The Impact of Forensic Accounting on Fraud Detection and Deterrence in Zimbabwe

Abstract

The recent fraud scandals in Zimbabwe have induced a crisis of confidence in financial reporting
and the traditional audit profession, hence the emergence of forensic accounting. Today forensic
accounting is a topical issue, not only in Zimbabwe, but all over the world. Forensic accounting is
the specialty practice area that provides a financial analysis that is sustainable at the court of law
from which the basis for litigation is formed. While fraud requires sophisticated ways to fathom,
forensic accountants apply their intuitive skills to analyze fraud.

The purpose of this study is to examine the impact of forensic accounting on fraud detection and
deterrence in Zimbabwe, and to proffer suggestions that will bring public awareness on the
importance of forensic accounting. The study also contributes to the limited existing literature on
forensic accounting in Zimbabwe. Data was gathered using 205 questionnaires, along with
interviews which were administered to six (6) Zimbabwe organisations. 149 questionnaires were
completed and returned. Follow up interviews were carried out with key staff in those
organisations. The data was subjected to statistical tests such as Cronbach’s alpha, Chi-Square Test
and Analysis Of Variance (ANOVA), to test the reliability of sample and to test the hypotheses.

The results of the empirical findings show that the use of forensic accounting increases fraud
detection and significantly deters fraud cases, both in private and public sectors of Zimbabwe. It
was also found out that forensic accountants play a key role in litigation support services.
Amongst the proffered solutions, it was recommended that the legislature must amend Criminal
Law (Codification and Reform) Act {Chapter, 9:23} and the Public Accountants and Auditors
Act (27:12) to embrace forensic accounting. The judiciary system must be trained in forensic
accounting, academic institutions must offer degrees and diplomas in forensic accounting, and the
government must promote forensic accounting so as to curb financial crimes.

Authors:
William Magombedze is a Forensic Accountant in Harare
Mufaro Gunduza is head of Mount Carmel Institute of Business Intelligence
1.0 Introduction
Forensic accounting is a fairly new phenomenon in Zimbabwe as a tool for combating fraud.
Indeed, fraud has manifested into some financial cancer, not only in Zimbabwe but the world
over. Today the term “forensic accounting” has taken a centre stage in most organisations across
the globe that come to realise the need of forensic accounting to detect and deter fraud cases
which have substantially soared across the world. For instance, Timmons and Wassener (2009),
reported that the Chief Financial Officer for Satyam (Pvt) Limited pleaded guilty to a huge fraud.
The article stated that the fourth largest Indian Information Technology outsourcing company,
Satyam Computer Services (Pvt) Limited, was audited by PricewaterhouseCoopers (PWC), which is
registered with the Stock Exchange Control, and both its Chief Executive Officer and Chief
Financial Officer certified its financial statements. The auditors (PWC) gave Satyam stakeholders a
clean Audit Report and could not discover that the financial statements were marinated with
fraud. Surprisingly, a total of US$1.04 billion in cash and bank loans recorded in its books of
accounts for the second quarter in 2008 were non-existent. This was only sniffed later on by
forensic accountants. Prima facie, this is a clear indication that forensic accountants are needed
around the world to curb fraud. Therefore, this study seeks to unpack forensic accounting and see
if it is the right tool for fraud detection and deterrence in Zimbabwe. If top of the cream external
auditors such as PWC cannot unearth fraud of high magnitudes running into billions of United
States dollars, what else can a forensic accountant do?!

1. Background of the Study

It is apparent that fraud is a thorn in flesh and is committed under the nose of both
internal and external auditors, hence the need for forensic accountants to sniff it out and
assist in the incarceration of fraudsters. The forensic accountant is there to communicate
an analysis of financial evidence which is structured within some legal framework. Such
type of evidence is sometimes referred to as "a legally accurate accounting". A forensic
accountant is a financial detective who treats all figures as dubious until proven otherwise.
In other words, 2 + 2 is not always equal to 4 in the practice of forensic accounting. In
other words, forensic accounting is a concoction of financial skills and investigative
mentality applied to a case within the rules of evidence.

Figure 1 below shows statistics of fraud cases where financial statements were misstated in
America:
Figure1

The diagram above shows that Financial Statement Fraud is mainly perpetrated through
booking fictitious revenues and followed by overstatement of assets on the company’s
books. Some companies are shrewd enough to record non-existent or fictitious assets and
these contribute about 10% of Financial Statement Fraud as per the diagram above.
Empirical evidence has shown that fraud is affecting all nations and according to Figure 2
below, the most affected regions are Sub-Saharan Africa with a total of 285 reported
fraud cases followed by Asian-Pacific with a total of 221 reported cases in the period
2015/2016. The least affected region was Middle-East & North Africa.
Figure 2

It is important to note that the chart above refers to “reported fraud cases”. It has
limitations in the sense that some nations or organisations prefer not to report their fraud
cases fearing that they might damage their reputations in the process. Therefore, this is
just the tip of the iceberg.
Ajomele (2015) listed major fraud scandals which rocked Nigeria in the past few years.
Such scams included Maina Pension scam where 195 billion naira was lost; Kerosine
subsidy scam which resulted in US$100 million vanish from the economy monthly and
PDP fuel subsidy shenanigans which resulted in 6 billion naira disappearing from Nigeria.
Other financial scandals included the Pension Fund fraud where 32.8 billion naira was
stolen resulting in the sentencing of the Chief Accountant for the fund; car purchase
scandal where 255 million naira was swindled and the perpetrator, Oduah, was charged;
Private Jet Arms scandal in which US$15 million was swindled; Mohammed Abacha 446
billion naira case and 7 billion bribe to Christian religious leaders (Ajomele, 2015).
Honestly, this is just a tip of the iceberg and more is still covered under water!
In South Africa, corruption is believed to be rampant within the Metro Police. Some
major scandals in South Africa include the Tshwane Prepaid Meter scam in which R830
million is believed to have been swindled; Prasa scandal where R3,9 billion was lost;
corruption by Minister of Energy in which R800 million is believed to have been lost and
corruption by the Sports Minister where R65 million is also believed to have been
swindled (Nedu, 2016).
 Figure 3 below shows the number of fraud cases in Sub-Saharan Africa in the period
2015/2016:

Country Number of fraud cases %   Country Number of fraud cases %

Angola 4 1.4%   Ghana 11 3.9%
Botswana 2 0.7%   Kenya 41 14.4%
Cameroon 2 0.7%   Lesotho 1 0.4%
DRC 4 1.4%   Liberia 5 1.8%
Cote 0.7%   Malawi 3 1.1%
2
d'lvoire
Gabon 1 0.4%   Mali 1 0.4%
Gambia 1 0.4%   Mauritania 2 0.7%
Mauritius 1.4%   South 1 0.4%
4 Sudan
Namibia 1 0.4%   Sudan 1 0.4%
Nigeria 70 24.6%   Swaziland 1 0.4%
Senegal 3 1.1%   Tanzania 8 2.8%
Sierra Leone 1 0.4%   Uganda 11 3.9%
Somalia 1 0.4%   Zambia 7 2.5%
South Africa 87 30.5%   Zimbabwe 9 3.2%

Grand Total (285 cases)

Based on Figure 3 above, South Africa tops the chart (30.5%), seconded by Nigeria
(24.6%) and on the third position is Kenya (14.4%). The rest of the nations have fraud
cases below 5% each.
One major impediment to economic growth is corruption (Nedu, 2016). The table below
shows the level of cleanliness of a few selected Sub- Saharan nations with regards to
corruption. Countries at the bottom need to adopt radical anti-corruption measures. The
Corruption Perception Index presented below measures the levels of perceived public
sector corruption, on a scale of 0 to 100, where 0 refers to the highest level of public
sector corruption and 100 refers to the cleanest nations with regards to public sector
corruption.
 Figure 4

According to the graph above, Botswana is the cleanest nation with levels of corruption
below 40% followed by Namibia (about 50%). The worst nations affected by public sector
corruption are Zimbabwe with a level of corruption as high as 80% and Somalia which has
corruption rate approaching 90%. This is amazing. The question remains, ‘will forensic
accounting curb corruption in Zimbabwe at this rate of 80%?’ Surely, this needs to be
looked into with a keen eye to see if it is the right tool to detect and curb corruption and
the other basket of frauds bedevilling the nation.

Presently, forensic accounting is gaining popularity in Zimbabwe, Africa and the world at
large. Educational institutions around the globe have started teaching forensic accounting
as a major course, for instance, Harare Institute of Technology University (Zimbabwe),
Ballsbridge University (Ghana) and Kogod School of Business (America) among others.

Figure 5 below shows fraud cases reported in Zimbabwe media after adopting multi-
currency:
Figure 5
Fraud Case Estimated loss   Fraud Case Estimated loss
Air Zimbabwe saga US$10m   Net-One scam US$11m
ZESA tender scandals US$300m   ZIMRA duty scam US$20m
Interfin Bank scandal US$136m   Chitungwiza Council salary storm US$10m
Econet / Liquid tax US$300m   NSSA externalisation fiasco US$300m
saga
Mbada Diamond scam US$15bn   Old Mutual death claim scam US$70,000

The researcher noticed an upsurge for the demand for forensic accountants in Zimbabwe
after the nation adopted a basket of multi-currencies as legal tender. It is common cause
that the United States dollar out-paced other currencies with regards to its demand and
 the level of fraud also soared to unprecedented levels in the Zimbabwean economy,
hence the call for forensic accountants to fish out perpetrators of fraud.
Fraud is complicated and difficult to unearth. To this end, the researcher developed an
interest to find out if forensic accounting is the right tool for detecting and deterring
fraud in Zimbabwe. Without over-emphasising, forensic accountants are seen as god-
fathers for fraud detection among other services they provide such as business valuation,
asset identification in matrimonial disputes,, expert witness testimony, computation of
future earnings, computation of economic losses arising from a breach of contract, or
economic loss from terrorism such as the attack of America on September 11, 2001
among other assignments.
It is indeed important to note that although the field of forensic accounting seems to be
becoming a very popular and demanding occupation for many, it is not a career that just
anyone can choose to pursue because it requires a lot of hard work, effort, and personal
characteristics that not many people possess.  This career appears to be very appealing
because it is not the ordinary “behind-the-desk” job where accountants do journals, draw
up cash books and so on. No, it’s not like that. It involves a lot of guerrilla tactics to sniff
out fraud and other criminal conduct. Although it comes from a family of accounting, it
is not what one would consider to be a stereotypical form of accounting.
However, despite how appealing forensic accounting seems to be, the researcher noted
that there are no set standards in Zimbabwe neither is there any Act of Parliament with
which forensic accountants must comply when carrying out their duties. The Institute of
Forensic Auditors (IFA) is still in its infancy and is yet to come up with standards to be
followed by forensic accountants.

1.2 Problem Statement

Recently, there has been a surge in a series of fraudulent activities committed both in the
private and public sectors of the economy, surprisingly under the nose of both internal
and external auditors. This is exuberated by advancement in information technology
which oils fraudsters’ antics towards fraudulent practices.

Organisations spent thousands of dollars on internal and external auditors, yet there
seems to be no real value coming from them with regards to plugging financial crimes and
haemorrhage. Generally speaking, external auditors, internal auditors and Chief Financial
Officers lack requisite training in financial forensics to detect and deter modern
sophisticated crimes like security fraud, bankruptcies, money laundering by organised
criminals and other criminal financial transactions.

Also, whilst both internal and external auditors have reduced themselves to mere number
crunchers behind their desks, investor confidence has been shaved off in most economies
due to corruption and other forms of fraud. Indeed, there is need for a new guard to
ferret fraud and provide litigation support to organisations which fall prey of fraudulent
misdemeanours. Forensic accounting new as it is, has become a complex area of concern
for the accounting profession and seems to be a proper tool for fraud detection and
deterrence in developing nations such as Zimbabwe and world over.

1.3 Research Objectives

The main objective of the study is to examine the impact of forensic accounting on fraud
detection and deterrence in Zimbabwe organisations.  

The specific objectives are:

i. To find out why fraud occurs and how it is perpetrated in Zimbabwe organisations.
ii. To measure the impact of forensic accounting in fraud detection and deterrence in
Zimbabwe organisations.
 iii. To generate new insights on the relevance of forensic accounting.

