INVESTIGATION AND EXPERT WITNESS TESTIMONY

INVESTIGATION AND EXPERT WITNESS TESTIMONY PRE-READING NOTE A fraud investigation can cover a wide variety of issues and actions. Fraud investigations and forensic enquires may not involve actual fraud or corrupt behavior but may instead be concerned with a breach of company policy, a problem with health and safety, harassment, or an investigation into security. Fraud itself is defined as a misrepresentation that is intended to deceive a person or business. Companies can be accused of fraud if they make claims about a product they sell that are untrue or made up only in order to make a profit. Fraud investigations are carried out to determine whether fraud has taken place or whether there is evidence of the fraud. Fraud can cause serious problems not only concerning loss of money but physical harm to people and harm to reputations. Fraudulent behavior or unethical actions can impact strongly on a business. Unethical behavior can bring emotional as well as financial trauma from which a business may take years to recover.  Fraud investigations occur when fraud is suspected, and the fraud investigator meets with the client to find out what is alleged to have happened. When fraudulent behavior is known to have taken place, the investigator focuses on why and how it occurred and what can be done to prevent it happening again in the future. Fraud investigations cover a number of procedures, including the thorough analysis of electronic data. Computer forensics is vitally important when dealing with fraudulent or unethical actions in businesses today. It can reveal evidence that would otherwise never have come to light — evidence can be hidden within mountains of electronic data, and only professional computer forensic investigators will be able to uncover it. Computer forensics is one of the first procedures to be carried out in a fraud investigation — making sure that dates and time stamps on files are not changed, and that critical information is not overwritten. A fraud investigation should always be carried out from an objective position and supported by documented evidence. The investigation should be carried out by a neutral professional, so that the company can ensure it is seen to be complying with a commitment to objectivity. The practices used within a fraud investigation should be consistent and thorough.

INVESTIGATION AND EXPERT WITNESS TESTIMONY

Forensic Accountants are often called upon to initiate a fraud investigation for the primary purpose of determining whether a fraud has occurred. Other reasons for initiating a fraud investigation include the following: a tip or concern received (from an employee, a vendor, a customer, or other source), an accidental discovery, fraud uncovered as a result of an audit, or a concern from the business as to the adequacy of their internal controls system.

 Fraud Investigation

A fraud investigation is the systematic examination to obtain the truth as to:

1. Whether a fraud has occurred

2. Who is involved

3. How it was perpetrated

4. How much is involved

 Fraud Investigation Versus Accounting Audit

ASK FOR THE REST OF THIS PAPER: +2348033467639

COMPETITIVE STRATEGY

COMPETITIVE STRATEGY

PRE-READING NOTE

The old competitive strategies of invention and mass production no longer work in an increasingly turbulent business environment. Successful firms and implementing the new competitive strategies of continuous improvement (constant process improvement) and mass customization--a dynamic flow of goods and services via a stable set of processes. This paper provides a "lens" through which managers can assess their firm's current competitive position, build a vision for where they must be in the future, and craft a transformation strategy to turn that future vision into reality.

How to succeed in today's rapidly changing competitive environment is a question weighing heavily on many a manager's mind. Everything seems to be changing-markets, customer demands, technologies, global boundaries, products, and processes. In the midst of this seemingly overwhelming change, managers are being asked to make critical competitive decisions that will affect not only the present position of their firm (the legal or competitive entity), but also its future success.

Much to their dismay, however, many managers are finding out, sometimes the hard way, that it is a different game, and the old rules do not apply anymore. To compete in today's rapidly changing competitive environment, new strategic responses are required that most managers may have never thought possible. In addition, managers must understand that at the heart of these new strategic responses is innovative management through advanced information technologies.

In the dynamic environment of the business world, a firm needs to constantly focus on improving its competitive strategy. Competitive strategy refers to the way a firm can gain advantage over others operating in a similar market. Rivalry drives improvement and innovation.

Without competition, strategy would be irrelevant. Strategy goes beyond operational improvement. Tactics that are easily imitated do not constitute a strategy.

 Simply improving operations or quality cannot lead to a competitive strategy. A competitive strategy utilizes analysis of the structure of an industry and its competitors in order to identify an optimal position. A competitive strategy will also integrate the strengths and resources of the firm to develop a competitive advantage. A sustainable competitive strategy involves continuous improvement with strategic continuity.

