FORENSIC ACCOUNTING PRACTICE: IMPLICATIONS IN COVID-19 ERA
The corona virus pandemic otherwise known as COVID-19 from the obvious has greatly affected all sectors of the economy negatively. This has resulted in changing the ways different professions engage in their operations and this does not exclude forensic accountants in their operations. Gradual easing of the current lockdown by many countries will definitely have significant impact on humanitarian costs of our communities and the economy scar that would be left on most businesses is inevitable.
It is important to know that health and safety care of everyone must first be considered and thereafter, economic stabilization follows as we move towards managing the impacts on businesses and economy as a whole.
There are so many challenges companies face regarding the ability to continue critical operations, revenue generation, and contractual obligations management, obtaining capital and credit and other insurance coverage to mention few. Having known the significant uncertainties in global market place presently, coupled with impacts across all industries, companies need to comprehensively evaluate the impact of the crisis on their accounting, disclosures and internal controls operations.
It is of no doubt that this pandemic will pose a financial impact and thereby exert pressure on corporation’s financial results and at the same time introduce potential challenges for individual employees. These challenges or pressure may result to temptation for individuals to engage in unprofessional acts just to cater for their pressing financial needs or lead to financial statement manipulation to meet stakeholder expectations. Therefore, organizations need to be sensitive to any pressure that could result in financial statement manipulation at the corporate or operating subsidiary level which will call for engagement of a forensic accountant when there are red flags for fraudulent acts.
COVID-19 and Forensic Accountants
Due to the unprecedented events of the pandemic, some of its impacts on forensic accounting practitioners are discussed below:
- The pandemic threat increases the risk of economic slowdown, which may affect other reporting and accounting documentation leading to a great distress for the forensic accounting practitioners and thereby affecting them in exercising their duties.
- Evidence gathering while on lockdown may not be possible and also even after the pandemic, it is not certain that what was done before the pandemic may remain intact unless it is reconfirmed over and over again. Also on engagement terms, there must have been lots of distortion in the agreement either on the set period or on the fees.
- The pandemic will make it difficult for forensic accounting practitioners in carrying out smooth investigation process as their operations will warrant movement to the organizations to get information and one on one interaction will be required. Hence, delays set in.
- The pandemic will surely bring about increase in frauds in so many businesses and that will add up to the workload of the practitioners which will eventually lead to additional time and investigative period.
- Witnesses and legal personnel interactions as well as client/customers contact may be restricted hence giving way to distortion in exercising the process
Some already agreed engagements between forensic accountants and the customers may experience cancelation, alteration or may even be subjected to review due to the financial implications of the COVID-19 on the organization that may hinder them from meeting up with the engagements as initially agreed upon.
Minimizing COVID-19 impact on Forensic Accounting Practice
The unprecedented widespread of this crisis is a big concern to many professions and the global economy at large, one thing that is certain is that no one can categorically utter that they foresaw these unprecedented times neither does anyone knows when exactly it will end, however, we are left with an option of carrying out the majority of operations electronically, and in a means to minimize the impact, Forensic Accountants have to make use of the following options to see how efficiently it can be helpful in their operations:
- Forensic Accountants should first consider the financial impacts of COVID-19 on the economy. The consequence of the pandemic on every client’s operations, processes and the system itself as a whole should be analysed.
- It is imperative that Forensic Accountant should also investigate the effects of the temporary closure of business on the entire economic chain, as well as the damages it posed due to the temporary shutdown of operations.
- Forensic Accounting Practitioners need to re-examine their technical and digital skills as well as their competency in handling data and its proper analysis.
- From the obvious, the trend of business operations during this pandemic indicates that Forensic Accounting Practitioners will need to equip themselves with adequate IT and data science analysis skills for optimum performance in their future engagement.
- Safety measure should be encouraged. Therefore, Forensic Accountants should ensure that their safety is guaranteed by taking all measures seriously which include use of Personal Protective Equipment and practicing social/physical distancing in compliance with the world best practice as prescribed by W.H.O. The practitioners may have to rely more on virtual platforms such as Webinar meetings, WhatsApp meetings, and exchange of electronic mails alongside other related platforms to deliver assignments and duties that does not necessarily require physical presence.