Literature Review
2.1 Evolution of forensic accounting
Forensic accounting’s history dates back to the ancient Egyptian scribes who were
responsible for maintaining all of the Pharaoh's assets and report any fraud that could
have taken place and also bring culprits to the Pharaoh’s panel of judges for punishment .
During this time the Egyptian scribes were not aware that they were already fraud
examiners and also the term ‘forensic accounting’ was unknown to them (Dreyer, 2014).
In 1817, the principles of forensic accounting were tested in court, when an accountant
was called to be an expert witness in testifying at a bankruptcy hearing. Years later around
1931, investigative accounting was applied by Internal Revenue Service (IRS) and the FBI
to convict a culprit, Al Capone who was arrested for tax evasion. The investigative
accountant documented evidence of tax evasion for a conviction. This court case drew
the attention of many people on the significance of investigative accounting in criminal
cases. In 1932, forensic accounting techniques were also applied to solve the Lindbergh
baby kidnapping case by tracking down serial numbers of the gold certificates used to pay
the kidnapper's ransom. Eventually, this led to the conviction of the suspect of the ‘baby
kidnapping scam’ (Brown, 2008).

Maurice E. Peloubet (1946) is credited with developing the term forensic accounting. At
around the end of 1940s, forensic accounting was used during World War II (Rasey, 2009).
The concept of forensic accounting became fully fledged in the 1980s in some Western
countries, particularly in the United States of America. Forensic accounting was identified
as a profession composed of accounting, auditing, investigative skills and litigation support
(Ozkul and Pamukc, 2012). Thereafter, it was adopted by many nations in response to
fraud cases.

2.2 Different views of forensic accounting

Crumbley et al (2005) view forensic accounting as a specialty area of the accountancy
profession which emanates from actual or anticipated disputes or litigation.  “Forensic”
means “suitable for use in a court of law”. According to Williams (2002), views forensic
accounting as a particular form of professional expertise endowed with technical
attributes which come from possessing a formal certification in forensic accounting.
Looking at the two views, Crumbley et al (2005) anticipate forensic accounting to find its
way to the courts (also called ‘expert witnessing’), whilst Williams (2002) focuses more on
technical skills acquired during a certification process.
In the view of Arokiasamy and Cristal (2009), forensic accounting is a science dealing with
the application of accounting facts gathered through auditing methods to resolve legal
problems which require the integration of investigative skills and accounting skills. It is
interesting to note that they view forensic accounting as a science and not an ‘art’.
Stanbury and Paley-Menzies (2010) view forensic accounting as the science of gathering
and presenting information in a form suitable for court of justice against perpetrators of
economic crime. Their view seems to buttress the opinion of Arokiasamy and Cristal
(2009).  
Hopwood et al (2008) concluded that forensic accounting is basically the application of
investigative and analytical skills to resolve financial matters in a manner that meets
standards required by courts of law.  This seems to support the opinion of Degboro and
 Olofinsola (2007) who also noted that forensic investigation is about the determination
and establishment of fact in support of legal case.  In other words, forensic accounting
evidence should be used to prosecute fraudsters.
In the view of Howard and Sheetz (2006), forensic accounting is a specialist discipline that
has its own methodologies that search for assurance and attestation for producing legal
evidence.  On the other hand, Singleton and Singleton (2010) concluded that forensic
accounting is the comprehensive view of fraud investigation.  It includes preventing frauds
and the gathering of non-financial information. This view is at variance with the majority
of views cited above in the sense that this seems to focus more on fraud prevention
mechanisms, whilst others focused more on prosecution of criminals as a way of deterring
fraud.
Based on the above divergent views, the researcher notes that the objectives of forensic
accounting include assessment of economic damages caused by fraud and the collection
of evidence in criminal proceedings. Indeed, the primary orientation of forensic
accounting is discovery of deception and prosecution of culprits. Furthermore, forensic
accountants provide assistance from fraud discovery all the way up to reviewing
testimony. During court proceedings, forensic accountants review the suspect’s rebuttal
and provide assistance with cross-examination.

2.3 The Conceptual Framework

Many researchers have attempted to formulate theories that explain the mind set of
fraudsters.  Unless Forensic Accountants understand the way the fraudsters think, they
will not be able to keep ahead of such fraudsters.  This research focused more on four
fraud theories which are briefly discussed below:

2.3.1 Theories of Fraud

Edwin H. Sutherland’s Theory

Edwin Sutherland first defined “white-collar crime” in 1939. He identified criminal acts of
corporations and those of individuals in corporate capacity. In his study of fraud, he came
up with the Theory of Differential Association. This theory suggests that crime is not
caused by evil spirits neither is it genetic but rather it is learned from intimate personal
groups. It is depicted in Figure 7 below.

Figure 7

Peer
  organisation  
Parental       Delinquent
demographi opportunitie
c s

    Family  
organisation

     
Spatial       Excess of Delinquen
location   delinquent t
definitions behaviour
    Neighbourhoo  
 d organisation

     

Social       Learned
structural   School   skills and
location organisation techniques

(Source: 2010 Fraud Bulletin)

According to Edwin’s Theory of Differential Association, there is clear cut distinction

between “white collar” crime and “fraud”. He found out that white collar crime is a
criminal conduct that does not involve violence or the threat of violence and usually takes
place in a professional work place. Whilst fraud happens anywhere, white-collar crime is in
the workplace. Whereas fraud is perpetrated by anyone, white-collar crime is by business
people or professionals in an organisational set up.

Cressey’s Fraud Triangle Theory

The Fraud Triangle is a model for explaining the factors that cause someone to commit
fraud. It consists of three components which, together, lead to fraudulent behaviour.
Figure 8 below helps to explain why people commit fraud.

Fig 8 (Source: Crumbley et at (2005)]

It is believed that pressure arises from financial needs, work-related issues, life-style changes and
from other sources. On the other hand, opportunity arises from weak internal control
environment such as on accounting, weak procedures, unfettered access to critical corporate
information, inadequate audit trails and so on. Rationalisation fortifies the perpetrator’s act of
committing fraud, whereby the fraudster comes up with bogus reasons for justifying fraud. The
reasons could be such as, “the company owes me”, “nobody will be personally hurt”, “I am
under-paid and deserve more”, “I will put proceeds of fraud for a good purpose such as to pay
tithe”, “the goat feeds within the radius of its rope”, and so on.

Cressey’s Fraud Triangle theory proffers different reasons for committing fraud, from those of
Differentiation Association Theory. Sutherland concluded that fraud is learned whilst Cressey saw
fraud as something that comes from external environment (pressure and opportunities) as well as
from internal environment (rationalisation), and does not give reference to the perpetrator’s
upbringing or society.
The Fraud Scale Theory
This theory was propounded by W. Steve Albrecht. The Fraud Scale is presented below:

Figure 9

High situational pressures, high opportunities to commit fraud and low personal integrity
result in high levels of fraud. On the other hand, low situational pressures, low
opportunities to commit fraud and high personal integrity often result in no or negligible
levels of fraud.

The Fraud Scale Theory seems to buttress Cressey’s Fraud Triangle Theory in the sense
that they both agree that pressure and opportunities are key ingredients to the
commission of fraud. However, the slight difference is that the Fraud Triangle talks about
‘rationalisation’ as another fundamental reason for fraud commission, whereas the Fraud
Scale Theory looks at the person’s integrity. The researcher seems to enjoy more the
Fraud Scale because personal integrity is surely a core factor for any form of misdeeds, be
they prostitution, corruption, robbery and fraud.  

Theory of Fraud Diamond

This theory was propounded by Wolf and Hermanson in 2004. Wolf and Hermanson
(2004) proffer the Theory of the Fraud Diamond, in place of the Fraud Triangle.  They
argue that the diamond offers a better view of the factors leading to fraud.  They add a
fourth variable, “capability”, to the three-factor theory of Cressey. Capabilities mean that
the fraud perpetrator must have the necessary traits, abilities, or positional authority in
order to commit fraud. It looks like the Theory of Fraud Diamond offers a better view of
the factors to fraud.  Wolf and Hermanson believed many frauds would not have
occurred without the right person with the right capabilities implementing fraud. This is
very true with corruption and embezzlement.  The researcher concurs with Wolf and
Hermanson particularly with regards to Zimbabwe where most of the frauds are
committed by those in positions of trust and authority, such as government ministers,
executive directors, non –executive directors and even shareholders stealing from each
other!
 Thus, Forensic Accountants have to keep in mind the diverse motives for committing
fraud. Also, Forensic Accountants need to appreciate the possible fraud schemes an
individual can commit and how fraud virus occurs when there is an ineffective or missing
internal control.
The researcher is of the view that even though the fraud diamond added the fourth
variable to the fraud triangle and filled the gap in other theories, the model alone is still
an inadequate tool for preventing or detecting fraud in organisations.
Wolf and Hermanson also suggested four observation traits for committing fraud; which
were (a) authoritative position within the organization, (b) capacity to understand internal
control weakness, (c) confidence that the fraudster will not be detected or if caught he /
she will get out of it easily, and finally (d) capability to deal with internal stress created
when one commits bad acts.
Reviewing the literature shows that researchers classified the motive side of the fraud
diamond differently.  Some researchers classified them as personal, employment or
external pressure, while other classified them as financial and non-financial pressure.
However, it can be noticed that both classifications are interrelated.

The Fraud Tree Theory

The Fraud Tree Theory is complicated and suggests that occupational fraud is committed
using three main schemes which are corruption, asset misappropriation and fraudulent
statements. The model seems to zero in on fraud schemes and does not seem to consider
the psychology behind fraudsters. This makes this theory fundamentally different from the
Theory of Differential Association, Fraud Triangle, Fraud Diamond and the Fraud Scale.

2.3.2 General Fraud Schemes

The researcher selected a few fraud schemes to show the severity of fraud in the world.
FBI seems to be tracking closely all acts of fraud and the organisation has come up with
sophisticated means of detecting and deterring fraud from both local and international
perpetrators.

a. Advance Fee Schemes

FBI (2016) alludes that an advance fee scheme occurs when the victim is asked to
pay money as “advance”, to a fraudster anticipating to receive something of
greater value. Eventually, the victim is deceived and receives nothing.
In order to militate against this fraud scheme, individuals and organisations are
encouraged to be wary of brief case companies that operate out of post office
boxes or mail drops and do not have street addresses.  The public is also
discouraged from dealing with persons who do not have a direct telephone line
and who are never in their offices when one makes a call, but always return the
call later.
(b) Identity Theft
This occurs when a con artist steals victim’s identity to perform a fraud such as
stealing pin codes and passwords.  Fraudsters can access this information by eve-
stooping on their victims, rifling through the victim’s trash (also called, “dumpster
diving”), or by using specialised scanners to hijack the victim’s confidential
information such as scanning air-tickets and ATM receipts. As a tip, the public is
discouraged from throwing away air-tickets, ATM receipts, credit statements,
credit cards, or bank statements (ACFE, 2016).
(c) Internet Auction Fraud
Internet auction frauds are on the increase even in Zimbabwe. According to IRS
(2016), the fraudsters advise bidders that they have won the items and cause them
to pay for such items. Once the fraudster is paid, he disappears without shipping
items to the bidder.
(d) Investment Fraud  
Mphambela (2016) reported that many organisations are victims of investment
fraud in Zimbabwe. The fraudsters promise lucrative returns over a short period
of investment. This scheme was typically used by ENG Capital, Interfin Bank and
Trust Bank where millions of dollars for the investors were swept away.
(e) Market Manipulation (“Pump and Dump”)
This scheme, commonly referred to as a ‘pump and dump”, creates virtual and
artificial buying pressure for a targeted share, bond or any other security on the
stock market. This results in an upsurge of trading volumes for that security (the
“pump”), and fraudsters rapidly sell off the security into the inflated market (the
“dump”).  Obviously this results in illicit gains for the perpetrators and losses for
innocent third-party investors (FBI, 2016)

(f) Ponzi and Pyramid Schemes

The Federal Trade Commission (2016) warns the public of Ponzi and Pyramid
schemes that normally promise high financial returns not available through
traditional investments.  Instead of investing the funds of victims, the fraudster
pays “dividends to initial investors” using the funds paid by subsequent investors
and pockets the difference. The scheme generally becomes unsustainable and the
operator flees with all of the proceeds from new investors. Ponzi schemes as well
as pyramid schemes are already in Zimbabwe and investors need to be protected.
Investors need to be careful of any investment opportunity that makes
exaggerated earnings claims. Also, exercise due diligence in selecting investments
and the people with whom to invest (Zimbabwe’s National Risk Assessment
Report, 2015).