Our discussions will focus on the process by which a successful competitive strategy can be developed. The first step to creating a competitive strategy is to analyze the structure of the industry and the nature of competition. Next, we will discuss how to assess the firm’s internal environment. Once a clear picture of the industry structure and firm attributes are identified, we can consider the options for achieving goals and sustaining a competitive advantage. Industry Analysis In 1979, Michael Porter introduced the business world to a framework for analyzing the structure of an industry. His model, commonly referred to as “The Five Forces,” (Supplier Power, Threats of New Entrants, Rivalry, Threat of Substitutes and Buyers Power) takes a broad approach to competitive analysis. These are what we shall explore in this course.

COMPETITIVE STRATEGY

Decisions generate action that produces results.  Organizational results are the consequences of the decisions made by its leaders. The framework that guides and focuses these decisions is strategy. The framework that guides competitive positioning decisions is called competitive strategy.  The purpose of its competitive strategy is to build a sustainable competitive advantage over the organization’s rivals.  It defines the fundamental decisions that guide the organization’s marketing, financial management and operating strategies.

A competitive strategy answers the following questions.

-How do we define our business today and how will we define it tomorrow?

-In what industries or markets will we compete?  The intensity of competition in an industry determines its profit potential and competitive attractiveness.

-How will we respond to the competitive forces in these industries or markets (from suppliers, rivals, new entrants, substitute products, customers)?

-What will be our fundamental approach to attaining competitive advantage (low price, differentiation, niche)?

-What size or market position do we plan to achieve?

-What will be our focus and method for growth (sales or profit margins, internally or by acquisition)?

The key to strategy formulation lies in understanding and overcoming the system barriers that obstruct the attainment of organizational goals.  An effective strategy recognizes these barriers and develops decisions and choices that circumvent them.

ASK FOR THE REST OF THIS PAPER: Tel. +2348033467639

DUBAI FORENSIC AUDITING - MONEY LAUNDERING COURSE

ANTI-MONEY LAUNDERING

PRE-READING NOTE

Money Laundering is commonly referred to as the concept of concealing, relocating or seeking to retain the profits conducted from a crime. The European Communities Directive of March 1990 defines it as “the conversion or transfer of property, knowing that such property is derived from serious crime, for the purpose of concealing or disguising the illicit origin of the property or of assisting any person who is involved in committing such an offence or offences to evade the legal consequences of his action, and the concealment or disguise of the true nature, source, location, disposition, movement, rights with respect to, or ownership of property, knowing that such property is derived from serious crime.”

Criminals benefit from the proceeds of the crime by usually initiating in complex money laundering schemes which more often than not, finance terrorism and large criminal organizations. However, under UK law money laundering can also encompass the simple ownership of the proceeds of criminal's own crime. The Proceeds of Crime Act 2002 (PoCA) identifies this to be “wide-ranging and encompasses mere possession of criminal or terrorist property as well as its acquisition, transfer, removal, use, conversion, concealment, or disguise”..

Many organizations in the finance sector, such as banks and accountants, are required to employ anti-laundering safeguards and implement secure systems in respect of money laundering. Reporting obligations are strictly set whereby firms must report suspicious activities to The Serious Organized Crime Agency (SOCA).

Money which is laundered by criminals worldwide is estimated to be the equivalent of 2-5% of the world's Growth Domestic Product (GDP) - an estimated £20 billion is laundered yearly in the UK alone. Whilst smaller criminal organisations deal in diminutive amounts of cash, the more serious criminals have a propensity to locate a safer place for the proceeds of their crime in another country, quite possibly a self-governing state, where there is less suspicion and more security for themselves. This safeguard arrangement is a renowned precaution for criminals to distance the proceeds of their crime from the crime itself.

“From the point of view of the criminal, it is no use making a large profit out of criminal activity if that profit cannot be put to use…putting the proceeds to use is not as simple as it may sound. Although a proportion of the proceeds of crime will be kept as capital for further criminal ventures, the sophisticated offender will wish to use the rest for other purposes…If this is done without running an unacceptable risk of detection, the money which represents the proceeds of the original crime must be "laundered"; put in an estate in which it appears to have an entirely respectable provenance”.

Subsequently, the UK government has implemented many instruments to prevent a criminal from abusing the UK's financial system and benefiting from the proceeds of crime. The UK law is of the first which requires any British citizen to provide an obligatory report to the authorities about not just the actual awareness that one is involved in a crime but a suspicion also. This signifies both, a moral and legal obligation for British citizens and indicates the importance of compulsory responsibility within the UK. However, despite this, it must be analysed how these changes have affected professionals within the private sector who have created an act by omission.

