THE IMPORTANCE OF FORENSIC AUDITING TECHNIQUES AND INSTRUMENTS COMBATING CRIMINAL ACTS
Keywords:
financial reports, criminal activities, disclosure, auditing profession, forensic auditing.Abstract
Purpose
Non-objective and untrue data in financial reports and accounting are not always the result of error, incompetence, ignorance or incorrect application of international accounting standards and/or international financial reporting standards, but are often the result of a criminal activity in the field of financial transactions and business. Internal and external audits are not an instrument for detecting criminal acts, nor is this their main goal. In this context, practice has generated forensic auditing as a new service within the auditing profession. It is a specialized activity of auditing financial reports, the primary goal of which is the prevention, detection and investigation of criminal acts.
Design/Methods/Approach
The paper will be focused on the application of audit instruments and techniques in the prevention and detection of criminal acts. In order to detect and/or prevent a criminal act, forensic auditors, in addition to knowing a wide range of forms of criminal acts and criminal schemes, need to recognize warning signs that represent economic indicators of illegal actions in the field of financial operations, identify them and apply effective procedures for their disclosure. This clearly indicates that in order to suppress criminal acts in the modern business environment, it is necessary for forensic auditors to be competent in the implementation of audit instruments and techniques with the help of computers and programmes. The methodological framework of the paper includes analysis, synthesis and description with the use of relevant literature by foreign and domestic authors.
Findings
The aim of this paper is to point out the importance and role that forensic auditing has as an instrument for detecting and preventing criminal acts in the operation of modern business systems. The paper will specifically analyze criminal acts related to financial reports, warning signs of the so-called ”red flags” indicating possible criminal activity in financial reports and accounting, types of criminal activities and forensic audit analysis in the context of detecting and preventing criminal activities in companies. Emphasis in the paper is on the importance of audit methods and analysis in forensic audit investigations of criminal acts, all with the aim of better understanding the action and role of the audit profession in suppressing criminal acts.
Originality/Value
This paper will represent a solid starting point for further research, considering the covered topic which is current at the national level and at the global level as well.
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