(g) Reverse Mortgage Scams

FBI (2016) states that these are perpetrated by fraudsters in real estate, financial
services and related companies to steal the equity from the property of
unsuspecting senior citizens through property flipping. As a tip for avoiding such
scams, the public is encouraged to be suspicious of anyone claiming that one can
own a home with no or little down payment. This is often a trap and the victims
lose their hard earned cash upon failure to pay eventual instalments and land flips.

(h) Cyber Attacks

It is generally believed that the FBI is the lead federal agency for investigating
cyber attacks by criminals and terrorists. Cyber intrusions are becoming more
dangerous and sophisticated taking about 3-5% of GDP (RBZ Report, 2015).
Organisations are targeted for trade secrets and other sensitive corporate data as
well as research and development programmes.  

2.3.3 How some fraudsters are organised

 It is common cause that billions of dollars across the globe have been lost through
fraud. The researcher has discovered that fraudsters can operate as solo
individuals, some form syndicates whilst others form companies which are
supervised by a board of directors. This is quite frightening and amazing to say the
least. For instance, in Italy fraudsters have formed a hard-to-break syndicate of
gangsters called La Cosa Nostra. This group comprises several gangs, known as
families. The number of families can range from 10 to 100. Sometimes the
emergency of a new family must be approved by the heads of other families. Each
family has separate business dealings, but the dealings of families can be inter-
mingled depending on proximity and commonality of their ventures. Associates
are planted all over the country or even in foreign countries, and report directly
to soldiers. The reporting structure goes up to the Boss, who rewards, guides and
strategise for the mafia family. This is how serious the virus of fraud can be!

2.4 Empirical Review

There are several empirical studies that were carried out to see if forensic accounting
affects fraud detection and deterrence. Forensic accounting has gained a steady entrance
into mainstream contemporary accounting literature and has been written by a
considerable number of scholars.  Howard and Sheetz (2006) view forensic accounting as
simply the process of presenting complex financial information succinctly in a court of law
as an expert witness.  
Many researchers have attempted to examine the effect of forensic accounting on fraud
detection, for example, Kosmas et al (2009) used questionnaires, personal interview and
documentary review to obtain information from respondents in thirteen commercial
banks, four building societies, and four audit firms.  They concluded from their research
that forensic auditing lacked material resources and technical know-how to cope with
dynamic fraud tactics.  Also, it was apparent from the research that forensic auditing was
bedevilled with a host of interference from management, who are often fraud culprits.
Hence, the profession lacked clear recognition in the business sector.
In their research, Okunbor and Obaretin (2010) examined the effectiveness of the
application of forensic accounting services in Nigerian corporate organisation in a sample
of ten companies quoted on the Nigerian Stock Exchange. They employed a simple
regression model for the test of hypothesis.  Surprisingly, their study proved that the
application of forensic accounting services in Nigeria was not an effective tool for
detecting and deterring fraudulent activities in Nigeria. This seemed to agree with the
outcome of Cosmas et al (2009).
The third study which was examined by this researcher was the one conducted by
Modugu and Anyaduba (2013). They examined forensic accounting and financial fraud in
Nigeria.  Their study employed survey design in a sample size of 143 comprising
accountants, management, practising auditors and other stakeholders.  Modugu and
Anyaduba (2013) employed binomial test for data analysis and found that there is
significance agreement amongst stakeholder on the effectiveness of forensic accounting in
fraud control. The results of research were at tangent with that Okunbor and Oberetin
(2010) as well as that of Cosmas et al (2009).  
In 2013, Enofe et al also conducted a study on the impact of forensic accounting on fraud
detection in a sample of fifteen firms in Nigeria.  Their data analysis was based on
ordinary least square regression and chi squared test (Enofe: 2013). Their study showed
that forensic accounting services on firms affect the level of fraudulent activities. The
result of their study was in agreement with that of Modugu and Anyaduba (2013) and
disagreed with Cosmas et al (2009).
Adegbie and Fakile (2012) employed Chi-squared test and other statistics package for
social science to empirically evaluate forensic accounting as an antidote to economic and
financial crime in Nigeria. In their study, they tested four hypotheses.  The study revealed
that forensic accounting is a financial strategy to curb and resolve economic and financial
crime in Nigerian economy.  Once again, this was in conflict with the conclusion of
Okunbor and Obaretin (2010) as well as Cosmas et al (2009).
In 2009, Owojori and Asaolu employed conceptual analysis to investigate the role of
forensic accounting in reducing corporate fraud and mismanagement and they concluded
that forensic accounting will become very useful in public accounting.  
It is common cause that majority of authors were of the view that fraud is indeed a
cancer in many organisations that can only be cured by applying forensic accounting
techniques. In other words, fraud has a big impact on the ordinary audit and hence,
contributes towards the destruction of audit reputation.  Koh and Woo (1998), concluded
in their research that there is a widespread belief that a person who has interest in a
company should be able to rely on its audited accounts as a guarantee of going concern
status and its solvency. If such a company folds after receiving a clean audit opinion that
is marinated with fraud, without any warning that the company is in serious financial
difficulty, it is widely felt that the auditors must be held accountable.
The ACFE (2010) discovered that medium losses caused by the occupation fraud were
about $160,000, which is a material figure in most organisations. To this end, the public
now expects the auditors to detect fraud and guarantee that the financial statements are
correct.  Public expectation of the work required to be done by auditors and regulatory
requirements for the audit activity (known as “expectation gap”) have changed over the
years.
According to Singleton et al (2006), fraud detection was considered as the primary role in
the audit until approximately 1940 and later on it changed to be an casual examination of
the books and this has increased public dissatisfaction with the audit activity.  Now in a
quest to narrow the “expectation gap’, the American Institute of Certified Public
Accountants (AICPA) issued series of Statement of Auditing Standard (SAS).
Nevertheless, new standards and requirements have simply reduced but not eliminated
the “expectation gap”.  Hence, it remains imperative to research on the possibility to
improve fraud investigation and detection in the audit process through the forensic
accounting skills and techniques.
In their paper Okoye and Gbegi (2013) employed simple mean and standard deviation to
investigate the effectiveness of forensic accountants on planning fraud risk detection
procedures.  On their research, they used multivariate analysis of variance and analysis of
variance (ANOVA) to compare their study with that of Asare and Wright (2004). The
authors found that forensic accountants widen the extent and nature of audit test when
the risk of fraud is high.  This seemed to suggest that forensic accounting techniques are
better placed to detect fraud in the majority of organisations.
Bressler (2011) studied the perception of attorneys and judges in the court system as to
what might enhance understanding of the role of forensic accountants in fraud
investigation. The researcher used a conceptual analysis and found out that forensic
accountants must be well trained in the rules of evidence. In other words, the study
seemed to suggest that judges recon the relevance of forensic accounting in the court
process of prosecuting criminals. However, it seemed, though, that forensic accountants
need to improve on the rules of evidence and other information technology techniques in
order to reinforce their importance at courts as expert witnesses.
Ajie and Ezi (2000) concluded that financial fraud varies widely in its nature hence causes
of fraud are difficult to identify. Their study showed that modern day organizational
frauds usually involve a complex web of conspiracy and deception which make it difficult
to fish out the actual causes.  As a result, Ajie and Ezi (2000) estimated that 6 out of every
10 staff would look for ways to steal for whatever reason. This is quite an alarming rate of
60%.
 If the rate of 60% by Ajie and Ezi (2010) is something to go by, then fraud together with
white-collar crimes which came into being later in the 19 th and 20th century inter alia
corruption, money laundering, tax evasion, externalization of foreign currency to itemize
just a few, have stood as potent weapons capable of haemorrhaging the entire world
economies, particularly parastatals where internal control environments are sometimes
overridden by political super-beings.
Goredema (1992) is of the view that the Zimbabwean banking sector has had a fair share
of financial scandals.  Also, according to the Reserve Bank of Zimbabwe Report (2006), the
Zimbank-Lorac financial impropriety and the reckoned 2003-2004 financial turmoil that
saw the collapse of several banks due to deep-rooted mismanagement and poor corporate
governance practices are a tip of the ice berg.  Among possible causes of the collapse of
Zimbabwean financial institutions were the shocking inadequacy of risk management
systems and diversion of the core business to speculative activities contrary to the dictates
of Sections 32 to 35 of the Banking Act (Chapter 24:20).  
There are also high levels of non-performing insider loans (such as the case of Interfin
Bank) and overstatement of capital adequacy (window dressing), among the causes of the
fraudulent crisis.  The financial malice saw the siphoning of more than one trillion
Zimbabwe dollars into offshore accounts and the resultant escape of notable rogue
bankers into hiding or self-imposed exile in a bid to escape from the jaws of justice.
2.5 Comparison of Forensic Accounting and Traditional Auditing
According to Okoye and Akenbor (2009), it has been established that one of the
challenges facing the development of forensic accounting in developing economies, is that
it is myopically believed to be similar, if not the same, with traditional auditing. This is a
terrible mistake. The two accounting disciplines are significantly different in their
approach and objectives.
Forensic accounting is different from traditional auditing and is as presented in the table
below:

Table 1
Traditional auditing Forensic accounting
Traditional Auditing is mandatory and Forensic accounting is done in response to an event
governed by Companies Act such as fraud
Auditors should possess “professional Forensic accountants should possess “investigative
scepticism”. mentality” to treat all figures as suspects until proven
otherwise
Adds credibility to reported financial Resolves suspicions, accusations by determining facts
information
Obtain reasonable assurance that financial Findings used as evidence in court or to resolve a
statements are free of material dispute
misstatement
An auditor basically focuses on material A forensic accountant may focus more on seemingly
transactions. immaterial transactions.
Audit is mainly concentrated on financial The coverage of forensic accounting is wider than
statements and its related items audit dealing with both financial & non-financial
issues.
(Source: Carey, 2008)
 Accordingly, forensic accounting is the integration of accounting skills, auditing
knowledge, information technology skills, criminal psychology and investigative skills to
resolve a legal problem (Zysman, 2004).  It demands reporting, where fraud is established
and the report is considered as evidence in the court of law or in administrative
proceedings.
There is a debate on how to clearly categorize fraud. Attempts to categorize it have been
a daunting task to fraud specialists.  One school of thought differentiates fraud according
to occupation (Singleton et al, 2006) while another school of thought serialized it on the
basis of whether it is public or private sector fraud (Comer, 2001).  Similarly, another
school of thought accorded fraud in terms of industry in which the fraud has occurred
such as bank fraud and insurance fraud (Skalah et al, 2001). Lendemen (2003) found it
plausible to categorize fraud in terms whether it is corporate or non-corporate, such as
management fraud, insider dealing, investment fraud, and other related frauds.  
One of the most serious forms of fraud is accounting fraud which involves hiding serious
financial problems, using fraudulent bookkeeping to overstate income, inflate company
assets or report a profit when the company is actually operating at a loss through creative
accounting techniques (Millichamp, 2002).  This could be used to conceal theft in a
company. The collapse of Enron and Tyco are cases in point (Skalah et al, 2005).
According to (Ozkul and Pamukc, 2012), financial statement fraud results in the increase
of market value of the business and sometimes managers get paid performance bonuses
when in actual fact their organisations are loss-making.