Prior to the PoCA 2002, there were separate offences for drug money laundering. These were outlined in the Criminal Justice Act 1988 (CJA) and Drug Trafficking Act 1994 (DTA). Under the DTA and CJA, it was problematic for the Crown as it sometimes had difficulties analyzing when charging under the appropriate Act the foundation of the criminal Proceeds. The 2002 Act has significantly amended all key money laundering offences and associated definitions. It will be examined how the PoCA has replaced the parallel offences with single offences to resolve confusion. Nonetheless, there have been many developments ever since. These comprise of the Serious Organized Crime and Police Act (SOCaPA) 2005, Terrorism Act (TA) 2006 and Fraud Act (FA) 2006. Furthermore, independent government bodies, such as the Financial Task Force on Money Laundering (FATF) and the Joint Money Laundering Steering Group (JMLSG), have been created to provide assistance for both, individuals and organizations in ensuring preventative measures are taken to help prevent money laundering

Money laundering is an emerging problem currently faced by all countries around the world, and whilst many changes have been introduced to prevent it, it can be seen from the evidence of this research that the rudiments of this misdemeanor remain is more or less still the same. Technology has provided, and will probably continue to provide a more intelligent and sophisticated ways to convert the proceeds of a crime into legal assets. It has been demonstrated that money laundering and its affiliation with organized crime are more often than not connected in one way or another. The massive takings that accumulate from such areas as drug trafficking, domestic fraud, VAT fraud, etc, are usually used to aid operations in progress and to create status and admiration for those in control of the criminal business.

The degree of intelligence and sophistication within organizations is a major concern due to the recent cases involved corrupt public servants and politicians. Though the law has vastly developed over the years, the fight against money laundering continues. An international effort continues through regulatory authorities, such as the introduction of the 40 (+9) Recommendations by the Financial Action Task Force (FATF).

The FATF has acknowledged four significant threats presented by money laundering activities. Firstly, simply failing to prevent laundering from happening makes it a lot easier for criminals to gain access to key information and profit from their illegitimate conduct. Secondly, this failure then allows criminal organizations to finance other criminal activities such as Terrorism. Thirdly, the accessibility of the financial system by launderers creates a risk for all institutions in the finance sector. Finally, the power and wealth of criminals which is derived by laundering can ultimately place the national economies and democratic systems under threat.

Thus, money laundering poses a threat to the UK's financial development, political integrity and steadiness of our country. The Bahamas is a primary example of dishonest investment resulting in the government being regarded as corrupt and the country's financial sector on a downfall. The stability of a countries economy relies on well-constructive preventative measures to prevent criminals from cheating the revenue into claiming millions. Loopholes still exist within the English legal system, and though we cannot close them due to innocent traders, other strategies can be introduced to prevent this, as demonstrated in the Bond House Decision.

Money laundering is carried out first and foremost through financial institutions and it is therefore crucial that preventative measures against money launderers are enacted in those sectors. The recent Money Laundering Regulations 2007 has rung alarms in all institutions dealing with finance and has tightened up security. Now, firms such as banks, accountants, solicitors, loan companies, mortgage companies and many more have had to undergo training to prevent money laundering. This does indicate that the government is taking this issue seriously but so are the perpetrators. However, investigations have discovered that money laundering exists within members of a talented criminal class, such as professional money launderers. These comprise of accountants, lawyers, bankers and many other practicing professionals. Most, such as Donald Mackenzie – a bank manager in a £21 million fraud case, are fascinated by enormous amounts of wealth and a celebrity lifestyle. This has been brought to the attention of the authorities and legislation has been enacted so that now no financial institution or professional will be protected from the provisions contained within the UK's legislation.

In order for this to happen effectively, we must amplify our efforts on identifying the proceeds of crime and preventing criminals from accessing the financial system. Only by using these methods will criminals and money launderers become more doubtful and find money laundering to be a risky activity and ultimately one seen to be not worth the risk. Professor Bill Gilmore (1993) states: "for the first time, to take co-ordinated and effective world-wide action to undermine the financial power of drug trafficking networks and other criminal organisations, is now in sight if not, as yet, fully within our reach".

However, there must be political assistance in helping the nation to cement together a strong well-constructed international operation, against the battle against money laundering.

---

ANTI-MONEY LAUNDERING

What is Money Laundering?

