Defining a Forensic Audit

G. Stevenson Smith, Ph.D., CPA, CMA
John Massey Endowed Chair and Professor of Accounting
Southeastern Oklahoma State University
Durant, OK 74701
Phone: 580.745.2490
Fax: 580.745.7485
E-mail: sgsmith@se.edu

D. Larry Crumbley, Ph.D., CPA, Cr. FA, CFD, FCPA
KPMG Endowed Professor
Louisiana State University
 

ABSTRACT

Disclosures about new financial frauds and scandals are continually appearing in the press. As a consequence, the accounting profession's traditional methods of monitoring corporate financial activities are under intense scrutiny. At the same time, there is recognition that principles-based GAAP from the International Accounting Standards Board will become the recognized standard in the U.S. The authors argue that these two factors will change the practices used to fight corporate malfeasance as investigators adapt the techniques of accounting into a forensic audit engagement model.

Keywords: auditing, fraud examination, forensic audits, forensic accounting, financial reporting.