2.6 Fraud Detection and Deterrence

According to Rasey (2009), it was stated that forensic accountants work in two primary
areas which are investigative accounting and litigation support.  Investigative accounting
encompasses not just the numbers and documents of a company, but also criminal
psychology.  
Forensic accountants investigate the financial operations of an enterprise and prepare
information that may be used in a criminal or civil court case.  Jacobs (2011) states that
various laws can be used to prosecute offenders. This can be international and national
law, public law and private law; where public law can also be categorised into
constitutional law, criminal law, administrative law, law of criminal procedure as well as
the law of evidence. The forensic accountant must know with certainty the type of law
that applies to a particular case under investigation.
The court case  of S vs Prinsloo (2010) is a good example which shows the importance of
the forensic accountant in criminal prosecution where the forensic accountant gave an
expert testimony. In this case, the accused, Marietjie Prinsloo was convicted of a number
of criminal charges which included racketeering and money laundering, and was
sentenced to 25 years in prison.
Also in the case of S vs De Clercq (2008), the court summoned a forensic accountant to
give expert witness. However, the objectivity and credibility of the forensic accountant
was attacked by the opposing attorney on the basis that the report was prepared by
someone else other than the forensic accountant himself. Nevertheless, the court found
the forensic accountant’s testimony ‘persuasive’, and was not summarily rejected by the
court. These two cases illustrate the importance of forensic accountants in criminal law
proceedings.
In the researcher’s view, forensic accounting should be introduced into most organisations
as a service which can be acquired when fraud investigation is needed to be carried out.
It should also be used as the ultimate source of fraud investigation. It should be used as a
system to monitor the daily activities of the company to ensure that fraud can be
reduced.  
It is common cause that fraud is an ever growing problem in Zimbabwe as this country is
still in the developing stage in the business sector.  This actually increases the necessity of
adopting forensic accounting practices in Small- Medium Enterprises, Blue Chip
Corporations and parastatals.  Forensic accounting should be taken in as the ultimate
precaution towards financial fraud.  The public should be given the opportunity to be
educated by organizations or even government agencies on the influence of forensic
accounting on fraud detection and deterrence.
In Europe, the European Federation of Accountants (FEE) illustrated the role of forensic
accounting and highlighted that the unexpected collapse of an important company will
undermine the credibility and reliability of the financial information and the regulatory
system. The Institute of Chartered Accountants of Zimbabwe (ICAZ) should borrow ideas
from FEE. So many companies have collapsed in Zimbabwe due to fraudulent financial
reporting, such as Interfin Bank, which eventually destroyed confidence of both investors
and the depositors. This shows that even a well established company such as Enron would
also collapse because the company was involved in corporate scandals which cost billions.
The researcher also believes that there is a need to strengthen corporate governance
arrangements in Zimbabwe so as to provide the highest quality of financial information to
the capital markets.  The financial information is then required to be prepared by well
established accounting and auditing company.  But even so, with strong corporate
governance, and financial information prepared by well established accounting and
auditing companies, these corporate scandals still persists!  That is the challenge. The
understanding of the issue that these scandals would not be able to be totally eliminated
causes the public to continue to doubt the management and even the company itself.
That is why forensic accounting should be introduced as a main tool to investigate
companies of fraud occurrence.  With this, the interest of the public can be taken care of
without them fearing of losing everything.
When business frauds are analyzed, it is ascertained that three components come together
when committing the crime.  These are pressure, opportunity, and justification that
constitute Cressey’s Fraud Triangle.  Interestingly, the components of the Fraud Triangle
are similar to the fuel, spark, and oxygen which together cause fire.  When the three
come together, inevitably fire breaks out.  
Over time, the importance of initial detection of fraud has increased because the number
of fraudulent events has increased.  Detection of fraud begins with the notification of red
flags which indicate that something is wrong (Ozkul and Pamukc, 2012).  Figure 15 below
shows fraud cases that were identified FBI Forensic accountants in the period 2007 to
2011:

Figure 15
 (Source: FBI Financial Crimes Report: 2010-2011)
The above graph shows that FBI keeps improving on fraud detection. They have
intensified detection techniques over the years on corporate fraud, securities fraud,
healthcare fraud and mortgage fraud. However, it is not clear whether the decline in
insurance fraud and money laundering is attributable to fraud deterrence skills or it is
simply because majority of the cases were not identified as fraudsters developed new
tricks on the market.
In the past, many fraudulent acts have been detected by ‘tips’.  Unfortunately, the
incidence of fraud proceeds during detection and losses consequently increase.  Figure 16
below illustrates ways fraud can be established:

Figure 16

(Source: Report to the Nations on Occupational Fraud and Abuse -2014)

This graph shows how sophisticated fraud in organisations can be making it difficult to
crack and prevent. Fraudsters have the capacity to by-pass information technology (IT)
 controls and can send both internal as well as external auditors in wrong directions
without any scent of fraud. It is evident that majority of frauds are identified through tip
– offs. Sometimes people know that fraud is being committed, but are afraid to bring it to
light on fear of the unknown (Ozkul and Pamukc, 2012).
Fraud is costly.  ACFE (2011) estimated that $3.5 trillion worldwide were lost due to
fraudulent financial statements, asset misappropriation, and corruption in 2011. In
Zimbabwe, it is estimated that US$15 billion was lost through diamond scams. This
amount is more than the Gross Domestic Product of Zimbabwe that currently stands at
US$13,8 billion. The researcher finds this level of fraud to be alarming and calling for
action.
World-wide, in an effort to restore public trust in the audit profession, accounting
standard setters have increased the steps auditors are expected to take in order to detect
fraud.  As a result of the Enron and WorldCom debacles, auditors are currently required
to adhere to the requirements of Statement on Auditing Standards (SAS) no.99.  Rasey
(2009) revealed that financial statement fraud has cost market participation more than
USD$500 billion during recent years, with serious litigation consequences.  To this end, it
is peremptory for everyone to be educated on the consequences of fraud and hence
increase awareness among the public regarding the seriousness of the fraud, moreso in
developing countries such as Zimbabwe. Obviously, this research aims to increase
awareness and acceptance level of forensic accounting in Zimbabwe and the world over.

2.7 Fraud Detection Techniques

It must be understood that fraud in itself is a billion-dollar business and it is getting
sophisticated every year.  The PwC (2009) suggests that close to 30 percent of companies
worldwide have reported being victims of fraud in the year 2008. A big chunk of
organisations live with fraudsters and pay their salaries without knowing that fraud is going
on in their organisations. A rude awakening only comes by engaging Forensic
Accountants who leave no stone unturned in search of fraud.
Crumbley et al (2005) state that fraud involves one or more persons who intentionally act
secretly to deprive another of something of value, for their own benefit.  In recent years,
globalisation has provided further ways in which criminals may commit fraud. In addition
to that, continuous business reorganization or downsizing may also weaken internal
controls and present opportunities to commit fraud.
The traditional methods of data analysis to detect fraud have been out-paced by
technology. They require complex and time-consuming investigations that deal with
different domains of knowledge like financial, economics, business practices and law.
However, modern fraudsters employ top of the notch and sophisticated tricks to outwit
their prey and hence, traditional data analysis methods alone are not good enough to
detect fraud. Rasey (2009) revealed that fraud transgressions can be similar in content and
appearance but usually they are not identical.
The first industries to use data analysis techniques to prevent fraud were the telephone
companies, the insurance companies and the banks (Decker, 1998). A good example of
data analysis technique in the banking industry is the FICO Falcon fraud assessment
system, which is based on a neural network shell.
Majority of retail industries have suffered significantly from fraud at point of sale (POS)
through larceny and skimming fraud techniques. Recently, some retailers have started to
make use of digitized closed-circuit television (CCTV) in order to detect and deter
fraudulent activities.  Internet transactions have recently raised big concerns, with some
research showing that internet transaction fraud is 12 times higher than in-store fraud
(Decker, 1998).
Yufeng et al (2004) indicated that of late fraud that involves cell phones, credit card
transactions and internet represent significant problems for governments and businesses,
but yet detecting and preventing such type of fraud is not a simple task.  Fraud is an
adaptive crime which needs special methods of intelligent data analysis to detect and
prevent it.
Modern fraud detection methods exist in the areas of Knowledge Discovery in Databases
(KDD), Data Mining, Machine Learning and Statistics (Dorronsoro et al, (1997).  They offer
applicable and successful solutions in different areas of fraud crimes. Techniques used for
fraud detection fall into two primary classes: statistical techniques and artificial
intelligence.  

a. Statistical data analysis techniques:

These include data processing techniques for detection, validation, error correction, and
filling up of missing or incorrect data. They also include models and probability
distributions of various business activities such as computing user profiles, time-series
analysis, clustering and classification to find patterns and associations among groups of
data (Bolton and Hand, 2001).
Brachman et al (1997) assert that in forensic analytics, it is also critical to match algorithms
to detect anomalies in the behaviour of transactions or users and compare them with
previously known models and profiles.  These techniques are also needed to eliminate
false alarms, estimate risks, and predict future of current transactions or users.  It is
important to note that some forensic accountants specialize in forensic analytics that deals
with the procurement and analysis of electronic data to reconstruct, detect, or otherwise
support a claim of financial fraud.  
Surely fraud is a serious virus that needs to be detected early for early treatment. In 2016
alone Old Mutual (Zimbabwe) has been slapped with two similar frauds of US$70,000 each
following fraudulent claims on its life assurance products. Old mutual should employ
forensic analytics. Fraud detection techniques can be summarised as given in Figure 17
below:

Figure 17

(Source: Jarrod et al, 2011)

Fraud management is a knowledge-intensive activity. Just as an example, forensic analytics
may be used to review an employee’s purchasing card activity to assess whether any of
the purchases were diverted or divertible for personal use.  This may involve guerrilla
tactics to obtain relevant evidence for the crime.
b. Artificial Intelligence techniques for fraud detection:
Artificial intelligence fraud detection techniques include data mining to cluster and
segment the data and automatically find associations and rules in the data that may signify
interesting patterns, including those related to fraud.
Rasey (2009) propose the application of machine learning techniques to automatically
identify characteristics of fraud.  Neural networks can learn suspicious patterns from
samples and later on detect fraud from them.  Other techniques such as link analysis,
Bayesian networks, decision theory, land sequence matching are also used for fraud
detection.
According to Crumbley et al (2005), the machine learning and artificial intelligence
solutions may be classified into two categories: ‘supervised’ and ‘unsupervised’ learning.
These methods seek for information that behaves ‘unusual’ in order to output suspicion
scores, rules or visual anomalies, depending on the method.
It is important to note that whether supervised or unsupervised methods are used, the
output gives only an indication of fraud likelihood; hence, further investigations need to
be carried out.  No stand alone statistical analysis can assure that a particular object is a
fraudulent one.  It can only indicate that this object is more likely to be fraudulent than
other objects.

Figure 18
 (Source: International Journal of Computer (0975-8887) Application, volume 79- No. 2,
October 2013)
The diagram shows a simple machine learning process that can be used to detect fraud in
organisations. Cahill et al (2000) state that supervised neural networks, fuzzy neural nets,
and combinations of neural nets and rules, have been extensively explored and used for
detecting fraud in mobile phone networks and financial statement fraud.  On the other
hand, Bayesian learning neural network is implemented for credit card fraud detection,
telecommunications fraud and for detecting medical insurance fraud.
Sometimes forensic accountants use a hybrid system; where expert knowledge is
integrated with statistical power, use a series of data mining techniques for the purpose of
detecting fraud.  Specifically, a rule-learning program to uncover indicators of fraudulent
behaviour from a large database of customer transactions is implemented (Crumbley et al,
2005).
Cahill et al (2000) recommend the design of a fraud signature, based on data of fraudulent
calls, to detect telecommunications fraud.  For scoring a call for fraud its probability
under the account signature is compared to its probability under a fraud signature.
Thereafter, a Link Analysis is then employed to relate known fraudsters to other
individuals, using record linkage and social network methods.  This type of detection is
only able to detect frauds similar to those which have occurred previously and been
classified by a human.  To detect a novel type of fraud may require the use of an
unsupervised machine learning algorithm.
Zytkow and Rauch (1999) in their research paper concluded that there is series of
behavioural changes which follow a three-level profiling, for the purpose of fraud
detection. In order to do this, ‘normal’ profiles are created based on data without
fraudulent records (semi supervised).  Also Burge and Shawe-Taylor (2013) use behaviour
profiling for the purpose of fraud detection.  However, in the case of using a recurrent
neural network for prototyping calling behaviour, unsupervised learning is applied.