Definition

A basic definition of money laundering is that illicit funds from one source are deposited to another while the original source of the funds is hidden. The money then appears without fines, penalties, or legal restrictions elsewhere, through a series of transactions and becomes available for use in a legal setting.

ASK FOR THE REST OF THIS PAPER: Te. +2348033467639

NIGERIAN CAPITAL MARKET STUDIES

CAPITAL MARKET OPERATIONS

$$$

Dr. Richard Mayungbe

richardmayungbe@gmail.com

www.richardmayungbe.webs.com

Toll Free: +16462028832

CONTENTS

Ø Market background - Capital Market inter-relationships

Ø The Stock Exchange

Ø The Participants- Securities and Exchange Commission, the Stock Exchange, stock brokers, issuing houses, Registrars, Underwriters, Jobbers etc

Ø Accessing the Capital Market for Equities Issuing - The Primary Market

Ø Trading - The Secondary Market

Ø Equity Valuation

Ø International Equity Markets

Ø Equity Risk Management Portfolio Management and the importance of “beta” Equity Risk Management Tools:

Ø Background and development of the Bond Markets Primary vs. Secondary Market

Ø Instrument Characteristics

Ø Introduction to the Yield Curve

Ø Repos

Ø Market background - Capital Market inter-relationships

The Capital Market is a sub-set of the financial system that serves as the engine of growth in modern economies. It is that part of the financial system that is involved in providing long term funds for productive use. It can be defined as the section of the financial system that is responsible for efficiently channeling funds from the surplus to deficit economic units on a long term basis. The capital market provides another option for governments and companies to raise long term funds for the construction of bridges, schools, factories and purchase of vehicles, facilities and equipments.

Ø The Nigerian Stock Exchange

Before 1961, almost all formal savings and deposits went through the banking system while the then colonial masters invested major capital balances for the country on the London Stock Exchange.

However, following the establishment of Central Bank of Nigeria in 1959, it was logical to have a stock exchange, hence the incorporation of  the then Lagos Stock Exchange in 1960. Trading commenced in 1961 after the enactment of the Lagos Stock Exchange Act of 1961. The self-regulatory organization was subsequently reorganized and renamed the Nigerian Stock Exchange in 1977. The Exchange now has 13 branches. (appendix1) All the branches function principally as trading floors.

There are some misconceptions on the stock exchange. For example, several people believe that the Stock Exchange is government-owned. Factually, it is not a government institution. It is a non-profit making organization, limited by guarantee, incorporated via the inspiration and support of businessmen and the federal government, but owned by about 300 members. The membership includes financial institutions, stock brokers and individual Nigerians of high integrity who have contributed to the development of the stock market and the Nigerian economy.

ASK FOR THE REST OF THIS PAPER

ANTI-MONEY LAUNDERING

ANTI-MONEY LAUNDERING

PRE-READING NOTE

Money Laundering is commonly referred to as the concept of concealing, relocating or seeking to retain the profits conducted from a crime. The European Communities Directive of March 1990 defines it as “the conversion or transfer of property, knowing that such property is derived from serious crime, for the purpose of concealing or disguising the illicit origin of the property or of assisting any person who is involved in committing such an offence or offences to evade the legal consequences of his action, and the concealment or disguise of the true nature, source, location, disposition, movement, rights with respect to, or ownership of property, knowing that such property is derived from serious crime.”

Criminals benefit from the proceeds of the crime by usually initiating in complex money laundering schemes which more often than not, finance terrorism and large criminal organizations. However, under UK law money laundering can also encompass the simple ownership of the proceeds of criminal's own crime. The Proceeds of Crime Act 2002 (PoCA) identifies this to be “wide-ranging and encompasses mere possession of criminal or terrorist property as well as its acquisition, transfer, removal, use, conversion, concealment, or disguise”..

Many organizations in the finance sector, such as banks and accountants, are required to employ anti-laundering safeguards and implement secure systems in respect of money laundering. Reporting obligations are strictly set whereby firms must report suspicious activities to The Serious Organized Crime Agency (SOCA).

Money which is laundered by criminals worldwide is estimated to be the equivalent of 2-5% of the world's Growth Domestic Product (GDP) - an estimated £20 billion is laundered yearly in the UK alone. Whilst smaller criminal organisations deal in diminutive amounts of cash, the more serious criminals have a propensity to locate a safer place for the proceeds of their crime in another country, quite possibly a self-governing state, where there is less suspicion and more security for themselves. This safeguard arrangement is a renowned precaution for criminals to distance the proceeds of their crime from the crime itself.

