The Role of Forensic Accounting in Preventing and Overcoming Financial Crimes

Today fraud is more sophisticated and devastating than it was ever before. In recent years, the complicated nature of current racketeering and anti-graft laws as well as regimes especially addressing accounting transparency, has driven the growth of forensic accounting worldwide. Though a niche field, the forensic accounting is considered as an inevitable part of criminal investigations, criminal justice process and also civil litigations.

Forensic accounting has become popular and necessary especially to deal with the crimes like money laundering, terrorist financing, and embezzlement of funds etc. In Pakistan, we faced a lot of criticism while dealing with some high profile cases such as Axact Case, Benazir Bhutto Murder Case, and Panama Scam to name a few. We have not been able to take the services of forensic accountants in these cases. Honestly, speaking we don’t have single qualifies forensic accountant in our police and law enforcement departments. Therefore, many areas of vital importance to ensure justice to all parties involved in these cases remain unaddressed properly. What's to come in future is unmistakably splendid for forensic accounting.

A number of surveys and studies anticipate an incredible 25% increase in demand for forensic accountants in recent years. Changes in regulatory enforcement are expected to spur even more positions for forensic expertise. Forensic accounting is an exciting and rewarding field that allows professionals to use their accounting knowledge and investigative skills to catch criminals, settle lawsuits, and reduce the risk of large-scale fraud. Success in forensic accounting often requires a wealth of knowledge beyond those traditional, entry-level accounting roles. There are a plethora of reasons as to why we the law enforcement and investigations agencies in Pakistan should inexorably focus on this nascent but very remarkable field of forensic accounting.

First, guaranteeing the Fairplay in investigations is the noblest professional duty of a law officer. However, the ideal of fairness remains unrealisable without required expertise that the knowledge of forensic accounting fulfils in a befitting manner. The high profile graft cases require specialized attention on the part of both the investigators as well as the prosecutors. Deciphering complications and ensuring transparency through professional excellence in forensics is something beyond the domain of traditional investigators.

Second, larger government investigations demand investigators to reflect high ethical and professional standards in tracing complex money trails involving sometimes trans-jurisdictions and trans-domains, quite unexperienced by our Investigation Officers through conventional investigative methods. Many judgements by superior courts in Pakistan on corruption and embezzlement of public funds have time and again identified this vital component of police and law enforcement investigations as the grey area or a significant vulnerability to serve an exit door for the accused persons to go unpunished. The phenomenon called the lack of evidence, so caused, has rendered our criminal justice system to remain effective and productive in achieving its mandated goals any longer and also calls for a serious revisiting of the entire process of investigation or evidence collection in Pakistan. The actual problem lies thusly not in the lack of evidence but rather in the lack of investigative skill to find it for proper prosecution and adjudication of the cases of high national importance. The proposition that "the absence of evidence is not the evidence of absence" sits well in the context of Pakistan's criminal justice landscape. However, Forensic Accountants can play a very instrumental role in Prevention and Risk Management. For example, corporate entities and government agencies are increasingly turning to forensic accounting experts for assistance with preventive measures, designed to keep fraud and the associated expense of the investigation or litigation process to a minimum. It is so perhaps because the forensic accountants can conduct an internal audit to uncover potential pitfalls and suggest early steps to prevent fraud. Additionally, in the corporate environment, forensic accountants can also monitor compliance with emerging regulations.

Above all, to ensure the transparency and meritocracy in our criminal justice system, it is of prime importance for law enforcement and investigative agencies in Pakistan such as Federal Investigation Agency (FIA), National Accountability Bureau (NAB), and other anti-corruption bodies both on federal and provincial levels to recruit forensic accountants and offer them handsome pay packages so their performance could improve. Two important elements are eating into the vitals of our law enforcement establishments and organisations; these include imbalances between the volume of work and availability of required manpower or resources and also disequilibrium between the nature of the crime and the available investigative or law-enforcement capacities of our police and other civil law enforcement syndicates. In this connection, it is important to remind that not only recruitments will do but in addition to that training of our available staff will also go a long way in contributing towards the capacity building of our present staff and officials.

However, the training in sophisticated crime investigations is very costly and requires funds and other resources such as trainers and state of the art training facilities. Looking into our kitty we cannot be overambitious but realistically speaking we have many donors around us, both nationally as well as internationally, if we make them believe that their money will be spent transparently and fairly on achieving the pious goals of justice and peace, they will be more than happy to contribute. This area of investigative skills is stepping ahead of what we have been struggling with during the last two decades.

We have established some of the forensic labs in Punjab particularly which is indeed a commendable step in a right direction and which needs to be expanded in every police department with the same level of expertise. However, these labs both hitherto established and yet to be established hardly address the challenge of forensic accountancy, a skill which our investigation team should have for tracing and tracking the most complicated investigations of transnational organised crimes such as money laundering, terrorist financing and trafficking in persons. All this needs leadership, vision, trust, credibility and will to garner the support of international organisations to innovate and reform our rustic law enforcement mechanism for rising equal to the magnitude of the challenge of crime and terrorism in the turbulent times we are living right at the moment in Pakistan.