2.8 Challenges of using forensic accounting evidence in courts

With an upsurge in fraud in the current economic environment so far experienced; which
is marred with massive corruption, money laundering and accounting fraud, detection of
fraud has become an emerging topic of great importance for academic, research and
industries.  Kozinski (2001) states that incidences of fraud can be noted in the media on a
daily basis and hence, forensic accountants must be well-trained in the Rules of Evidence
so as to convince judges during a trial.
Forensic accounting evidence was used successfully to nail criminals, for instance, in the
case of S vs Prinsloo (2010), where the fraudster was sentenced to 25 years in prison and in
the case of S vs De Clercq (2008). In the case of Heather Mills vs Sir Paul McCartney, the
husband underestimated his net worth to GBP 400 million in a divorce case. This was
challenged by the complainant (Heather Mills) and forensic accountants were engaged. It
was held that the defendant’s net worth was GBP450 million and she got away with
GBP16,5 million. The other famous case is Robert Maxwell’s fraud of 1991 where forensic
accountants proved that the accused had embezzled US$1 billion from shareholders. In
the O. J. Simpson case, the accused claimed that he was broke and therefore unable to
 settle a civil suit. Forensic accountants proved that he had hidden away millions of dollars.
The claimants were awarded a total of US$33 million (Andreas, 2013).
Despite the success stories cited above, it does not follow that forensic accounting
evidence is immune of challenges at courts. Zimbabwe’s Criminal Law (Codification and
Reform) Act (Chapter 9:23) does not contain the phrase “forensic accounting”. Worst
still, the leading accounting regulatory board, Public Accountants and Auditors Act
(Chapter 27:12) does not also contain the phrase “forensic accounting”. Under these
circumstances, it is folly to assume that forensic accounting evidence will be automatically
accepted in courts. Recently, many culprits have been dragged to criminal courts of
Zimbabwe particularly from state-owned enterprises after corruption and other forms of
fraud took place. Sadly, most of the forensic reports are rendered useless due to political
interference and lack of support from the legislation itself.
Okoye and Akenbor (2009) state that forensic accounting is faced with so many
bottlenecks. Grippo and Ibex (2003) reveal the following challenges confronting the
application of forensic accounting: (a) the task of gathering information that is admissible
in the court of law; (b) the acceptance of evidence in compliance with the laws of
evidence is crucial to successful prosecutions of criminal and civil claims and (c)
globalization of the economy has the effect that a fraudster can be based anywhere in the
world leading to the problem of inter-jurisdiction.
Degboro and Olofinsola (2007) note that an important challenge to the application of
forensic accounting in financial fraud control in Nigeria is that the law failed to
incorporate latest technology in fraud detection. This is also the case with Zimbabwe.
Many times, fraud investigators are required to explain their data retrieval processes for
which they are testifying. Sometimes they face severe sanctions by the courts and they
have no law on their side to protect their case.
Several researchers indicate that judges sometimes find it difficult to understand
numerical or statistical data testimony during trials. Neufer (2000) noted that most jurors
or judges possess limited appreciation of numerical figures as well as statistics and usually
their anxiety arises and influences their attitude towards numerical testimony.
Finally, the impediment of testifying forensic evidence rests on the Forensic Accountants
themselves. Jordan (2006) indicated that giving evidence in court deals with
communicating information to individuals such as judges and public prosecutors, who
often have limited experience or exposure of such testimony. In other words, forensic
investigators must make their documents “speak” for themselves. Many times genuine
cases are thrown away for lack of consistency in the testimony.

2.9 The need for Forensic Accounting in Zimbabwe’s Public Sector

The need for forensic accounting aroused due to failure of audit system in organization as
the organizational internal and external audits failed to reveal certain errors in the
managerial system. It has been reported in the local media that Harare City Council could
have been fleeced of millions of dollars following revelations that two anonymous
computers could have been used to issue fraudulent receipts to customers
(Newsdzezimbabwe, 2016). The same report indicates that Gweru City Council failed to
account for US$1 million dollars, Kwekwe City Council could not account for US$2,569,
043 and Kariba Town Council could not give an account of US$1,1 million and so on.
Fraud has had severe negative consequences on Zimbabwe, ranging from negative
economic impact to negative national image. In Zimbabwe’s National Risk Assessment
(NRA) Report (2015), cybercrime is listed as one of the financial crimes contributing to
the US$1,8 billion estimated elicit proceeds generated from criminal activity annually in
Zimbabwe. The worst affected targets are state owned enterprises.
Thus, the researcher is alarmed by the level of fraudulent activities in Zimbabwe. It does
not need a rocket scientist anymore to show how devastating frauds have compromised
the administrative competence, performance capacity and the general credibility of public
sectors. Many capital projects have turned into “white elephants” due to corruption and
other forms of fraud, with serious implications for national growth and development.
Despite shortfalls on the law to support incarceration of fraudsters, it remains imperative
to have Forensic Accountants in the public sector to detect and curb fraudulent activities.
3 Research Methodology
Saunders et al (2009) explain research philosophy as “the development of knowledge and
the nature of that knowledge”. The three authors proceed to say that people’s
perspective of the world tends to interfere with the research at hand. As a result, the
philosophy approach that one adopts is largely influenced by several considerations, one
of which is the researcher’s view of knowledge, and how that knowledge is acquired.
However, it must be noted that there is debate as to which philosophical approach is
superior to the other. As a result, currently there is no better “philosophical” approach,
as long as there is adequate justification for the philosophy adopted, and whether it is
fulfilling the research questions.
Figure 6 below shows a research onion demonstrating the different philosophies,
approaches, strategies, choices, techniques and procedures. However, it must be noted
that contrary to what the research onion seems to suggest, rarely does one find a research
question falling under only one research philosophy.

Figure 6: The Research Onion

The research philosophy shows the author’s assumptions which serve as a base for
research strategy. Saunders et al (2009) allude that pragmatics recognise many
different ways of interpreting the world and as a result there is no single point of view
which can give the entire picture. Indeed, there may be multiple realities. Whilst
positivism and interpretivism are extremely mutually exclusive paradigms, positivism
 asserts that only factual knowledge gained through measurement is more trustworthy.
Figure 6.1 below summaries the research philosophies:

Figure 6.1
Pragmatism Positivism Realism Interpretivism

Popular data Mixed / Highly structured Methods chosen must Small samples,
collection multiple fit the subject matter, in depth
methods quantitative or
Method designs Large samples qualitative Investigations,
qualitative
Quantitative Quantitative but
and qualitative can use
qualitative

In this study, the researcher applied a positivism approach that is based on the “objective”
ontology and quantitative method as its research strategy. To this end, the researcher
administered 205 questionnaires to gather data which was then subjected to statistical tests.

3.2 Research Design

The primary objective of the research is to answer the two research questions
which are:
a. To what extent is forensic accounting an effective tool for detecting fraud in Zimbabwe
organisations?
b. To what extent does forensic accounting curb fraudulent activities in Zimbabwe
organisations?

The two research questions seek to identify whether there is a relationship between forensic
accounting and fraud detection as well as fraud control. The survey method is applied in order to
collect a sufficient amount of primary data. The survey method was selected because the study
focuses on evaluating respondents’ opinions with regards to the effectiveness of forensic
accounting as a tool for detecting and combating fraud in Zimbabwe. The survey design method
utilises data collected from a population for interrogation. Due to limited research time and other
essential resources, the research uses both quantitative data using questionnaires and qualitative
data amazed through interviews with influential and key respondents. Qualitative research is
appropriate for small samples and its outputs are not quantifiable. However, its basic advantage is
that it offers a complete description and analysis of a research subject, without limiting the nature
of participant’s responses as is the case with questionnaires (Collins & Hussey, 2003).

It is important at this point in time to allay the misconception that qualitative research and
quantitative research are one and the same thing. Collins & Hussey (2003) clearly state that a
qualitative research is exploratory in nature which provides insights into the problem or
hypothesis for a quantitative research. It uses common techniques such as focus groups, individual
interviews and observations. In this regard, the sample size is small so as to fulfil an established
quota.

On the other hand, a quantitative research quantifies the problem by generating numerical data
that can be converted into meaningful statistics. It uses measurable data to formulate facts of the
research. Normally, it uses techniques such as surveys, online polls, face-to-face interviews and
website interceptors among others.

3.3 Research Instruments

Research instruments are tools that are used to collect data suitable for a study under
consideration. Research instruments fall into two broad categories, which are, researcher-
completed instruments and respondent-completed instruments (Denzin & Lincolin, 2005). Table 2
below shows how the two categories of instruments are distinguished.

Table 2
Researcher- completed instruments Respondent-completed instruments
Tally sheets Questionnaires
Flowcharts Self-checklists
Rating scales Attitude scales
Interview guides Personality inventories
Performance checklists Aptitude tests
Observation forms Projective devices
Time and motion logs Socio-metric devices
(Source: Biddix, 2015)
The research focuses on questionnaires and interviews of key people as primary data collection
tools. The questionnaire used in this research is divided into four sections, where Section A to
Section C used structured questions and Section D employed open-ended questions. Also, the
interviews done with key people were derived from the questionnaire and follow-up questions
were asked when seeking clarity.

3.4 Credibility of questionnaires and interviews

It is important to note at this in time that for a research instrument to credible, it must be usable,
valid and reliable. Usability refers to the ease with which a research instrument can be
administered, understood by the participant and interpreted by the researcher (Fowler, 1988).
Validity measures the extent to which a research instrument measures what it is supposed to
measure. Numerous statistical tests can be used to measure validity of the instrument and this can
involve pilot testing. Reliability of the instrument is directly linked to its validity. In order to see if
the instruments used in this research are credible, Table 3 shows the advantages and disadvantages
of using questionnaires as data collection tools.

Table 3

Advantages
Large amounts of data can be
amazed within a short period of
time at a low cost
The results can be easily
quantifiable without much
influence on the reliability of
data
Data gathered can be analysed
Disadvantages
The questionnaire fails to capture key information such as the
respondent’s emotions, behaviour and feelings
Only a limited amount of information can be asked on the
questionnaire which also limits its validity
There is no way to tell the truthfulness of the respondent, nor
 more scientifically compared to
other methods
Questionnaire is a practical way
of gathering data
how much thought has been applied on the responses
There is some degree of researcher’s imposition, that, he or
she develops questions that are important to the researcher,
yet these questions might miss out on fundamental issues of
the research

(Source: Popper, 2004)

Despite the setbacks of the questionnaire, the author found it a convenient tool for this research.
There is a rise in the popularity of online and mobile surveys as data collection tools. However, in
addition to the questionnaire, the author also adopted face-to-face interviews with focal persons
to complement the questionnaire. Table 4 below shows the pros and cons of using interviews as a
data collection tool.

Table 4
Pros Cons
Face –to-face interviews capture emotions and Normally face-to-face interviews are very
behaviours of the respondents expensive to conduct and this may severely
limit the scope of the research
The interviewer has control over the interview Interviews sometimes suffer from self-serving
and is able to keep the interviewee focused and bias, where the interviewer may end up
on track asking leading questions
Face-to-face interviews allow the interviewer to Manual data capturing and at the same time
capture verbal and non-verbal ques. interviewing the respondent may leave out
critical information unrecorded and
compromise quality of research
Finally face-to-face interviews help with proper Normally the sample size is small and may
screening of information, for instance, it may not represent the population. This has the
become difficult for the interviewee to result of undermining credibility of the
misrepresent about their gender and age. research outputs
(Source: Hughes, 1981)
3.5 Population Sampling
It is within the interest of the researcher to clearly define the population following clear logic and
judgment. The population must keep in line with the research objectives, for instance, when
researching on forensic accounting, it may be folly to draw the population from nurses who may
struggle to understand the subject matter.

Sharon (1999) states that sampling methods can either be probability based or non-probability
based. Where probability method is used, each member of the population has a known non-zero
chance of being selected. It includes random sampling, systematic sampling and stratified
sampling. Non-probability sampling includes convenience sampling, quota sampling, judgmental
sampling and snow-bow sampling. In this research, probability sampling method was used.
The population of study for this research comes from six (6) organisations, all based in Zimbabwe.
This is tabulated below:

Table 5
Organisation Population
Institute of Chartered Accountants of 27
 Zimbabwe
Auditor General’s Office 81
Zimbabwe Anti-Corruption Commission 94
Zimbabwe Republic Police Serious Fraud Squad 176
Deposit Protection Corporation 28
Institute of Forensic Auditors (Zimbabwe) 14
Total 420
(Source: Population was estimated by Human Resources Departments of each
organisation)
It is pertinent to bear in mind that when selecting a sample there is always a compromise between
what is desirable and what is attainable. Where the sample looks unrepresentative of the
population, it is incumbent upon the researcher to moderate the sample from time to time.
Suitability of the sample will be determined by the following formula at 5% level of significance
(Adefila, 2008):

S = P / {1+P(g2)}
Where S = sample size
P = Population size
g = level of significance.

Based on this formula, the sample size is calculated as follows:

S = P / {1+P(g2)}
= 420 / {1 + 420(0.0025)
= 205
The sample distribution for the six (6) organisations is tabulated below:

Table 6
Organisation Population
Institute of Chartered Accountants of 14
Zimbabwe
Auditor General’s Office 39
Zimbabwe Anti-Corruption Commission 46
Zimbabwe Republic Police Serious Fraud Squad 87
Deposit Protection Corporation 12
Institute of Forensic Auditors (Zimbabwe) 7
Total 205

In order to have confidence that the survey results are representative of the population, it is
recommended to have a big pool of randomly selected participants. The question is, “How big is
big?” Niles (2006) highlighted that at 95% confidence level, margin of error can be calculated
using 1 / ∫N, where N is the sample size. The table below shows the margin of error for a sample:

Table 7

Sample Size Margin of Error (3 decimal places) Margin of Error (as a %)

(N)

10 0.316 31.6%
20 0.224 22.4%
50 0.141 14.1%
100 0.100 10.0%
 200 0.071 7.1%
500 0.045 4.5%
1,000 0.032 3.2%
2,000 0.022 2.2%
5,000 0.014 1.4%
10,000 0.010 1.0%
(Source: Creative Research Systems, 2003)
From the above table, a sample with 205 participants has a margin of error of 7.1%. In other
words, there is 7.1% probability that the sample is not representative of the population. On the
other hand, there is 92.9% probability that the sample is a representative of the population. The
author therefore concludes that the selected sample represents the population to a greater extent.