“From the point of view of the criminal, it is no use making a large profit out of criminal activity if that profit cannot be put to use…putting the proceeds to use is not as simple as it may sound. Although a proportion of the proceeds of crime will be kept as capital for further criminal ventures, the sophisticated offender will wish to use the rest for other purposes…If this is done without running an unacceptable risk of detection, the money which represents the proceeds of the original crime must be "laundered"; put in an estate in which it appears to have an entirely respectable provenance”.

Subsequently, the UK government has implemented many instruments to prevent a criminal from abusing the UK's financial system and benefiting from the proceeds of crime. The UK law is of the first which requires any British citizen to provide an obligatory report to the authorities about not just the actual awareness that one is involved in a crime but a suspicion also. This signifies both, a moral and legal obligation for British citizens and indicates the importance of compulsory responsibility within the UK. However, despite this, it must be analysed how these changes have affected professionals within the private sector who have created an act by omission.

Prior to the PoCA 2002, there were separate offences for drug money laundering. These were outlined in the Criminal Justice Act 1988 (CJA) and Drug Trafficking Act 1994 (DTA). Under the DTA and CJA, it was problematic for the Crown as it sometimes had difficulties analyzing when charging under the appropriate Act the foundation of the criminal Proceeds. The 2002 Act has significantly amended all key money laundering offences and associated definitions. It will be examined how the PoCA has replaced the parallel offences with single offences to resolve confusion. Nonetheless, there have been many developments ever since. These comprise of the Serious Organized Crime and Police Act (SOCaPA) 2005, Terrorism Act (TA) 2006 and Fraud Act (FA) 2006. Furthermore, independent government bodies, such as the Financial Task Force on Money Laundering (FATF) and the Joint Money Laundering Steering Group (JMLSG), have been created to provide assistance for both, individuals and organizations in ensuring preventative measures are taken to help prevent money laundering

Money laundering is an emerging problem currently faced by all countries around the world, and whilst many changes have been introduced to prevent it, it can be seen from the evidence of this research that the rudiments of this misdemeanor remain is more or less still the same. Technology has provided, and will probably continue to provide a more intelligent and sophisticated ways to convert the proceeds of a crime into legal assets. It has been demonstrated that money laundering and its affiliation with organized crime are more often than not connected in one way or another. The massive takings that accumulate from such areas as drug trafficking, domestic fraud, VAT fraud, etc, are usually used to aid operations in progress and to create status and admiration for those in control of the criminal business.

The degree of intelligence and sophistication within organizations is a major concern due to the recent cases involved corrupt public servants and politicians. Though the law has vastly developed over the years, the fight against money laundering continues. An international effort continues through regulatory authorities, such as the introduction of the 40 (+9) Recommendations by the Financial Action Task Force (FATF).

The FATF has acknowledged four significant threats presented by money laundering activities. Firstly, simply failing to prevent laundering from happening makes it a lot easier for criminals to gain access to key information and profit from their illegitimate conduct. Secondly, this failure then allows criminal organizations to finance other criminal activities such as Terrorism. Thirdly, the accessibility of the financial system by launderers creates a risk for all institutions in the finance sector. Finally, the power and wealth of criminals which is derived by laundering can ultimately place the national economies and democratic systems under threat.

Thus, money laundering poses a threat to the UK's financial development, political integrity and steadiness of our country. The Bahamas is a primary example of dishonest investment resulting in the government being regarded as corrupt and the country's financial sector on a downfall. The stability of a countries economy relies on well-constructive preventative measures to prevent criminals from cheating the revenue into claiming millions. Loopholes still exist within the English legal system, and though we cannot close them due to innocent traders, other strategies can be introduced to prevent this, as demonstrated in the Bond House Decision.

Money laundering is carried out first and foremost through financial institutions and it is therefore crucial that preventative measures against money launderers are enacted in those sectors. The recent Money Laundering Regulations 2007 has rung alarms in all institutions dealing with finance and has tightened up security. Now, firms such as banks, accountants, solicitors, loan companies, mortgage companies and many more have had to undergo training to prevent money laundering. This does indicate that the government is taking this issue seriously but so are the perpetrators. However, investigations have discovered that money laundering exists within members of a talented criminal class, such as professional money launderers. These comprise of accountants, lawyers, bankers and many other practicing professionals. Most, such as Donald Mackenzie – a bank manager in a £21 million fraud case, are fascinated by enormous amounts of wealth and a celebrity lifestyle. This has been brought to the attention of the authorities and legislation has been enacted so that now no financial institution or professional will be protected from the provisions contained within the UK's legislation.

