LATTHE EDUCATION SOCITY’S POLYTECHNIC, SANGLI

DEPARTMENT OF COMPUTER ENGINEERING

MICRO PROJECT REPORT

SUBJECT : Emerging Trends in Information Technology.

TITLE : “Forensic Accounting in the Fraud Auditing Case”

SUBMITTED BY:

Roll Number Name Enrollment Number

233229 Varad Nitin Madake 2200430186

233230 Shreyas Suresh Shinde 2100430088

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 MICRO-PROJECT INDEX

Index

Sr. No. Content Page No.

Annexure I-Micro Project Report
1. Rationale 3
2. Aims/Benefits of the Micro-Project. 3
3. Course Outcome Achieved. 3
4. Actual Methodology Followed. 4
5. Information about Forensic Accounting in the Fraud 5
Auditing Case.
6. Actual Resources Used. 8
7. Skills Developed. 8
8. Applications of this Micro-project. 9
9. Future Scope. 9
10. References. 9

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 RATIONALE

Digital forensic is a branch of forensic science encompassing the recovery and

investigation of material found in digital devices, often in relation to computer crime.
The term digital forensics was originally used as a synonym for computer forensics
but has expanded to cover investigation of all devices capable of storing digital data. Auditing
is a process that enables determining reliability of recorded, classified and summarized
financial data.
Fraud, as a criminal offence, is a generic term that includes surprising, tricking,
cunning, and unfair behaviour by which someone else is cheated. Corporate fraud is any
fraud perpetrated by, for, or against some business corporation (Singleton & Singleton, 2010).
An occupational fraud and abuse, or employee fraud is: “the use of one’s occupation for
personal gain through deliberate misuse or theft of the employing organization’s resources or
assets”.
In this project we will study Fraud Auditing Case incident to study use of digital
forensics to solve real world cases of hacking and computer attacks.

AIM OF THE MICRO-PROJECT

1. Application of Forensic Accounting Techniques: Implement forensic accounting

methodologies to examine financial records, transactions, and documents. Utilize forensic
tools and software for data analysis to uncover irregularities or anomalies.
2. Identification of Fraudulent Activities: Identify and categorize potential fraudulent
activities within the organization's financial data.
3. Investigation and Analysis: Conduct a thorough investigation into the identified
fraudulent activities. Apply analytical skills to trace the origin, extent, and methods employed
in the fraudulent transactions.
4. Understanding of Fraud Detection Techniques: Explore and apply various fraud
detection techniques commonly used in forensic accounting. Evaluate the effectiveness of
different detection methods in uncovering fraud.
5. Complexities and Challenges in Fraud Examination: Discuss the complexities and
challenges encountered during the fraud examination process.

INTENTED COURSE OUTCOMES

1. Compare Models of Digital Forensic Investigation.

2. Describe evidence handling procedures.

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 INTRODUCTION TO FORENSIC ACCOUNTING IN FRAUD
AUDITING

Forensic accounting is vital in uncovering financial irregularities and fraud within

organizations. This microproject focuses on applying forensic accounting principles to fraud
auditing cases. It aims to provide students with practical experience in detecting fraud and
misconduct through hands-on exercises and case studies.
Students will learn fraud examination techniques, financial statement analysis,
investigative procedures, and legal and ethical considerations. They'll develop skills in report
writing and presentation, essential for communicating findings to stakeholders.
This microproject offers a practical learning experience, equipping students with the
knowledge and tools needed to navigate the complex landscape of forensic accounting and
financial investigation.
Overall, the microproject offers a practical and immersive learning experience in
forensic accounting, equipping students with the knowledge, skills, and tools necessary to
navigate the complex landscape of fraud auditing and financial investigation. Through real-
world case studies and hands-on exercises, students will gain insights into the challenging yet
rewarding field of forensic accounting and its critical role in safeguarding the integrity of
financial systems and organizations.

ACTUAL METHODOLOGY FOLLOWED

We have followed below steps :

1. Case Selection and Preparation: Identify a suitable fraud auditing case study or
develop a simulated case scenario that reflects real-world complexities.
2. Research and Background Understanding: Conduct comprehensive research on
forensic accounting principles, fraud examination techniques, and relevant legal
frameworks.
3. Data Collection and Documentation: Gather relevant financial documents,
transaction records, bank statements, and other evidence related to the case. Organize
and document the collected data systematically to facilitate analysis and review.
4. Data Analysis and Examination: Apply forensic accounting tools and software to
analyze financial data for irregularities, inconsistencies, and suspicious patterns.
5. Fraud Risk Assessment: Conduct a comprehensive assessment of fraud risks within
the organization, considering factors such as internal controls, employee behaviour,
and management oversight.
6. Continuous Monitoring and Evaluation: Establish mechanisms for ongoing
monitoring and evaluation of fraud prevention measures. Review and reassess the
effectiveness of control procedures in addressing emerging fraud risks and
vulnerabilities.