3.6 Ethical considerations

Adams (2013) states that the major concern of the researcher should be the safety of participants.
In other words, the researcher must identify potential risks to the participants and eliminate or
better still minimise that risk to acceptable levels. Where serious unanticipated risks manifest, the
researcher may consider withdrawing from the study. In this research, the author upheld three
primary ethical principles regarding participants which included autonomy, beneficence and
justice. Autonomy refers to the fundamental right of the participant to determine the activities
where they can participate, free from coercive influence. Populations generally presumed to have
diminished autonomy are prisoners, children, elderly subjects by virtue of impaired cognition as
well as mentally retarded subjects (Adams, 2013). Beneficence refers to the implied obligation on
the part of the researcher to maximise benefits from participants and at the same time minimise
their risk of harm. Justice is premised on the equitable selection of each participant, where each
person in a population has an equal and equitable chance of being selected (Belmont Report,
1979).

In addition to the above, the researcher upheld individuals' and organizations’ rights to
confidentiality and privacy as a central tenet of his work. However, the researcher is also aware
that many “privacy issues” are idiosyncratic to the research population. In such instance, the
researcher needed to devise ways to ask whether participants were willing to talk about sensitive
topics without putting them in awkward situations or demeaning their autonomy. In a case where
research participants have the freedom and latitude to choose how much information about
themselves they will reveal and under what circumstances, the researcher was careful when
recruiting participants for a study, for instance, it would be inappropriate to solicit information
from sacked employees in this type of research. Where the researcher is precluded from obtaining
full consent at the beginning of interview or answering questionnaires, for example, if the protocol
includes deception or exhibits spontaneous behaviour, the author offered a full debriefing before
data collection and provide participants with an opportunity to reiterate their consent. In
instances where the researcher hit the walls with regards to data collection (as is normally the case
with ‘sensitive offices’), the only option available is guerrilla tactics till adequate information is
amazed.
Finally, the researcher was clear to avoid any sort of research misconduct such as fabrication,
falsification and plagiarism. Fabrication refers to the process of making up data and reporting on
the same. Falsification refers to the manipulation of research materials or omitting data / results
such that the research is not balanced and accurately reported. Plagiarism refers to the
appropriation of one’s prior research or another person’s ideas, processes, results or words
without according appropriate credit.

Data Presentation And Analysis

4.0 Introduction
Data was collected through 205 questionnaires that were administered to six (6) organizations
based in Zimbabwe. The purpose of the questionnaires and interviews on focus groups was to
obtain feedback from participants on their views regarding forensic accounting as a tool for fraud
detection and deterrence in Zimbabwe. Of the 205 questionnaires that were sent out, 149 were
received from the participants. This was an overwhelming response more than what the
researcher had initially anticipated. This slightly moved the reliability of the sample from 92.9% to
91.8%. At least two participants were interviewed from each organization in order to obtain more
information through open-ended questions.

4.1 Reliability Testing

The following table shows an analysis of the reliability of the data which was collected by the
questionnaire. The researcher applied Cronbach’s alpha to test the reliability of data. Cronbach’s
alpha is basically the measure of internal consistency or how closely related a set of items are as a
group. Decision rule: Where Conbach’s alpha ≥ 0.7, accept the results as reliable and below that,
the results are deemed unreliable (Hatcher, 1994).
Table 8
Reliability Statistics
Cronbach's Alpha N of Items
0.728 13
(Source: SPSS calculation)
Since the Cronbach’s alpha is 0.728 which is greater than 0.7, it therefore implies that the data set
collected by this instrument is reliable. This is consistent with the results on Table 7 above.

4.2 Data Analysis

SECTION A : DEMOGRAPHICS

4.2.1 Participant’s duration in the organisation

Table 9 below shows participants’ duration in their organizations. This question was meant to see
if respondents clearly understood the dynamics taking place in their organizations.

Table 9
Duration
Frequency Percent Valid Percent Cumulative Percent
1 to 5 years 37 24.8% 24.8% 24.8%
6 to 10 years 66 44.3% 44.3% 69.1%
Valid Less than 1 year 29 19.5% 19.5% 88.6%
More than 10 years 17 11.4% 11.4% 100%
Total 149 100 % 100%
(Source: 2016 survey)
This information is summarized by the following graph:
Figure 19.1: Duration in the organization

The analysis above shows that 44% of the respondents worked between 6 to 10 years, 25% worked
between 1 and 5 years, 19% worked less than a year at the organisation and 11% worked for a
period more than 10 years.

4.2.2 Highest level of educational qualification

From the analysis of responses received, 53% had first degrees, 19.5% had diplomas, 18.1%
had Masters Degrees and only 9.4% had PHDs.

Table 10      Educational Qualification

Frequenc Percen Valid Cumulativ
y t Percen e Percent
t
Diplom 29 19.5% 19.5% 19.5%
a
First
Valid 79 53.0% 53.0% 72.5%
Degree
Masters 27 18.1% 18.1% 90.6%
Degree
PHD 14 9.4% 9.4% 100%
Total 149 100% 100%
The responses given in Table 10 above can be summarized as per the following Pie Chart:
 Figure 19.2 – Level of education for the respondents

It can be concluded that at least 80.5% of the respondents had a first degree and above. Normally
such groups of participants are the ‘think tanks’ of most organizations.

4.2.3 Position in the Organisation

Table 11     Position in the organization

Frequency Percent Valid Percent Cumulative Percent
Executive Director 21 14.1% 14.1% 14.1%
Manager and below 108 72.5% 72.5% 86.6%
Valid
Non-Executive Director 20 13.4% 13.4% 100.0%
Total 149 100% 100%
(Source: 2016 Survey)
Table 11 above shows that 72.5% of the respondents described their positions in their
organizations as managerial and below, 14% described their positions as executive directors and
13.4% described their positions as non-executive directors. Likewise, this information can be
summarized by the graph below:
Figure 19.3: Position in the Organisation

4.2.4 Gender
The survey also looked at the gender distribution of the participants. The results show that there
were more responses from males than females in the organizations subjected to the survey. This is
shown on the table below:

Table 12   Gender
Frequency Percent Valid Percent Cumulative Percent
Female 69 46.3% 46.3% 46.3%
Male 80 53.7% 53.7% 100%
Valid
Bisexual 0 0.0% 0.0%
Total 149 100% 100%
(Source: 2016 Survey)
4.3 SECTION B  -  RELEVANCE OF FORENSIC ACCOUNTING
This section provides an analysis of the relevance of forensic accounting. This shows an
analysis of the effectiveness of forensic accounting as the tool for detecting fraud in
Zimbabwe organisations and also the extent to which forensic accounting can curb
fraudulent activities in Zimbabwe organisations.

4.3.1 To what extent do you understand forensic accounting?

The results are cross-tabulated as given on Table 13 below. The cross-tabulation focused
on the respondent’s position in the organization and the extent the respondent
understood forensic accounting.
 Table 13: Position in the organisation vs. understanding of forensic accounting cross tabulation
Understanding of forensic accounting Total
Basic Not at Very
Knowledge all Knowledgeable
Count 22 18 68 108
Manager % within Position
and below in the 20.4% 16.7% 63.0% 100.0%
organisation
Count 0 0 21 21
Position in the Executive % within Position
organisation Director in the 0.0% 0.0% 100.0% 100.0%
organisation
Count 14 0 6 20
Non-
Executive % within Position
Director in the 70.0% 0.0% 30.0% 100.0%
organisation
Count 36 18 95 149
Total % within Position
in the 24.2% 12.1% 63.8% 100.0%
organisation
(Source: 2016 Survey)
The table above shows that 63% of the management and below were very knowledgeable about
forensic accounting, 100% of the executive directors was very knowledgeable and 70% of the non-
executive possessed basic knowledge about forensic accounting.
Overall, 24.2% of the respondents had basic knowledge on forensic accounting, 12.1% had no
knowledge of forensic accounting and 63.8% were very knowledgeable on the subject of forensic
accounting. Figure 19.5 shows total respondents within the organizations and their understanding
of forensic accounting.

Figure 19.5: Respondents’ understanding of forensic accounting.

The graph shows that at least 88% of the respondents understood forensic accounting, distributed
as “basic knowledge, 24.2%”, and those “very knowledgeable, 63.8%”.
4.3.2 The services of forensic accountants are important in Zimbabwe.
This section provides an analysis of the importance of forensic accounting in Zimbabwe as
a tool for fraud management. Data from respondents was tabulated as given below:
Table 14  Forensic accounting is important in Zimbabwe organizations
Frequency Percent Valid Percent Cumulative Percent
Agree 17 11.4% 11.4% 11.4%
Disagree 18 12.1% 12.1% 23.5%
Strongly disagree 0 0% 0% 23.5%
Valid
Not sure 0 0% 0% 23.5%
Strongly agree 114 76.5% 76.5% 100%
Total 149 100% 100%
(Source: 2016 Survey)
The researcher found the results from Table 14 very interesting in the sense that there
were no respondents who were not sure about the importance of forensic accounting
neither were there any respondents who strongly disagreed. There was almost a tie
between those who disagreed (12.1%) and those who agreed (11.4%). However, 76.5%
strongly agreed that forensic accounting is important in Zimbabwe.

Figure 19.6: The Importance of Forensic Accounting Services in Zimbabwe.

Figure 19.6 above shows that overall 88% of the respondents were of the view that
forensic accounting is important in Zimbabwe, where 77% strongly agreed that the
services of forensic accountants are important in Zimbabwe and 11% just agreed that it is
important. This generally implies that forensic accounting is important in the organisations
operating in Zimbabwe.
4.3.3 Forensic accounting services are needed more in Zimbabwe’s Public Sector
Table 15 below shows the respondents’ views of forensic accounting in the public of
Zimbabwe.

Table 15: Forensic accounting services are needed more in public Sector
Frequency Percent Valid Percent Cumulative Percent
Agree 28 18.8% 18.8% 18.8%
Disagree 18 12.1% 12.1% 30.9%
Strongly disagree 0 0 0% 30.9%
Valid
Not sure 0 0 0% 30.9%
Strongly agree 103 69.1% 69.1% 100%
Total 149 100% 100%
(Source: 2016 Survey)
The results from Table 15 above seem to confirm those from Table 14, where majority of
the respondents (in this case 69.1%) strongly agreed that forensic accounting is important,
moreso in the public sector. The outcome from this survey seems to buttress the views of
the majority of authors who believe that the public sector is bedevilled with corruption
and all sorts of fraud, hence, the need for forensic accounting to curb financial
haemorrhage from the economy.  

Figure 19.7: Forensic accounting services needed more in Zimbabwe’s public sector.

Figure 19.7 above shows that only 12% of the respondents disagreed that forensic
accounting is needed more in Zimbabwe public sector. Contrary to their view, 88%
generally agreed that forensic accounting is needed in public sector, where 69% strongly
agreed and this was supported by 19% who just agreed.

4.3.4 Forensic accounting can help in detecting fraud in Zimbabwe organizations.

 The following is an analysis to establish if forensic accounting can help to detect fraud in
organisations that are operating in Zimbabwe. Table 16 helps to summarize the responses
obtained from the participants.

Table 16  Forensic accounting can help detect fraud in Zimbabwe

Frequency Percent Valid Percent Cumulative Percent
Agree 35 23.5% 23.5% 23.5%
Disagree 12 8.1% 8.1% 31.5%
Strongly agree 96 64.4% 64.4% 96%
Valid
Not sure 0 0% 0% 96%
Strongly disagree 6 4.0% 4.0% 100%
Total 149 100% 100%
(Source: 2016 Survey)
The results show that 64.4% of participants strongly agreed that forensic accounting is a
useful tool for fraud detection, 23.5% just agreed and only 4% strongly disagreed. None
were unsure about the effect of forensic accounting on fraud detection. In summary a
total of 87.9% generally agreed that forensic accounting is a tool better placed to detect
fraud in Zimbabwe, where 64.4% strongly agreed and 23.5% just agreed. Figure 19.8
provides a snapshot of the results.