In order for this to happen effectively, we must amplify our efforts on identifying the proceeds of crime and preventing criminals from accessing the financial system. Only by using these methods will criminals and money launderers become more doubtful and find money laundering to be a risky activity and ultimately one seen to be not worth the risk. Professor Bill Gilmore (1993) states: "for the first time, to take co-ordinated and effective world-wide action to undermine the financial power of drug trafficking networks and other criminal organisations, is now in sight if not, as yet, fully within our reach".

However, there must be political assistance in helping the nation to cement together a strong well-constructed international operation, against the battle against money laundering.

---

ANTI-MONEY LAUNDERING

What is Money Laundering?

Definition

A basic definition of money laundering is that illicit funds from one source are deposited to another while the original source of the funds is hidden. The money then appears without fines, penalties, or legal restrictions elsewhere, through a series of transactions and becomes available for use in a legal setting.

ASK FOR THE REST OF THIS PAPER

FORENSIC AUDITING AND ACCOUNTING

FORENSIC AUDITING & ACCOUNTING

Richard Mayungbe PhD, MSc, MBA, BSc, CPFA, ACFE, Ch.MC

Dr. Richard Mayungbe

PortHarcourt, Nigeria

27^th-29^th September, 2012

FORENSIC ACCOUNTING 101

Introduction:
 George A. Manning in his book “Financial Investigation and Forensic Accounting" defines Forensic Accounting as the science of gathering and presenting financial information in a form that will be accepted by a court of jurisprudence against perpetrators of financial and or economic crimes. Forensic accounting is a new and rapidly growing area of accounting and is concerned with the detection and prevention of financial fraud and white-collar crimes.   The integration of accounting, auditing, and investigative skills combined to give birth to the specialty known as Forensic Accounting, which focuses very closely on detecting or preventing economic and financial crimes. "Forensic," according to the Webster’s Dictionary means, "Belonging to, used in or suitable to courts of judicature or to public discussion and debate."  The word accounting is defined as "a system of recording and summarizing business and financial transactions and analyzing, verifying, and recording the results." The term ‘forensic accounting’ refers to financial fraud investigation which includes the analysis of accounting records to prove or disprove financial fraud and serving as an expert witness in Court to prove or disprove the same. Thus, basically, forensic accounting aims at using accounting report in a form suitable for legal purposes.

The History of Forensic Accounting

Forensic accounting can be traced back as far as 1817 to Meyer v. Sefton, a Canadian case that allowed an ‘expert witness’ to testify in court. The term ‘forensic accounting’ was first published in an article in 1946 "Forensic Accounting- Its Place in Today’s Economy" authored by Maurice E. Peloubet, a partner in Price Waterhouse. He stated that, "during the war both the public and industrial accountant have been engaged in the practice of forensic accounting." Interest in forensic accounting spread through the United States and England early in the twentieth century. One of the first institutions to use the services of Forensic Accountants was the Inland Revenue Service to control tax evasion. The FBI used forensic accountants and employed nearly 500 such agents during World War II. As a profession, forensic accounting continued to grow during the latter half of the century, as the Generally Accepted Accounting Practice and tax laws became widespread and mandatory.

