Statement of the problem
Background of the Study
The modern times have witnessed numerous accounting frauds and other financial crimes that have led to the loss of money for the related stakeholders and ultimately led numerous thriving business organisations towards filing for bankruptcy thereby bringing economic downturns in many countries all around the world. The popular financial or accounting frauds or scandals in the modern era started with the “Waste Management’ scandal in 1998 soon followed by the “Enron” scandal in 2001 and many others such as “WorldCom” scandal in 2002 and many more (Onlinedegrees.unr.edu., 2022). All these accounting and financial statement frauds led to the numerous changes in the field of auditing such as removal of self-regulation in the field of auditing and many more. However, as days passed numerous auditing scandals were also discovered such as the “Enron” scandal where the auditor was also responsible which further led to the development of the “Forensic accounting” whose main function is to identify and detect the financial discrepancies, irregularities and hint of fraud present within the financial statements and reports in order to save the interest of all relevant stakeholders of an organisation and ultimately save the organisation itself from going into liquidity thereby upholding the stakeholder theory. There have been no such studies concerning the implementation of both auditing and forensic accounting within the public sector of Ghana has been conducted before and hence has been taken into consideration.
The statement of the problem lies on the fact that there has been no mandate to compulsorily implement the forensic accounting within the public sector of Ghana whose need will be investigated through the study. It is to be noted that there has been very less study been conducted in the field of forensic accounting in the Ghanian perspective especially considering the need and importance of forensic accounting implementation with the public sector of Ghana amidst the discovery of numerous financial crimes in the modern times. It is also to be noted that no previous studies have considered both auditing and forensic accounting implementation impact on public sector of Ghana where the research gap lies that will be bridged through the present study.
The purpose of the study is to ascertain the need and outcome of implementation of both auditing and forensic accounting mechanisms within the public sector of Ghana. Therefore, the accomplishment of the aims of the study will ensure whether the appropriate authorities may likely to consider the importance and need to include the forensic accounting within the public sector of Ghana and also within the University curriculum in Ghana.
The aim of the particular research study is to ascertain the need and outcome of implementation of both auditing and forensic accounting mechanisms within the public sector of Ghana.
- To study the forensic accounting and its need.
- To investigate into the potential issues that can be solved by the implementation of forensic accounting in Ghana.
- To ascertain the need for implementation of both auditing and forensic accounting mechanisms within Ghana for protecting its public purse.
The research questions which are needed to be framed to bridge the gap existing in literature are as follows:
- What is forensic accounting and its need?
- What potential issues can forensic accounting implementation solve in Ghana?
- Is there a need for both auditing and forensic accounting mechanisms to be implemented within Ghana for protecting its public purse?
The scope of the study will be circumference the need and importance of both the auditing and forensic accounting. In order to fulfil the aims of the study, the research will be conducted on the need and importance of the implementation of both the auditing and forensic accounting within the public sector of Ghana only.
- H01: The implementation of forensic accounting within the Ghanian public sector will not be able to reduce fraud and other financial crimes.
- H1: The implementation of forensic accounting within the Ghanian public sector will be able to reduce fraud and other financial crimes.
- H02: The implementation of both forensic accounting will not be able to protect the public sector purse of Ghana.
- H2: The implementation of both forensic accounting will be able to protect the public sector purse of Ghana.
Research questions
The particular study will be limited to the public sector of Ghana only and hence will not be considering the likely impact of the implementation of both mandatory auditing and forensic accounting within the holistic business sector of Ghana that covers both public and private including the LLP’s operating in Ghana.
According to Knechel and Salterio (2016), auditing in simple sense refers to evaluation or examination and analysis of something in order to test the safety and accuracy of the product or thing that is evaluated. However, in the context of financial statement audit, the thing here becomes the financial statements itself, where the auditors test the true and fairness of the financial statements of the audit client against the audit evidences obtained during the course of the audit. It is to be specifically noted that auditing is a “reasonable assurance’ engagement which portrays that the auditor can only provide a reasonable assurance on the reliability and viability of the prepared financial statements and can never portrays an absolute assurance that the prepared financial statements are absolutely free from errors, mistakes and material misstatements as he forms his opinion on the prepared financial statements by testing a few transactions or financial records where a complete set of transactions can never be tested especially for large companies. It is to be noted that there are two types of audits namely the internal audit where a company hires an individual within an organisation to find any material errors or misstatements way before the external auditors find it. The second type of audit is the external audit which is mandatory for all medium and large companies in majority of the countries of the world including Ghana represents an independent audit where an external person or firm audits the financial statements prepared by the firm (Wakim, 2021). So, the primary need and importance of audit is to identify the errors and material misstatements that might be present within the financial records of a company thereby providing a reasonable assurance to the relevant stakeholders of the company.
According to Kranacher and Riley (2019), forensic accounting in simple sense refers to the impartial investigation into the financial records or transactions of any individual or any business enterprise in order to deduce the presence of accounting irregularly fraud or misstatements if there is any. It is to be specifically noted that the scope of forensic accounting is wider as compared to financial statement audit and hence is considered a stricter measure adopted by any business to find the presence of fraud or material misstatement. It is to be noted that the detection of fraud is not the actual responsibility of any auditor where such responsibility lies with the management who may appoint a forensic accountant to discover such issues if there is any (Kramer, Seda & Bobashev, 2017). So, the primary need and importance of forensic accounting is to discover the accounting irregularities, frauds or embezzlement present within the financial statements if there is any thereby safeguarding the business from incurring losses out of such malpractice by any specific group or individuals thereby protecting the interest and wealth of the shareholders.
Scope of the study
The research gap lies in the fact that there have been no single studies conducted in the field of auditing or accounting that have considered the likely implementation of both the mandatory auditing and forensic accounting within the public sector enterprises in Ghana. There have been studies on forensic accounting or auditing separately in Ghana such as the one conducted by “Ocansey (2017)” but none have specifically concentrated both the factors that too based upon the public sector of Ghana.
The research philosophy that will be selected for this study is “Interpretivism” as this study will conducted using the personal experience and expertise of the primary respondents taking part within the primary data collection process along with using the personal analytical and interpretation skills of the researcher who will be analysing the primary data collected for the study (Cr, 2020).
The approach for the study will be “Deductive” as the study will be deducing the outcome of based on testing the pre-developed research hypotheses (Pandey & Pandey, 2021).
The design of this study will be “Exploratory’ as the study will be exploring the likely impacts of implementation of both auditing and forensic accounting within the public sector enterprises in Ghana.
The data to be needed for this study will be quantitative primary data to be collected using the “Survey method using a “semi-structured” research questionnaire. The “simple random sampling” will be used to select the target population of 50 respondents from a total of 100 respondent population from 10 public sector enterprises operating in Ghana (Igwenagu, 2016). Finally, it is to be noted that the population selected for this study will be employees employed in different managerial positions within the public sector enterprises operating in Ghana.
The quantitative data which will be collected using the “Semi-structured questionnaire” will be duly analysed by the researcher using a statistical tool, “IBM SPSS” or “MS Excel.”
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