Figure 19.8: Forensic accounting can help to detect fraud in Zimbabwe

There is consistency in terms of respondents’ opinions regarding forensic accounting and

it can be concluded that it is indeed a tool for fraud detection.
Table 17 below shows a cross-tabulation of respondents’ understanding of forensic
accounting and how they view it as a tool to detect fraud in Zimbabwe.
 Table 17: Understanding forensic accounting vs. fraud detection cross tabulation
Detection Total
Agre Not Disagre Strongly Strongly
e sure e agree disagree
Understanding Basic Count 11 0 0 25 0 36
of forensic Knowledge % within
accounting understanding 30.6% 0.0% 0.0% 69.4% 0.0% 100.0%
of forensic
accounting
Not at all Count 0 0 12 0 6 18
% within
understanding 0.0% 0.0% 66.7% 0.0% 33.3% 100.0%
of forensic
accounting
Very Count 24 0 0 71 0 95
Knowledgeable % within
understanding 25.3% 0.0% 0.0% 74.7% 0.0% 100.0%
of forensic
accounting
Total Count 35 0 35 96 6 149
% within
understanding 23.5% 0.0% 23.5% 64.4% 4.0% 100.0%
of forensic
accounting
(Source: 2016 Survey)
The above analysis shows that 69.4% of respondents with basic knowledge of forensic
accounting and 74.7% of those who were very knowledgeable about forensic accounting,
strongly agreed that forensic accounting can help to detect fraud in organizations. The
results are summarized by the graph below:
 Figure 19.9: Knowledge of forensic accounting vs. fraud detection

Although those with no knowledge about forensic accounting, 66.7% disagreed and 33.3%
strongly disagreed on the effectiveness of forensic accounting as a tool for fraud
detection, the result is overwhelmed by that of those with basic knowledge where 69.4%
strongly agreed and 74.7% of those who were very knowledgeable also strongly agreed
that forensic accounting is an important tool for fraud detection.

4.3.5 The services of forensic accountants are preferable to the services of both internal and
external auditors.

The following figure shows an analysis to find out if the services of the Forensic
Accountants are preferable to the services of both the Internal and the External auditors.

Table 18: Forensic accounting services are preferable to Internal and External Audit

Frequency Percent Valid Percent Cumulative Percent

Agree 54 36.2% 36.2% 36.2%
Disagree 6 4.0% 4.0% 40.3%
Strongly disagree 0 0% 0% 40.3%
Valid
Not sure 12 8.1% 8.1% 48.3%
Strongly agree 77 51.7% 51.7% 100%
Total 149 100% 100%
(Source: 2016 Survey)
 The above table shows that only 4% of the respondents disagreed that forensic accounting
is superior to internal and external audit whilst 8.1% were not sure. The results are skewed
towards forensic accounting as a preferable tool, where 51.7% strongly agreed and 36.2%
simply agreed, making a total of 87.9%. This is an interesting result which is consistent
with other findings such as those on Table 15, Table 16 and Table 17. Likewise this
information can be presented as in Figure 19.10 given below:

Figure 19.10: Forensic accounting more preferred to Internal and External Auditing

Figure 19.10 above shows that 51.7% of the respondents strongly agreed whilst 4%
disagreed that forensic accounting services are preferred to the services of both the
internal and the external auditors in organizations operating in Zimbabwe.

4.3.6 Forensic accounting gives sufficient evidence during litigation process

Table 19 below analyses whether forensic accounting provides adequate evidence during
litigation or not.

Table 19: Sufficient evidence during litigation

Frequency Percent Valid Percent Cumulative Percent
Agree 48 32.2% 32.2% 32.2%
Disagree 44 29.5% 29.5% 61.7%
Strongly disagree 0 0.0% 0.0% 61.7%
Valid
Not sure 28 18.8% 18.8% 80.5%
Strongly agree 29 19.5% 19.5% 100%
Total 149 100% 100%
(Source: 2016 Survey)
Table 19 shows that 18.8% of respondents were not sure whether forensic accounting
provides sufficient evidence during the litigation process whilst 29.5% completely
disagreed.

Figure 19.11 above shows that 32.2% agreed that forensic accounting gives sufficient
evidence during litigation, 19.5% agreed strongly and 29.5% disagreed. This output shows
 that a significant proportion of respondents disagreed (29.5%) including those who were
not sure (18.8%) that forensic accounting gives sufficient evidence during litigation.
However, the outcome is overwhelmed by those who agreed (32.2%) and those who
strongly agreed (19.5%). Overall, it shows that forensic accounting provides adequate
evidence during litigation process.

4.3.7 Forensic accounting skills and techniques reduce fraud occurrence in Zimbabwe
organizations.

Table 20 shows the analysis of whether forensic accounting skills and techniques curb
fraud occurrence in Zimbabwe organizations. The outcome shows that 51.7% of the
respondents agreed strongly that the forensic accounting skills reduce fraud occurrence in
Zimbabwe organizations, 14.8% also agreed, 25.5% were not sure and 8.1% disagreed to
that. This generally shows that forensic accounting skills reduce fraud in Zimbabwe
organisations. Table 20 shows the results in detail.

Table 20: Forensic accounting skills and techniques reduce fraud occurrence in Zimbabwe
organisations
Frequency Percent Valid Cumulative
Percent Percent
Agree 22 14.8% 14.8% 14.8%
Disagree 12 8.1% 8.1% 22.8%
Strongly 0 0.0% 0.0% 22.8%
Valid disagree
Not 38 25.5% 25.5% 48.3%
sure
Strongly 77 51.7% 51.7% 100%
agree
Total 149 100% 100%
The results are summarized on Figure 19.12 below.

Figure 19.12: Forensic accounting curbs fraud occurrence in Zimbabwe organizations.

 Figure 19.12 shows that 51.7% of the respondents strongly agreed that forensic accounting
curbs or deters fraud occurrence in Zimbabwe organisations and 14.8% simply agreed to
that. This gives a total of 66.5% of respondents who believed that forensic accounting
deters fraudulent activities in Zimbabwe organisations. This result shows that indeed
forensic accounting is the tool better placed to deter fraud in organisations operating
within Zimbabwe.

This result is further scrutinized using a cross-tabulation technique as given in Table 21

below.
Table 21: Respondent’s understanding of forensic accounting vs. fraud detection
cross tabulation

Forensic accounting deters fraud Total

Agree Strongly Disagre Not Strongly
disagree e sure agree
Understanding Basic Count 11 0 6 0 19 36
of forensic Knowledge % within
accounting understanding 30.6% 0.0% 16.7% 0.0% 52.8% 100.0%
of forensic
accounting
Not at all Count 0 0 6 12 0 18
% within
understanding 0.0% 0.0% 33.3% 66.7% 0.0% 100.0%
of forensic
accounting
Very Count 11 0 0 26 58 95
Knowledgeable % within
understanding 11.6% 0.0% 0.0% 27.4% 61.1% 100.0%
of forensic
accounting
Total Count 22 0 22 38 77 149
% within 0.0%
understanding 14.8% 14.8% 25.5% 51.7% 100.0%
of forensic
accounting
(Source: 2016 Survey)
The above table (21), shows that 30.6% of respondents who had basic knowledge agreed that
forensic accounting deters perpetration of fraud in Zimbabwe organisations and 52.8% of them
strongly agreed. However, of the respondents who had no knowledge of forensic accounting,
33.3% disagreed that it is a tool which can deter fraud whilst 66.7% of them were unsure. On the
other hand, 11.6% of respondents who were very knowledgeable about forensic accounting
agreed that it deters fraud, 27.4% were unsure and 61.1% strongly agreed that it deters fraud in
organisations operating within Zimbabwe. The output can be summarized by the following graph.
Figure 19.13 Knowledge of forensic accounting vs. fraud deterrence

Once again, it can be concluded that forensic accounting indeed deters fraud penetration
in most organisations operating within Zimbabwe.

5.0 SECTION C - RESPONDENT’S OPINION

5.1 Reasons for committing fraud
Table 22 below shows an analysis of why con artists commit fraud or white collar crime.
The results are based on opinions from 149 respondents. This section focused more on
the opinions of respondents and not necessarily their previous experience. The
respondents had the latitude to select more than responses; hence, “N” does not
necessarily remain at 149. Descriptive statistics were applied to analyze the results.

Table 22:   Descriptive Statistics

N Minimum Maximum Mean Std. Deviation
Financial pressure 127 1 2 1.55 0.499
Rationalization 116 1 2 1.46 0.500
Opportunity 117 1 2 1.95 0.222
Key: No=1 Yes=2
(Source: SPSS calculation)
The table above (22) shows that the main reason why people commit fraud is due to
opportunity with a mean response of 1.95, followed by financial pressure with a mean
response of 1.55 and rationalization with a mean response of 1.46. This can be summarized
by Figure 19.14 below:
Figure 19.14 Reasons why con artists commit fraud

According to Figure 19.14 above, very few people commit fraud for bogus reasons such
as, “it is my money, the organisation owes me”. This reason has a mean of 1.46 which is
much closer to 1 (or NO). Please refer to the key above. Rather, fraudsters commit fraud
as a result of opportunity which has a mean of 1.95 and much closer to a 2 (or YES).
Financial pressure is at the middle with a mean of 1.55. This analysis tests Cressey’s Fraud
Triangle to see which reasons carry much weight as far as fraud perpetration is concerned.
It has emerged to be ‘opportunity’ and lastly ‘rationalisation’.

5.2 How fraud is perpetrated in Zimbabwe organizations.

Also, Table 23 below tests some of the tactics that are used to commit fraud or white-
collar crime. The analysis looked at broad categories which are corruption, embezzlement
and cyber crime.

Table 23: Descriptive Statistics

N Minimum Maximum Mean Std. Deviation
Corruption 138 2 2 2.00 0.000
Embezzlement 106 1 2 1.35 0.479
Information technology systems 110 1 2 1.37 0.486
Valid N (list wise) 89
Key: No=1 Yes=2
(Source: SPSS calculation)
Table 23 above shows that corruption with a mean response of 2 was viewed to be
perpetrating most frauds in Zimbabwe, information technology (1.37) was ranked second
and embezzlement (1.35) was ranked third. Once again, this information can be
summarized by the graph below:
 Figure 19.15 Comparison of how fraud is perpetrated in Zimbabwe organizations.

It is evident from Figure 19.15 above that corruption is the major threat to the economy
and it is the most common tactic of siphoning away cash from Zimbabwe. Obviously, this
involves under-hand dealings, brown envelopes and excessive gratuities. Cyber crime
comes second and it needs to be curbed before it causes severe financial haemorrhage to
the Zimbabwe economy.

6.1 Testing of hypotheses

The researcher uses two different methods to test both hypotheses 1 and hypotheses 2.
The first step is to apply the Chi-Square test which attempts to measure the association
between importance of forensic accounting services and fraud detection in the first place
and then followed by the association between forensic accounting and fraud deterrence.
The second method is the Analysis of Variance (ANOVA), where observed data from
the questionnaire is compared in order to accept or refute the hypotheses.

6.1.1 Credibility of Chi-Square Test

Chi-Square test is basically a statistical test commonly applied when comparing observed
data with expected data according to a specific hypothesis. One of its advantages rests on
its ability to test the association between variables, for instance, in this research it tests the
association between forensic accounting vis-avis fraud detection and deterrence. It helps
to identify differences between observed data and expected values. However, Chi-Square
has its own shortfalls such as its inability to use percentages, number of observations must
be at least 20 and the test becomes invalid where any of the expected values are below 5.
Nevertheless, this is the first statistical test to be applied in this research.

6.1.2 Hypothesis One

H0 : Forensic accounting does not affect fraud detection in Zimbabwe organisations.
H1 : Forensic accounting affects fraud detection in Zimbabwe organisations.
 Based on the Chi-Square results on Table 24 below, the predetermined alpha
measure of significance is 0.05. The calculated measure of significance (alpha) is
0.000. This measure is below 0.05; hence, there is a strong association between
forensic accounting and fraud detection.