The need for Forensic Accountants

Forensic Accounting is a fast emerging field in the control and management of Economic and Financial Crimes, otherwise known as white-collar crimes. Although it has been around for a long time, it has become increasingly popular and much relevant today in view of global financial crisis arising from high profile cases like Lehman Brothers, Enron, World.com and recently Goldman Sachs with their ripple effects across the globe.  Although Investigative Accounting has been around for years, it has only recently begun to transform into a new branch of accounting, popularly called Forensic Accounting. Forensic accountants unlike traditional accountants, look beyond the numbers, in fact, while the traditional accountants look at the numbers, Forensic Accountants look behind the numbers.  The word forensic has nothing to do with the dead as is erroneously believed.  It is the application of scientific knowledge to legal problems and legal proceedings. Forensic Accounting is like the bridge which connects accounting system to legal system. Thus, we can say that forensic accounting is an accounting that is used to help the court to arrive at the truth about a particular case in a court of law. Enron scandal was one of the high-profile cases in the recent past; where large numbers of American forensic accountants were deployed. The wave of financial crisis primarily caused by corporate malfeasance and fraudulent financial activities eroded public trust and investors’ confidence in financial reports and audit services and need was felt to look beyond the conventional accounting function which only fulfilled the compliance requirements i.e. company’s books of accounts are kept in accordance with rules & regulations. In view of the increasing number of financial frauds committed by conspiracy with complex accounting schemes, creative accounting, records manipulation, and outright falsification of books of accounts, it was felt that a new breed of Accountant is needed to detect the financial fraud in companies with financial, accounting, auditing, and investigative skills, even some regulatory knowledge, and also assist in legal matters. This area of accounting came to be known as ‘forensic accounting’. There is a global awareness to fight the cases of economic and financial frauds as well as general corruption. Though many strategies have been formulated and many actions have been taken to fight against these vices, the problems still persist. One major hindrance in fighting financial crime cases is due to lack of forensic accounting professionals to carry out qualitative forensic analysis of financial statements and accounting records. So many cases of financial crimes have faced the dearth of qualified forensic accounting experts who could have come handy on time and offer accurate investigation to unearth the complex modus operandi adopted by the fraudsters who are themselves in some cases highly qualified financial professionals. The reason why there has been rampant increase in white collar financial crimes is because fraudsters think that they can always get away with it. However, the conviction rate in the financial fraud cases is very low due to weak law enforcement which is attributable to weak litigation support in prosecution process and cumbersome legal processes that are often abused in order to waste time. Of great importance in this part of the world is the ignorance and general apathy on the part of the populace, imagine a case involving a big political stalwart who was provided a carnival like support at the premises of the court of law, with his supporters singing and raining abuses on all those who brought their (accused) bread winner to the court. Without full support of Forensic accounting experts, prosecutors often fail to prove and provide strong evidence to put the fraudsters behind bar. Here, the Forensic Accountant can play an important role by providing accounting or financial information or other evidentiary inputs for legal purposes. To achieve this aim, forensic accountant besides having financial accounting expertise, should also have proven skill in financial regulatory frame works, scientific investigative technique, interpersonal and communication skills etc.

Growth of Forensic Accounting

Western Countries are utilizing the forensic accounting expertise to address financial fraud cases, and economic crimes. United States and Canada are pioneers in the development & implementation of Forensic Accounting. Forensic Accountants offer specialized services in areas such as:

*fraud and economic loss quantification,
*investigating and analyzing financial evidence;
*testifying as an expert witness;
*becoming involved in criminal investigations and uncovering financial evidence in employee or insurance fraud cases;
*Investigating in the rapidly evolving area of computer and Internet fraud.

*Business Valuations

*Assets Valuation for Matrimonial Cases

*Royalty Audits

*Damage Computation

*Determination of Compliance

*Financial Surveillance

*Anti Money Laundering Programs

*Background Checks etc, etc.

Forensic Accounting in Africa

Forensic accounting is yet to be fully deployed by the government and the private sector in Africa, despite the alarming increase in complex financial crimes and lack of adequately trained professionals to investigate them. The Institute of Chartered Accountants of Nigeria, not quite long ago created its Forensic Accounting Faculty in order to jump start the training of specialist in this all important field. Other African nations are expected to create a pool of experts too.
 Growing financial fraud cases, bank failures, despite regular inspections,    recent stock marker scams, and the almighty world-wide- wipe-out of investment in stocks and derivatives, failure of non banking financial companies, and failure of the regulatory mechanism to curb it requires extra investment in forensic accounting skills. However, the main important law enforcement agency involved directly in combating white-collar crimes is the Police Special Fraud Unit, and specially created anti fraud/anti corruption establishments in Africa.  I am not sure these law enforcement agencies do train their investigators in the specialized usage of forensic accounting. It is very common that investigation of major financial crimes is handled by ordinary investigating officers who after spending some time in investigation of conventional crimes are transferred to the economic offence wing and they are expected to handle financial crime cases involving complex and intricate financial records which must be analyzed to unearth crime or unique Modus Operandi adopted by the white collar criminal. The result is obvious, the case dies a natural death and the criminals roam freely on our Streets, as the Investigating Police Officer soon get bored with cumbersome financial records, given his lack of specialized knowledge and qualification. On the other hand if we look at the western countries particularly USA, the law enforcement agencies like FBI, CIA have properly marshaled their pool of special agents with forensic accounting backgrounds, who are the backbone of the bureau’s financial crimes squad. They investigate with professional acumen, complex financial crimes like money laundering, cyber crimes, financial institution fraud and other economic crimes. Today, there are more than 600 FBI agents with accounting backgrounds.