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 INFORMATION OF FORENSIC ACCOUNTING

Forensic accounting, forensic accountancy or financial forensics is the specialty

practice area of accounting that investigates whether firms engage in financial reporting
misconduct or financial misconduct within the workplace by employees, officers or directors
of the organization. Forensic accountants apply a range of skills and methods to determine
whether there has been financial misconduct by the firm or its employees.
Forensic accounting was not formally defined until the 1940s. Originally Frank
Wilson is credited with the birth of forensic accounting in the 1930s. When Wilson was
working as a CPA for the US Internal Revenue Service, he was assigned to investigate the
transactions of the infamous gangster Al Capone. Capone was known for his involvement in
illegal activities, including violent crimes.
However it was Capone's federal income tax fraud that was discovered by forensic
accountants. Wilson's diligent analysis of the financial records of Al Capone indicted him for
federal income tax evasion. Capone owed the government $215,080.48 from illegal gambling
profits and was guilty of tax evasion for which he was sentenced to 10 years in federal prison.
This case established the significance of forensic accounting.
FORENSIC ACCOUNTANT :
The Certified Forensic Accountant (CRFAC) program from the American Board of
Forensic Accounting assesses Certified Public Accountants (CPAs) knowledge and
competence in professional forensic accounting services in a multitude of areas. Forensic
accountants may be involved in both litigation support (providing assistance on a given case,
primarily related to the calculation or estimation of economic damages and related issues)
and investigative accounting (looking into illegal activities). The American Board of Forensic
Accounting was established in 1993

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 • FEATURES

Features of Microproject: Forensic Accounting in Fraud Auditing

1. Practical Case Studies: The microproject incorporates practical case studies relevant to
forensic accounting and fraud auditing, allowing students to apply theoretical knowledge to
real-world scenarios.
2. Hands-On Exercises: Students engage in hands-on exercises to analyze financial data,
identify red flags, and detect fraudulent activities, gaining practical experience in forensic
accounting techniques.
3. Fraud Examination Techniques: The microproject explores various fraud examination
techniques, including data analysis, document examination, and interview procedures, to
uncover evidence of financial misconduct.
4. Investigative Procedures: The microproject covers investigative procedures such as
evidence gathering, documentation, and chain of custody, emphasizing legal and ethical
considerations throughout the investigation process.
5. Ethical Standards and Professionalism: Emphasis is placed on adhering to ethical
standards and professional conduct in forensic accounting investigations, fostering integrity
and accountability in the field.

• FRAUD AUDITING PRINCIPLES:

1. Being at the same time an art and a science, fraud auditing is different from financial
auditing.
2. Fraud auditors place emphasis on the exceptions, irregularities, and oddities of accounting
conduct patterns.
3. Essentially, any fraud is an intentional change of financial or material facts in order to gain
some benefits.
4. Despite some fraud theories, fraud auditing is learned primarily from experience.
5. There are many reasons for committing fraud such as economic, emotional, egocentric,
psychotics etc.
6. Places where fraud could be committed in digital environment are at input, transition or
output of transaction.
7. Some financial gains are the most usual among internal frauds made by employees.
8. The lack of or poor control is most often the cause of accounting frauds.
9. Accounting frauds are more often discovered by reactive than proactive actions.

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 • Integrated forensic accounting investigative process model :-

• ADVANTAGES
1. Fraud Detection
2. Evidence Collection
3. Legal Compliance
4. Risk Mitigation
5. Financial Recovery

• DISADVANTAGES
1. Complexity
2. Costs
3. Litigation Risk
4. Confidentiality Concerns
5. Resource Constraints

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 • CONCLUSION

Taking into consideration previously explained case study and available literature, it is
blatantly obvious that ICTs (Information and Communications Technologies) play an
increasing role in capturing accounting and overall business processes in an organization. It
could be observed from the available fraud statistics and relevant history that fraud can occur
anywhere and it continues to grow, especially in terms of losses and frequency.
Therefore, in order to successfully investigate fraud, joint efforts of both digital
investigator and fraud auditor is required by combining their auditing, computer crime and
digital forensic investigation skills, which can be hardly encountered in a single person. Both
of these two roles, fraud auditing and digital forensics, require skills, knowledge and abilities
exceeding the traditional financial auditing.
One of the ways to fight fraud is to provide forensic readiness of companies in order
to ensure a healthy business environment for development of national economies.

RESOURCES REQUIRED

Sr. No Name of Resource / Material Specification Remark

1. Computer System with broad Intel Core I5 and later 1
specifications. RAM 8GB, Windows 11
and later versions.

2. Software MS Word or Notepad. 1

3. Any other resources used. Laser printer HP LaserJet 1
Pro P1566 Printer.

SKILLS DEVELOPED

1. The concept of Digital Forensics.

2. The concept of Ethical and Unethical investigation.
3. Scope of Digital Forensics.
4. Efficient communication skills.
5. Working as a team member for developing c program.
6. Developing leadership qualities.

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 APPLICATIONS OF THE MICROPROJECT

1. This project can be used in the implementation of Digital Forensics in solving the criminal
cases.
2. The project can be also used to understand the concept of Digital forensics.
3. The project can be used in learning the case study on particular case and put forth our
conclusions

FUTURE SCOPE

1. Technological Advancements: Integration of advanced technologies such as artificial

intelligence (AI) and machine learning (ML) in forensic accounting tools and software to
enhance fraud detection capabilities and streamline investigation processes.
2. Global Compliance Standards: Alignment with evolving global regulatory frameworks
and compliance standards to address emerging challenges in financial fraud detection and
prevention on an international scale.
3. Industry Specialization: Specialization in specific industry sectors such as healthcare,
banking, and e-commerce to develop tailored forensic accounting solutions and
methodologies that address industry-specific fraud risks and vulnerabilities.
4. Interdisciplinary Collaboration: Collaboration with professionals from diverse fields
including cybersecurity, data analytics, and digital forensics to develop holistic approaches to
fraud auditing that leverage cross-disciplinary expertise and insights.

REFERENCES

TO build our project we took the from following links and books such as:
1. We have referred following websites:
a. https://www.researchgate.net/publication/309892262_Forensic_accounting_in_the
_fraud_auditing_case
From this website we have collected information and learn about what is Forensic
Accounting in the Fraud Auditing Case.
b. https://www2.deloitte.com/us/en/pages/about-deloitte/articles/forensic-
accounting-case-studies.html
From this link we have learnt about case studies for forensic accounting.
2. Emerging Trends in Computer and Information Technology :
From this text book we are learning the basic concepts of Emerging Trends in
Computer and Information Technology.