
5. Text: Chapter 10: The Fraud examination- evidence 11, Interview and Interrogation
methods pp. 285- 324
6. Stephen Pedneault, 2009, Fraud 101: Techniques & Strategies for Understanding Fraud,
3rd edition, Chapter9, pp 160- 170, John Wiley & Sons, New Jersey, USA.
7. Stephen Pedneault, 2009, Fraud 101: Techniques & Strategies for Understanding Fraud,
3rd edition, Chapter10, pp 171-188, John Wiley & Sons, New Jersey, USA
8. Silverstone. H, Sheetz, M, 2006,. Forensic Accounting & Fraud Investigation for Non-
Experts; 2nd edition; Chapter 11 pp 196-225, John Wiley & Sons, New Jersey, USA.
9. Silverstone. H, Sheetz, M, 2006,. Forensic Accounting & Fraud Investigation for Non-
Experts; 2nd edition; Chapter 10 pp 160-192, John Wiley & Sons, New Jersey, USA.
10. Golden W. T, Skalak L. S, Clayton M, M., 2006, A guide to forensic accounting
investigations, 1st edition; Chapter18, John Wiley & Sons, New Jersey, USA.
11. Nathan, M. and Dirlam, J. “Two lessons from the Arthur Andersen Saga”, Business week,
issue 3792, pp12- 14.

TOPIC 5: FORENSIC ACCOUNTING INVESTIGATION REPORT AND LITIGATION SUPPORT

SERVICES.
Lecture Hrs: 10 Tutorial/Workshop Hrs: 5 SDL Hrs: 34

Learning outcome
The student shall be able to formulate and present a forensic accounting investigation report.
Performance Criteria
After studying this topic, the students should be able to:
5.1 Demonstrate mastery in analyzing court proceedings.
5.2 Validate compliance to legislation while presenting evidence in court

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5.3 Analyze the role of forensic accounting expert witness during litigation and court
proceedings
5.4 Evaluate the contents of the Engagement Letter and Independent Accounting Expert
Report
5.5 Analyze other services of a forensic accountant

Reading Resource Materials

1. Lecture Notes
2. Text: Chapter 12: The fraud report, litigation and the recovery process pp. 335-384.
3. Text: Chapter 16: Tax fraud, pp. 469-510.
4. Text: Chapter 17: Bankruptcy, Divorce, Identity theft, pp. 247-284
5. Stephen Pedneault, 2009, Fraud 101: Techniques & Strategies for Understanding Fraud,
3rd edition, Chapter 11, pp 189-207, John Wiley & Sons, New Jersey, USA.
6. Stephen Pedneault, 2009, Fraud 101: Techniques & Strategies for Understanding Fraud,
3rd edition, Chapter10, pp 171-188, John Wiley & Sons, New Jersey, USA
7. Silverstone. H, Sheetz, M, 2006,. Forensic Accounting & Fraud Investigation for Non-
Experts; 2nd edition; Chapter 13 pp 254-283, John Wiley & Sons, New Jersey, USA.
8. Copes, H. Kerley, K .et.al “ Differentiating identity theft: An exploratory study of victims
using a national victimization survey”, Journal of criminal justice, 2040 vol 38 (5) 1045-
1052.
9. Greenlee, J. Fischer, M. et.al “An investigation of fraud in nonprofit organisations,
Occurrences and deterrents”, Non profit & voluntary sector Quarterly, 2010 vol 36 (4) pp
676- 694.
10. Ramasamy, R. “Tax Avoidance or tax evasion”, UNITAR e- journal, 2010, vol 6 (1) pp64-
69.

6.0 Assessment

6.1 Grades
(a) The overall mark for the unit depends on performance during the trimester (50%) and
performance in the final examination (50%).

In Class Assessment

Mid-Trimester Test 15%

Assignment (Individual) 10%
Group Assignment / Presentation 10%
Tutorial Attendance & Participation 5%
Seminar Presentation 10%
Total Coursework 50%
Final Examination 50%

(b) In order to pass the unit, that is, to obtain a grade of C- or better, it is necessary to score
at least 50% (ie 25/50) in the final examination. It is highly recommended that students
attend all tutorials/labs/workshops.

