An investigation in forensic accounting: private company valuation and related components of forensic accounting

This composition presents a digest of research that investigates aspects of forensic accounting that shape its development from practice to an academic research perspective. This submission is based on six outputs that cover the period of 2006 through 2008. My research theme is, in the context of valuations of privately held companies, identifying the skills of a forensic accountant, and how to use them. This research not only breaks ground in the growing field of forensic accounting as it applies to private company valuation, but also lays a firm foundation and gives direction for further research. It provides insights into a growing sector of accounting for which there is a pressing need due to a dearth of research in the area. Statistically significant results of Output 1 indicate that there are systematic trends in court preferences for valuation methods, and provides empirical evidence of best valuation choices for decision makers involved in proposition of methods to the courts. Study controls indicated that macroeconomic factors such as GDP and inflation are related to court choice of valuation methods for some types of cases. Specifically, market methods are preferred during higher economic growth and the capitalized earnings method is preferred during times of higher economic inflation. Output 2 contributes to research by producing new knowledge with the understanding of the trend of investigating a potential insurance fraud in a routine business interruption. Output 3 hypothesized that valuation approaches for closely held companies preferred by court vary by industry type. Income approaches were more popular that either asset or market approaches for manufacturing industries, and that the market approach had a higher proportion of cases than asset approach for holding companies. Significant results for logistic regression analyses indicated that income valuation approaches had odds ratios approximately five times greater for manufacturing companies than other types of companies, which substantiated the results from the univariate analyses. Output 4 found a statistically significant odds ratio of 6.27 indicating the matrimonial court preferred the capitalized earning method when inflation was high and involved a manufacturing company. In addition, the excess earning method was far more likely to be preferred in marital dissolution when the case did not involve a service company. Output 5 defined the relevant skills of forensic accountants, and the perceived importance of these skills among three important stakeholders; forensic accountants, accounting academics, and users of forensic accounting services. These empirical findings are the first of its kind. Output 6 presented the results of a moderated multiple regression analysis to show that, all else held equal, there exists a positive premium in the relative valuation of S corporations over C corporations in the period subsequent to the Tax Court rulings that started this debate. The model also allows for the moderation of this premium by varying different levels of a set of interaction variables. The results of the study indicate that the magnitude of the "S corporation premium" depends on the level of these variables. My contribution to knowledge is presented in table format with the number of citations of each publication according to searches on Google Advanced Scholar, Lexis-Nexis, and a general World Wide Web search. In addition, since the World Wide Web has essentially created an environment where information is simply a point and a click away, the relevance of manuscript downloads are an important indicator of the interest and contribution of a paper. There are recorded downloads of my publications from various publishing sources either selling academic articles online or simply providing working papers available for download. Included in table 1 and table 2 are the aggregate number of downloads and source, respectively

Financial Statement Fraud and the Failure of Corporate Financial Statement Fraud Prediction

There have been many advances in recent years in accounting literature that focus on theories for detecting the occurrence of corporate financial statement fraud. Many tools and methods have been developed to detect the occurrence of corporate financial statement fraud, particularly using various computer-assisted auditing tools including artificial intelligence. However, there is also within the accounting literature a stream of research that focuses on theories and models attempting to predict the occurrence of corporate financial statement fraud. This paper examines those theories and models and explains why those theories and models fail to predict the occurrence of corporate financial statement fraud

A Risk Assessment of Intangible Asset Valuation: The Post-Hoc Association between Goodwill Impairments and Risk Hazards in Mergers and Acquisitions

We tested whether the change from SFAS 141 to SFAS 141r/ASC 805 had any effect on restatements due to goodwill impairment. Our findings suggest that the implementation of SFAS 141r increased the likelihood of a financial restatement by 2.5 times. Board of Director and Audit Committee involvement in the goodwill impairment decision reduced the likelihood of a restatement occurring. Service industry companies were 3.2 times more likely to restate their assets due to goodwill impairment. Companies who were audited by a Big4 firm reduced the odds of restatement by 47%

The efficiency wage hypothesis and the role of corporate governance in firm performance

