The Role of Forensic Accounting in Businesses Development: Alleviating the Fraud Risk and the Litigation Risk

In recent decades, business development has been restricted to global financial, geopolitical and natural changes and crises. Moreover, the world has witnessed high-profile corporate scandals and fraud incidents, including Xerox, WorldCom, and Enron. Fraud is a major problem of our era. According to PwC’s Global Economic Crime and Fraud Survey 2022, 46% of organizations reported experiencing some form of fraud or other economic crime within the last 24 months. While 52% of companies with global annual revenues over US$10bn experienced fraud during the past 24 months. The financial impact of the fraud incidents reaches more than US$50m in many cases. The increased fraud incidents have severely reduced economic growth at the individual, company and country levels. Moreover, the presences of undetected fraud incidents lead, in most cases, to the misguidance of stakeholders and companies’ failure, as financial reporting is not fairly presented. In ‎this respect, most institutions worldwide are affected negatively by fraudulent activities.

Another hazardous issue that did a similar impact of fraud incidents to the companies is the litigation risk. In today’s litigious business environment, companies are exposed to increased multiple litigation risks. For many companies worldwide, even a sudden or substantial stock price fluctuation can precipitate shareholder lawsuits. Moreover, the reasons for being exposed to litigation risks are varied, including, for example, financial statements misrepresentation, a failure to disclose material information, or even a considerable modification in assets value, all could potentially end in a court.

However, many companies were able to avoid being fraud victims or being drained by litigation risk through developing forensic accounting solutions and advanced techniques. Forensic accounting has proven its merit in supporting individuals, companies and governments to solve vexing problems during tough times. Forensic accounting practitioners bring wide services to the accounting and auditing professions. Forensic accounting practitioners mainly perform fraud investigation services, litigation support, business valuation and IT forensics. By exploiting forensic accountants’ abilities, individuals, companies, and governments could protect themselves from being fraud victims and mitigate the litigation risk.

Forensic accounting is the ‎‎most important part of the recent ‎development on the accounting and auditing profession. Managers and other decision-makers ‎became more connected ‎by ‎and ‎through forensic accounting solutions, techniques, and technology, which sustain the development of their ‎‎businesses ‎in the current rapidly changing environment. In addition, there is increasing attention to forensic accounting research. ‎There is a ‎growing ‎body of literature focusing on forensic accounting education and profession, fraud investigation by forensic accountants, business valuation, and ‎‎the adversarial and legal role of forensic accountants.

This special issue invites the implications of (new) forensic accounting techniques, technologies, and services ‎for applications in business ‎‎development. It highlights a range of topics in the fields of law, criminology, psychology, accounting, economics, and business, as well as information, technology, and systems management that can contribute to business, organization, and economic ‎development, especially in emerging markets. In such context, topics such as fraud investigation, cybersecurity and financial cybercrime, litigation support, expert testimony, financial dispute resolutions, business valuation, ‎accounting information ‎system, damage and loss quantification, financial data analysis using forensic accounting techniques, forensic accounting education, professionalism of forensic accounting, the international professional standard applicable to forensic accounting, forensic accounting certificates, forensic accountant’s role in the societies, in addition to controversial issues in financial reporting, audit effectiveness, corporate governance, and innovation, legal issues, business ethics, and firm performance, managerial accounting and firm financial affairs, non-traditional research and creative methodologies gain prominence.

Themes and key features of the Special Issue:

• The investigative role of forensic accountants in different fraud and corruption cases and its impact on business development.
   
• Forensic accounting and financial statement fair presentation and reporting.
   
• On the relations between financial crimes, information technology, and business development.
   
• The role of forensic accounting in resolving a financial dispute and the role of forensic accounting in litigation support to alleviate the litigation risk.
   
• The fifth industrial revolution, business intelligence and the future of forensic accounting work.
   
• Corporate governance and fraud investigation performance.
   
• Forensic accounting role in business and economics within uncertain situations.
   
• Forensic accounting curricula, pedagogies, assessment tools and learning objectives.
   
• Professionalism and public recognition of forensic accounting services.
   
• Relevant certificates, entry requirements to the forensic accounting profession and the value of forensic accounting services.
   
• The impact of forensic accounting on individuals, corporations, and societies.
   
• Internal and external mechanisms for detecting and discouraging fraud.
   
• Whistleblowing and forensic accounting.
   
• Organizational culture and codes of conduct as fraud deterrence mechanisms.
   
• The relationship between leadership style and corporate fraud.
   
• Cybercrime investigation and forensic analysis.

Guest Editors

Dr. Hashem Alshurafat

He is an assistant professor in accounting and the dean associate at Hashemite University. He earned his PhD in accounting from the University of Southern Queensland-Australia. He is an editor and reviewer of many scholarly journals and a keynote speaker at many international conferences. His research is currently focused on forensic accounting, technology adoption in accounting, and accounting education. He has research papers published in academic journals and conferences indexed under Scopus and ISI. https://orcid.org/0000-0002-9514-3826.

Prof. Allam Hamdan

Professor Allam Hamdan has served as the dean of the College of Business and Finance at Ahlia University since September 2018. He published more than 250 articles and book chapters. He also was awarded lots of prestigious awards for his research work. Professor Hamdan has the highest citations in the Arab world for 4 consecutive years 2018/19/20/21 according to Arcif. He has also supervised many doctoral theses under the auspices of Brunel University London as well as innumerable MBA dissertations. He is an Expert at Education & Training Quality Authority. Member of National Qualifications Framework NQF – Validation Panel, and appeal committee, General Directorate of NQF, Kingdom of Bahrain.

Dr. Mohammed Alzahrane

He is a General Manager of Technical and Vocational Training Corporation in the Southern region of Saudi Arabia. He received his PhD from the University of South Florida, focused area on Forensic Accounting & Fraud Investigation. Before his current Job, he worked as a Consulting & Training Specialist in Forensic Accounting & Fraud Investigator in different sectors with the Saudi Organization for Certified Public Accounting, developing professional certificates and courses. Also, he works with Saudi Arabia Financial Investigation (SAFIU) as Money Laundering and financial crime investigator. He published his first book, second edition, ((The Fundamentals of Forensic Accounting, also he has a second book under publication about financial crimes in Saudi and Gulf countries’ business environments.

Dr. Mohannad Al Shbail

He is an assistant professor in accounting and Head of the accounting department at Al al-Bayt University, where he earned his PhD in accounting from Universiti Malaysia Terengganu. His research is currently focused on AIS, auditing, E-accounting in SMEs, behavioural accounting, and ERP adoption in the industrial and banking sectors. He has research papers published in journals indexed under Scopus. ORCiD: https://orcid.org/0000-0002-0130-0238.