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 6.2 Letter Grade Scale

6.1 Grade Marks GPA

A+ 90-100 4.33-5.00 High Distinction
A 85-89 4.00-4.27 Distinction
A- 80-84 3.73-3.93 Distinction
B+ 75-79 3.33-3.60 High Credit
B 70-74 3.00-3.27 Credit
B- 65-69 2.67-2.93 Credit
C+ 60-64 2.33-2.60 Pass
C 55-59 2.00-2.27 Pass
C- 50-54 1.67-1.93 Pass
D+ 45-49 1.33-1.60 Fail
D 40-44 1.00-1.27 Fail
D- 35-39 0.67-0.93 Fail
E Below 35 0-0.60 Fail
DNQ Did Not Qualify; student received over 50% of 0 Fail
total marks but did not meet other specified
conditions for a pass
W Withdrawn from Unit 0
CT Credit Transfer 0 Cross credit (CT)
NV Null & Void for Dishonest practice 0
I Result withheld/Incomplete assessment 0
X Continuing course 0
DNC Did Not Complete 0
CP Compassionate Pass 0
Aeg Aegrotat Pass      0
PT Pass Terminating 0
P Pass 0
NP Not Passed 0

7.0 Programme Regulations and Dissatisfaction with Assessment

The academic conduct of the students are governed by the University Academic and Students
Regulation (UASR). All students must obtain a copy of the UASR from the FNU academic office
and familiarize themselves with all academic matters.

Should a student be dissatisfied with either the internal or external assessment, they can take
the following steps to get redress of their grievance.

Internal Assessment: The student can refer the work back to the unit coordinator for checking
and reassessment. Following this reassessment, if the student is still dissatisfied, the student
may refer the work to the HOD. The HOD will then appoint another lecturer to examine the
work and result will then stand.

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Final Exam: The student can apply for re-check of the grade as per the procedures laid down in
the UASR.

8.0 Plagiarism and Dishonest Practice Regulation

Plagiarism and dishonest practices are serious offences for which offenders shall be penalized.
Students must read the relevant section of UASR to understand the various types of cases
defined as dishonest practices in academic work and to also know the penalties associated with
these kinds of practices.

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 ACC 705 Forensic Accounting WEEKLY SCHEDULE
WEEK MODE TOPIC / FOCUS READING
1 Lecture TOPIC 1: PROFESSIONAL Hopwood, ch 1
Tutorial Preparation ETHICS AND THE FORENSIC Pedneault S, Ch. 1,
ACCOUNTANT
2 Lecture Topic 1 : Cont Hopwood ch 2, 4
Tutorial Preparation Pedneault S, Ch. 2, 7

3 Lecture TOPIC 2: FRAUDULENT Hopwood ch 13, 14

Tutorial Preparation ACTIVITIES, SCAMS,
MANAGEMENT AND
EMPLOYEE ABUSE

4 Lecture Topic 2 : Cont Hopwood ch 18

Tutorial Preparation Readings
5 Lecture TOPIC 3: PREVENTION AND Hopwood 5
Tutorial Preparation DETECTION STRATEGIES Pedneault S, Ch. 8

6 Lecture Topic 3 : Cont Hopwood 5

Tutorial Preparation MID-TRIMESTER TEST Pedneault S, Ch. 3

MID-TRIMESTER BREAK
7 Lecture Topic 3 : Cont Hopwood ch 6
Tutorial Preparation Pedneault S, Ch. 4, 5, 6
Golden T,W, et. al,
Ch. 11
8 Lecture TOPIC 4: FORENSIC Hopwood ch 7, 8
Tutorial Preparation ACCOUNTING INVESTIGATION
TECHNIQUES

9 Lecture Topic 4 : Cont Hopwood ch 9, 10

Tutorial Preparation Pedneault S, Ch. 9, 10

10 Lecture TOPIC 5: FORENSIC Hopwood ch 12

Tutorial Preparation ACCOUNTING INVESTIGATION Pedneault S, Ch. 10
REPORT AND LITIGATION Golden T,W, et. al,
SUPPORT SERVICES. Ch. 18, 19

11 Lecture Topic 5 : Cont Hopwood ch 16

Tutorial Preparation Pedneault S, Ch. 10
Golden T,W, et. al,
Ch. 23
12 Lecture Topic 5 : Cont Hopwood ch 17
Tutorial Preparation Pedneault S, Ch. 11

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STUDY WEEK/ EXAMINATION
14 FINAL EXAMINATION

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