- Compulsorily, companies will need to consider how they can productively continue or initiate investigations in the current environment. Fortunately, technology-driven solutions are available to help perform data and information collection and analysis, as well as provide virtual connectivity for interviews and collaboration needs.
- Forensic Accounting Practitioners should endeavour to take note of key aspects of their functions as a result of the fast changing situation. This reassessment will take place right up to the point of report presentation and may require management to provide further evidence and information.
- Instant communication of the possible effects of COVID-19 related restrictions on evidence gathering.
- In these unprecedented times it is highly likely that, in some situations, Forensic accountant may need to issue a disclaimer due to the inability to gather sufficient, appropriate audit evidence. However, this should never be a default and auditors should work to obtain the necessary evidence to form an opinion.
- Extra functions may be required to conclude any forensic engagement in terms of work ethics and evidence gathering. It is possible to assess remotely many audit processes, but if one cannot obtain sufficient and appropriate audit evidence, then a modification of work needs to be considered.
Conclusion and Recommendations
Corona Virus pandemic has come and it has been established that it will definitely affect the global economy and in turn, leave a significant impact on forensic accounting practitioners in delivering their duties. It is on this note that, forensic accounting practitioners should take all the possible and available opportunity of the pandemic period to step up their work in order to maintain their relevance in the society.
The fact still remains that forensic accountants services will still be required in many organization as fraudulent acts in business operations is inevitable. Hence, Telecommuting will become more prevalent while the use of digital tools and automation will become more widespread to enhance productivity and proper functioning in the profession.
As a forensic accounting professional, one should be able to acquire required digital skills that will ensure that the practice continues to stay relevant and structured to future proof the careers of the professional forensic accountants. Also, continue to encourage business owners to always depend on their judgements especially during and after this challenging period of COVID-19.
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Disclaimer: OGE’s article is to provide information on technical and contemporary issues within field of Accounting, Finance, Taxation and Forensic Accounting only. It is not to be misconstrued to be a professional advice and opinion. OGE Professional Services will not be responsible for any misrepresentation therefrom. Please, seek appropriate professional advice where needed.
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Prof. Godwinis a young but experienced multidisciplinary scholar-practitioner of good repute with over 25 years’ experience and over 27 Professional qualifications, from both Nigeria and international professional bodies. He is the co-founder and the Chief Technical Consultant at OGE Professional Services Ltd, President at OGE Business School, Principal Partner at Oyedokun Godwin Emmanuel & Co (Chareterd Accountants), Principal Partner at OGE Professional Services (Certified National Accountant and Tax Consultants). Godwin is a Professor of Forensic Accounting & Finance at Charisma University, Turks & Caicos Island, West Indies, UK. An Adjunct Professor at the Department of Accounting, Igbinedion University, Okada, Nigeria, an Adjunct Professor in the Department of Management & Accounting of Lead City University Ibadan Nigeria, a Visiting Professor at the Department of Management Science of Coal City University, Enugu and a Senior Lecturer in the Department of Accounting at Nasarawa State University Keffi, and he was a one-time adjunct lecturer at Babcock University, a part-time Lecturer at South-Western University and McPherson University, all in Nigeria to mention few.
Godwin is currently a Faculty member for the supervision of Postgraduate Students at the University of South Africa (UNISA). He is also an External Examiner for undergraduate programme of the Accountancy Department, Faculty of Business Administration, Abia State University, Uturu Nigeria.
He worked with Ibraheem Jimoh & Co Chartered Accountants as a Partner, Audit and Forensic Services, and as theDirector- Tax, Forensic & Regulatory Services at Saffron Professional Services. He was the Head of Education, Research & Technical and the Head – Finance & ICT Departments of the Chartered Institute of Taxation of Nigeria (CITN). He was the Senior Analyst- Enterprise Risk Management & Control at XL Management Services Ltd and the Accounts Manager (Head) at Bond Group of Companies.
HND (Acct.), BSc. (Acct. Ed), BSc (Acct. & Fin.), MBA (Acct. & Fin.), MSc. (Acct.), MSc. (Bus & Econs), MSc (Tax), MTP (SA), PhD (Acct), PhD (Fin), PhD (FA), FCA, FCTI, ACIB, ACS, MNIM, CNA, FCFIP, FCE, FERP, CICA, CFA, CFE, CIPFA, CPFA, ACAMS, ABR, CertIFR, IPA, IFA, FFAR