Table 24: Test Statistics

The services of forensic accountants are Forensic accounting detects fraud in
important in Zimbabwe Zimbabwe organisations
Chi- 125.007a 136.128b
Square
Df 2 3
Asymp. 0.000 0.000
Sig.
(Source SPSS calculation)
a. 0 cells (0.0%) have expected frequencies less than 5. The minimum expected cell
frequency is 49.7.

b. 0 cells (0.0%) have expected frequencies less than 5. The minimum expected cell
frequency is 37.3.
Decision rule: The calculated level of significance (0.000) is below the predetermined alpha
(0.05), therefore reject the null hypothesis. It is hereby concluded that forensic accounting
affects fraud detection in organisations operating in Zimbabwe.
6.1.3 Hypothesis Two
H0 : Forensic accounting does not curb fraudulent activities in Zimbabwe
organisations.
H1 : Forensic accounting curbs fraudulent activities in Zimbabwe organisations.
Table 25 below shows the output from SPSS software which was used to calculate
the Chi-Square test in order to find out if there is no association between forensic
accounting and fraud deterrence.

Table 25: Test Statistics

The services of forensic accountants are Forensic accounting curbs fraud in
important in Zimbabwe Zimbabwe
Chi- 125.007a 65.792b
Square
df 2 3
Asymp. 0.000 0.000
Sig.
(Source SPSS calculation)
a. 0 cells (0.0%) have expected frequencies less than 5. The minimum expected cell
frequency is 49.7.

b. 0 cells (0.0%) have expected frequencies less than 5. The minimum expected cell
frequency is 37.3.
 Decision rule: The calculated level of significance (0.000) is below the predetermined alpha
(0.05), therefore reject the null hypothesis. It is hereby concluded that forensic accounting
deters fraud in organisations operating in Zimbabwe.

6.1.4 ANOVA Calculation

Analysis of Variance (ANOVA) is a statistical method based on quantitative data that
tests the hypothesis. This focuses on measuring one or more means. ANOVA can be
One-Way (where it has one independent variable), Two-Way (with two independent
variables, factorial and so on.

6.1.5 Credibility of ANOVA

ANOVA is based on the assumptions that cases are independent of each other,
distributions are normal and variance of data in the groups is homogeneous. The basic
advantages of ANOVA are that it uses a robust design and hence increases statistical
power. It looks deeper into the interaction between factors (independent and dependent
variables). Also, it controls the overall Type 1 error rate, that is, false positive findings.
Good as it may sound; ANOVA has its own setbacks. The first one being that the
assumptions must be fulfilled. It poses complications where the null hypothesis is rejected.
It means that one group differs from the other but it may be very difficult to identify the
differing groups. Using the ANOVA to test the hypothesis, the results are as hereunder.

6.1.6 Hypothesis One

H0 : Forensic accounting does not affect fraud detection in Zimbabwe organisations.
H1 : Forensic accounting affects fraud detection in Zimbabwe organisations.

Table 26: ANOVA test statistics

Model Sum of df Mean Square F Sig.
Squares
Regression 146.297 1 146.297 669.292 0.000a
Residual 32.132 147 0.219
Total 178.430 148
(Source: SPSS calculation)
a. Predictors (independent variable): The services of forensic accountants are important in
Zimbabwe.
b. Dependent variable: Forensic accounting affects fraud detection in Zimbabwe.
Decision Rule: The analysis above shows that the F value is 669.292 and the significance
value is 0.000 which is less than 0.05 and therefore it can be concluded that the model of
relationship between the importance of forensic accounting and detection of fraud is
significant. This confirms that forensic accounting assists in detecting fraud in
organisations operating within Zimbabwe.
6.1.7 Hypothesis Two
H0 : Forensic accounting does not curb fraudulent activities in Zimbabwe
organisations.
H1 : Forensic accounting curbs fraudulent activities in Zimbabwe organisations.

Once again, this relationship is tested using ANOVA. The results are shown in Table 27
below:

Table 27: ANOVA test statistics

Model Sum of df Mean F Sig.
Squares Square
Regression 57.230 1 57.230 80.690 0.000a
Residual 104.260 147 0.709
Total 161.490 148
(Source: SPSS calculation)
Decision Rule: The analysis above shows that the F value is 80.69 with a significance
value of 0.00 which is less than 0.05 and it can be concluded that the model of
relationship between the importance of forensic accounting and the deterrence of
fraud is significant. It is apparent from this analysis that forensic accounting curbs
fraud in organisations operating within Zimbabwe.

Summary, Conclusions And Recommendations

5.0 Introduction
The importance of forensic accounting on fraud detection and fraud deterrence in
Zimbabwe cannot be over-emphasised. Forensic accounting is typically a bloodhound
exercise for sniffing out fraud and this might result in the conviction of fraudsters. If
Zimbabweans are concerned about financial haemorrhage which is crippling the economy,
then there is need for more than just a ‘behind the desk accountant’, who tallies figures.
Zimbabwe needs experts in financial forensics to plug all financial leakages emanating
from corruption and other financial fiasco. This chapter looks at the research summary,
findings, conclusions and the recommendations proffered.

5.1 Research Summary

The purpose of this study was to scrutinize the effect of forensic accounting on fraud
detection and deterrence in the Zimbabwean economy. The specific research objectives
were to find out why fraud occurs and how it is perpetrated in Zimbabwe organisations;
to measure the impact of forensic accounting on fraud detection and deterrence in
Zimbabwe organisations; and to generate new insights on the relevance of forensic
accounting.

The study was meant to answer the key research questions which were: (i) to what extent
does forensic accounting identify the root causes of fraud and the perpetration schemes
used by con artists? (ii) to what extent is forensic accounting an effective tool for
detecting and curbing fraud in Zimbabwe organisations? (iii) to what extent is the study
able to generate new insights on the relevance of forensic accounting? In this study, the
researcher applied a positivism approach that is based on the “objective” ontology and
quantitative method as its research strategy. To this end, the researcher administered 205
 questionnaires to gather data which was then subjected to statistical tests. The reliability
of the sample was tested using Cronbach’s alpha. The sample was found to be a true
representation of the population. Also, Chi-Square test and ANOVA statistics were used
to test two key hypotheses:

H01 : Forensic accounting does not affect fraud detection in

Zimbabwe organisations.
H02 : Forensic accounting does not curb fraudulent activities in
Zimbabwe organisations.

5.2 Summary of Findings

The summary of findings is premised on the statistical analysis of data gathered through
questionnaires and interviews. Also, the findings are based on the results that came out
after testing the hypotheses. The research findings are summarised as follows:
i. It was found out that more males (53.7%) participated in the study than females
(46.3%). Also, 73% of all participants were managers and below in their organisations.
In addition, majority of the participants (53%) had first degree in education and also
44% of the participants had spent between 6 and 10 years with their employers.
ii. The researcher found out that the use of forensic accounting significantly helps in
detecting and preventing fraud in Zimbabwe.
iii. The services of forensic accountants are needed more in the public sector, which is
currently riled with corruption.
iv. It was found out from the research that forensic accounting services are important in
Zimbabwe
v. Majority of respondents were aware of forensic accounting.
vi. This research proved that the services of forensic accountants are more preferable to
the services offered by the traditional external auditors.
vii. It was also found out that forensic accounting gives sufficient evidence during
litigation process in Zimbabwe law courts.
viii. The fundamental reason for con artists to commit fraud is the existence of
opportunities. This seems to improve Cressey’s Fraud Triangle where reasons for
committing fraud were not ranked.
ix. Finally, corruption was found out to be the main tool by which fraud is perpetrated in
Zimbabwe organisations.

5.3 Research Conclusion

Based on the above findings, the research concludes that forensic accounting is an
important tool for detecting and deterring fraudulent activities in Zimbabwe
organisations. It is therefore important for all organisations in Zimbabwe to adopt forensic
accounting as a strategy for curbing economic and financial crimes. Without over-
emphasising, forensic accounting will restore investor and public confidence in the
economy by instituting good corporate governance.
It is indeed common cause that traditional external auditors have limitations in fraud
detection and this gap can only be plugged by forensic accountants, who have unique
professional ability to discover fraud and provide evidence in courts during litigation. The
image of Zimbabwe is, to a greater extent, marred with corruption and other fraud scams
 which discourage foreign direct investment. Therefore, investor confidence can be
restored by adopting forensic accounting as a strategy in all government entities and the
private sector. It is a fact that both internal and external auditors have failed in this
regard.

5.4 Recommendations
Pursuant to the revelation from the research conducted, the following recommendations
are important:
a. To the legislature
The Criminal Law (Codification and Reform) Act {Chapter 9:23} and Public
Accountants and Auditors Act {Chapter 27:12} must be amended and incorporate
the term ‘forensic accounting’. This will minimise misinterpretation by courts during
litigation processes.
b. To Auditor General’s Office
It is highly recommended that the Auditor General’s Office adopts forensic
accounting and establishes a section which specialises in financial forensics that is
adequately equipped. Once this is done, it will act as a deterrent of corruption and
other fraudulent activities in the public sector.
c. To Academic Institutions
All academic institutions which offer degrees in accounting must incorporate a
module in forensic accounting. Better still, they can offer degrees and diplomas in
forensic accounting. Honestly speaking, ‘knowledge is power’. Graduates will be
empowered to detect and deter fraud in various organisations before much damage
has been suffered.
d. To the Judiciary
It is common cause that most judges, lawyers and public prosecutors have little or no
understanding of forensic accounting. This may result in good evidence being thrown
out because it has not been well-understood. It is a considered view that lawyers,
public prosecutors and judges must train in financial forensics (even at least attending
workshops) and must also train in computers so that they are amiable with electronic
evidence when it is presented in courts.

e. To the Institute of Forensic Auditors

The Institute of Forensic Auditors must ensure that it is properly registered by the
appropriate Acts of Parliament. It must come up with Code of Conduct and
Regulations governing the practice of forensic accountants in Zimbabwe. Currently,
there is none such paramount tools in forensic accounting practice.
f. To the Zimbabwe Republic Police (ZRP)
In its Forensics and Ballistics Section, ZRP must establish a section for forensic
accounting. This will assist in leaving no stone unturned as far as financial and
economic crimes are concerned. This has been seen to be effective particularly with
Federal Bureau of Investigations (FBI). Crime is becoming more sophisticated, hence
the need for forensic accountants in the ZRP.
g. To the government
 The government must be leading in promoting forensic accounting (just like what is
currently happening with STEM programme for science subjects). It must invest in
forensic accounting so as to restore investor and public confidence in the economy.
One simple way is to ‘name and shame’ all citizens involved in fraudulent activities.
Sanctions on employment and setting up businesses by convicted fraudsters must be
promoted and implemented so as to deter corruption, cyber crime and other criminal
activities.
h. To the general public
The public must be wary of con artists and their fraud schemes. If a deal sounds too
good to be true, the public is urged to walk away from such deals. Cyber crime is on
its rise, corruption is already a cancer, ponzi and pyramid schemes are mushrooming
in the country, money laundering is on its increase and so on. Where in doubt, always
seek assistance from a forensic accountant or police before parting with hard-earned
money!

i. To the researchers
Forensic accounting is a new phenomenon in Zimbabwe and little of it has been
researched so far. Researchers must develop interest in this area and carry out
research covering the entire discipline of forensic accounting. Below, the researcher
has proposed other facets of forensic accounting that need to be researched on.

5.5 Areas of Further Studies

The researcher proposes future research on the following three areas:
a. Cost-Benefit-Analysis of forensic accounting
It is a fact that forensic investigation into every reported fraud case is costly to
organisations and investigators. As a result, it is unlikely that all suspected fraud cases will
receive the same investigative priority. On the other hand, academics stress that each
reported fraud case should be taken seriously. Therefore, it is indeed an interesting area
of study to research on the Cost-Benefit-Analysis (CBA) of forensic accounting, moreso
on fraud detection and deterrence.
b. Why forensic accounting research does not inform policy
It seems there is a gap between forensic accounting research and policy formulation. It is
a considered view that forensic accounting research should play an important role to
inform policy. Obviously, the future of forensic accounting research will depend on its
ability to inform policy. At the moment, forensic academic research has done little to
inform strategy and policy in private companies and parastatals. It is of paramount
importance to research on why forensic accounting is failing to stimulate strategy and
policy in various organisations.

c. Complexity of future fraud schemes

It is important to note that while forensic accounting is gaining significant research
interests among academics, progress in forensic accounting research will depend on the
extent to which fraudsters leave traces after committing fraud. However, in the coming
years technology is likely to be sophisticated and forensic investigators will be more
concerned about fraudsters who do not leave any trace of some sort. This will pose a real
challenge for investigators if con artists have thorough knowledge of accounting standards,
auditing techniques and investigative skills. This knowledge will be abused and help fraud
schemers to eliminate a possible trace of fraud. It will be interesting to research on the
‘relevance of forensic accounting to curb future complex fraud schemes’.
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