Abstract

Introduction

Forensic Accounting is defined as "An independent, objective assurance and consulting activity designed to add value and improve year organization's operations”. It helps companies in accomplishing their organization's objectives, with a systematic, disciplined approach to evaluate and improve the effectiveness of risk management, control and governance processes (Kraakman et al 2004). Internal audit, unlike external audit or statutory audit, has very little attracted the interest of researchers in UK as research discipline or mechanism of corporate governance. The permanence of the debate leads us to wonder about the theoretical issues relating the role of forensic accountingas a tool in the service of corporate governance. The difficulty arises in gauging the contribution of forensic accountingin the process of preparing and processing financial reporting, and improving performance. This paper presents the theoretical framework linking forensic accountingand business governance.

Discussion

Forensic accounting concept has recently emerged in the accounting profession and it elbows its way, systematically, according to the way in which modern management practices are implemented in the companies whose goal is to become more performing and competitive on the actual market. The name of forensic accounting that is used actually represents a recent concept and it was used first in the United States of America when the entities were affected by the economic recession and when they had to pay important amount of money for external auditors that had to certificate the accounts of the stock exchange listed companies (Albrecht, Steve & Conan, pp 30-3).

These companies began to organize their own audit departments in order to reduce their costs by assuming the realization of the preliminary work within the entity and, in order to achieve the process of certification, they appealed to external audit offices, which were entitled to supervise the company's activity. The offices' employees were called external auditors and the companies' employees were called forensic accountant in order to make a distinction between these two auditors' categories (Jensen and Murphy 2004).

Audit development in Great Britain through the nineteenth century, as a result of the Industrial Revolution and of capital growth, has deeply influenced the evolution of the auditor profession in the United States. Even if, by the year 1932, the US audit practice had known a strong British influence, during the first decade of the twentieth century, this profession took an important impetus in America, developing itself as an independent profession (Lamoreaux, pp 35). The forensic accounting function was established in England and France in the early 60s, being deeply marked by its origins as financial and accounting control. Only after the 80s - 90s, the forensic accounting function began to appear in the business activity and, since that moment up to the present, it has been developing continuously (Marco & Röell 2003 p. 109).

In June 1999, The Board of Directors of I.I.A. gave the definition of internal audit: "forensic accounting is an independent and objective activity, meant to assure and to assist the entity in order to furnish an added value and to improve its operations. Forensic accounting helps the entity ...