In Nigeria and Africa today, how many Forensic Accountants do we have in the battle against fraud and corruption?

GROUP CASE STUDY 1

Take a look at the result of the Association of Certified Fraud Examiners Survey on various cases of fraud in 2012

ASK FOR THE REST OF THIS PAPER

UNDERSTANDING FINANCIAL STATEMENT

What is the purpose of financial information?

For a business enterprise, all the relevant financial information, presented in a structured manner and in a form easy to understand, are called the financial statements. They typically include four basic financial statements:

1.     Balance sheet: also referred to as statement of financial position or condition, reports on a company's assets, liabilities, and Ownership equity at a given point in time.

2.     Income statement: also referred to as Profit and Loss statement (or a "P&L"), reports on a company's income, expenses, and profits over a period of time. Profit & Loss account provide information on the operation of the enterprise. These include sale and the various expenses incurred during the processing state.

3.     Statement of retained earnings: explains the changes in a company's retained earnings over the reporting period.

4.     Statement of cash flows: reports on a company's cash flow activities, particularly its operating, investing and financing activities.

ASK FOR THE REST OF THIS PAPER

TREASURY MANAGEMENT TOOLS AND TECHNIQUES

Definition:

Treasury management (or treasury operations) includes management of an enterprise's or government’s financial holdings like bonds, currencies, financial derivatives, stocks and many other securities.

All banks have departments devoted to treasury management, as do larger corporations. For non-banking entities, Treasury Management and Cash Management are sometimes used interchangeably. The treasury operations come under the control of CFO of the concern or the Vice-President / Director of Finance.

It is necessary to understand and appreciate the three distinct roles Treasury is

expected to play:

a. Liquidity Management: Treasury is responsible for managing short term

funds across currencies, and also for complying with reserve requirements (e.g. CRR)

b. Proprietary Positions: Treasury may trade in currencies, securities and other financial instruments, including derivatives, in order to contribute to Bank’s profits

c. Risk Management: Treasury will aid Management on one hand and Bank’s clients on the other hand, in managing market risk, using derivative instruments.

 These multiple roles necessitate Treasury to manage an ALM Book for internal risk management, a Merchant Book for client-related currency and derivative

transactions, and a Trading Book for managing its proprietary positions. ALM Book also includes traditional role of Treasury in liquidity management.

In an open economy, exchange rates are further influenced by macro-economic factors like relative inflation, GDP growth rate, stock markets and commodity markets. Treasury operates in markets which are almost free of credit risk, and hence requires very little capital allocation.

Secondly, the treasury activity is highly leveraged – the risk capital allocated to Treasury may range between 2% to 5% of the size of transactions handled, hence the return on capital is quite high. Treasury may do transactions similar to the ones done for the customers in forward market – buy forward and sell forward – without investing funds in actual purchase and sale of currency
ASK FOR THE REST OF THIS PAPER

TREASURY MANAGEMENT

Treasury management (or treasury operations) includes management of an enterprise's or government’s financial holdings. It includes activities like trading in bonds, currencies, financial derivatives and also encompasses the associated financial risk management.

All banks have departments devoted to treasury management, as do larger corporations. For non-banking entities, Treasury Management and Cash Management are sometimes used interchangeably. The treasury operations come under the control of CFO of the concern or the Vice-President / Director of Finance.

Bank Treasuries may have the following departments:

• A Fixed Income or Money Market desk that is devoted to buying and selling interest bearing securities
• A Foreign exchange or "FX" desk that buys and sells currencies
• A Capital Markets or Equities desk that deals in shares listed on the stock market. (Stock Exchanges)

In addition the Treasury function may also have a Proprietary Trading desk that conducts trading activities for the bank's own account and capital, an Asset liability management or ALM desk that manages the risk of interest rate mismatch and liquidity; and a Transfer pricing or Pooling function that prices liquidity for business lines (the liability and asset sales teams) within the bank.

Banks may or may not disclose the prices they charge for Treasury Management products.

Functions of Treasury Management includes:
1. To maintain the liquidity of business

It is the main function of treasury management to maintain the liquidity of business. Without proper liquidity, it is risky for business to operate smoothly. By using cash flow analysis and working capital management. Treasury officers make good ratio of liquid assets and liquid liability.
ASK FOR THE REST OF THIS PAPER