Forensic accountants are in major part defined by the nature of their work. Although most people equate forensic accounting with fraud, the scope of forensic accounting work is actually much broader. According to Accounting Today's survey of the top 100 CPA firms, the most common forensics services are business valuations, fraud examinations and litigation support (AICPA, 2011, Forensic and Valuation Services Trend Survey).

a.Discuss briefly three (3) types of fraud examination services provided by forensic accountants.

[6 marks]

b.Discuss briefly two (2) broad categories of litigation services provided by forensic accountants.

[4 marks]

c.Provide a table that can compare any five (5) differences of accountant's roles, external auditor's roles and forensic accountant'sroles.

[15 marks]

A unique feature of forensic accounting is the legal context in which it occurs. Working in a legal environment obligates the forensic accountant to be knowledgeable about the judicial process and procedures and the controlling rules of evidence.

a.What are the subdivisions of public law in which a forensic accountant might be engaged? Provide a short explanation of three (3) of any of the subdivisions.

[9 marks]

b.List and discuss the three (3) stages of a civil trial.

[9 marks]

c.What standard of proof is required for a prosecutor to obtain a guilty verdict in a criminal case? What level of probability is assigned to this standard?

[3 marks]

d.Explain why a testifying expert can provide an opinion in a civil case or criminal case, but other witnesses cannot do so.

[4 marks]

QUESTION 3 (25 MARKS)

a.Consider the three aspects of the fraud triangle. If you were hired by the board of directors to tell them what they could do to prevent fraud, what general activities would you tell them to engage in.

Briefly explain three (3) general fraud prevention activities for each of the three dimensions of fraud triangle.

[9 marks]

b.Benford's Law is a widely used digital analysis technique in fraud detection.

Briefly explain the basic concept of Benford's Law and how it is being used to detect fraud (provide examples where necessary).

[6 marks]

c.Many people feel that it is the job of auditors to detect fraud. However, it may not be necessarily true. Identify and explain briefly three (3) circumstances (according to the three approaches of fraud investigations) that make it difficult for auditor to detect fraud.

[10 marks]

QUESTION 4 (25 MARKS)

a. Financial statements are the end-product of the accounting cycle and are used by investors to make informed decisions . They can be analysed to help determine if there are any fraudulent activities in the company. As you know, the balance sheet, income statement, and statement of cash flows are the three primary financial statements .

List and briefly describe one (1) way each of these three financial statements can help to detect fraud.

[6 marks]

c.Asmadee is studying financial statements to decide which companies would be wise to invest in. Asmadee identifies Seri Jengka Bhd as having abnormally high financial ratios compared with other companies in its industry. Skeptical, he examines the footnotes of the financial statements further for indications that the company might be deceiving investors.

Name and explain three (3) common symptoms that fraudulent companies try to hide in the disclosures to their financial statements .

[6 marks]

d.Several years ago, a medical device company was charged with improperly recognizing approximately RM1.5 million in revenue from bill-and-hold transactions. One distributor placed orders with the medical device company for a total of approximately 15,000 units of a particular product in April and July. As part of the agreement with the distributor, the medical device company invoiced the distributor for the total 15,000 units for more than RM500,000.00 in September, but held the product at its own refrigerated facility until the distributor requested the product, which did not occur until March the following year. Yet, the company still recorded the revenue in the previous year.

i.List down three (3) accounts that this fraudulent transaction would affect? Provide a reason for each account listed.

[3 marks]

ii.List and briefly explain five (5) techniques that an auditor could use to uncover the nature of the relationship between the company and its distributor regarding these products.

[10 marks]