THE IMPACT OF FORENSIC ACCOUNTING AS A TOOL ON FRAUD DETECTION AND PREVENTION AMONG ORGANIZATIONS IN KENYA

Abstract

Forensic accounting serves as a tool that allows interested professionals to forecast whether firms are engaged in financial misconduct/behavior. Financial misconduct has severe economic and personal consequences towards the victim and the nation at large. Not only does such misconduct distort the allocation of economic resources, but also investors and employees of these firms experience substantial financial and psychosomatic harms. Forensic accounting aims to mitigate these harms by forecasting the possibility that a firm has committed financial misconduct thus allowing for early detection of such misconduct. In this abstract review, I provide an overview of the most common forensic accounting techniques in the literature and the effectiveness of such techniques. Although traditional forensic models tended to concentrate on behavioral characteristics of the executives who commit financial misconduct or to take a purely arithmetical approach based on financial data, more recent models combine big data analysis with psychological instincts. Any organization whether governmental/private has to be at the center stage with unethical issues of fraudulent practices in Kenyan that cripple’s functions and leads to increased losses and more borrowing from both local and international banks, hence the need to use forensic accounting services and accountability to help detect and deter such deceitful activities. Whether big/small the company is, it’s main core function is to provide both internal and external controls in order to enhance on the business of the day. The main objective of this study is to scrutinize the impact of forensic accounting services as a tool of fraud detection and mitigation among organizations in Kenya. The public/governmental sector is crucial to both day-to-day operation of the state and to its ability to effectively manage development processes and provide universal public goods and services to its people. The public sector pays a vital role in national development and its relevance can’t be underestimated in Africa. This was highly emphasized in the 1998 World Development Report that “an effective state is vital for the provision of goods and services and the rules and institutions hence enabling markets to flourish and the people to lead healthier, happier lives. Without it, lasting development of both economic and social state is impossible” (World Bank 1997: 1).