As well as a two-fold contribution to the literature as highlighted in their paper“, Financial Disruptions and the Cyclical Upgrading of Labor” (2017:8), and elaborated on by Epstein et al, the reconciliation of two quantitative limitations of current general equilibrium theories constituting part of such contribution, this paper highlights the need to incorporate other theories such as those relating to the economics of the firm – in explaining firm performance – given the previously highlighted limitations of “canonical models”. The inability to account for variables which are independent of exogenously or endogenously determined factors and which are outside their model, also necessitates the incorporation of other theories and factors to be taken into account in arriving at more accurate conclusions which determine firm performance

Base Erosion and Profit Shifting (BEPS) and the Digital Economy: challenges and issues

The digital economy, undoubtedly, has contributed to the immense task of clearly identifying, ascertaining, and accounting for sources, rationales, and audit trails relating to tax transactions. This is not only evident owing to difficulties associated with cross-border transaction regulations which govern different jurisdictions as well as the enforcement of such regulations, but also in respect of risks associated with the present global financial environment – all having generated from the rise in automation, increased and improved sophisticated technologies, globalization, and conglomeration. This chapter not only seeks to highlight the extent, contribution, and significance of the digital economy in respect of those risks associated with base erosion and profit shifting (BEPS) but also amongst other aims and objectives to recommend measures whereby regulations can be better enforced as a means of addressing practices associated with BEPS

Base Erosion and Profit Shifting (BEPS) and the Digital Economy: challenges and issues

The digital economy, undoubtedly, has contributed to the immense task of clearly identifying, ascertaining, and accounting for sources, rationales, and audit trails relating to tax transactions. This is not only evident owing to difficulties associated with cross-border transaction regulations which govern different jurisdictions as well as the enforcement of such regulations, but also in respect of risks associated with the present global financial environment – all having generated from the rise in automation, increased and improved sophisticated technologies, globalization, and conglomeration. This chapter not only seeks to highlight the extent, contribution, and significance of the digital economy in respect of those risks associated with base erosion and profit shifting (BEPS) but also amongst other aims and objectives to recommend measures whereby regulations can be better enforced as a means of addressing practices associated with BEPS

Chameleons in the midst of hawks: The real meaning to be attributed to the definition of fraud

The assumption of a different name for professional purposes dates back centuries – where environments did not encourage certain practices by certain genders. Even presently, the Internet Revolution – fuelled by online transactions and practices, is inducing many to assume measures aimed at the protection of their data – as well as privacy. How important is a professional career or the need to protect privacy such that the necessary, consequent (and ultimate) change involved with official documents also justifies such change? It will be argued by some that getting used to a new name is just a matter which can be adjusted to (and easily over time) – particularly with ease during an age where all documentation is also increasingly becoming digital. And what of those who have done nothing at all to change their names – but who have already been defined by society through their names – even though such definition or expectations may not necessarily accord with their true or real nature? Are they to be criticized for choosing to live genuine lives – which are regarded as contrary to societal expectations – by virtue of prior and already perceived perceptions? A case of the character or person (behind the name) not corresponding to what was expected – hence in the public view, not the real deal? As well as highlighting what should constitute ultimate considerations in determining whether fraudulent acts have been committed, this paper and presentation also aims to highlight challenges faced in an increasingly digital economy – as well as highlight the role of forensic accountants in addressing such challenges

Bank secrecy laws and tax havens:Expanding areas and possible roles for computer forensic accounting

Over the years, forensic accounting has expanded not just in respect of investigative accounting, but also in relation to areas which encompass forensic valuation studies and computer forensics. Whilst fraud detection has continued to constitute a vital element which links forensic accounting and auditing – particularly in matters relating to audit trails, new possibilities and roles continue to emerge in relation to forensic accounting – and in view of greater manipulative and innovative areas which have been fostered by improved, sophisticated and advanced technologies. Such technologies facilitating highly innovative criminal cover-ups which have continued to prove invaluable for the set-up and facilitation of fraudulent and fictitious accounts which have not only encouraged money laundering activities, but also criminal engagement in bank secrecy and transfers involving tax havens

Bank secrecy laws and tax havens:Expanding areas and possible roles for computer forensic accounting

Over the years, forensic accounting has expanded not just in respect of investigative accounting, but also in relation to areas which encompass forensic valuation studies and computer forensics. Whilst fraud detection has continued to constitute a vital element which links forensic accounting and auditing – particularly in matters relating to audit trails, new possibilities and roles continue to emerge in relation to forensic accounting – and in view of greater manipulative and innovative areas which have been fostered by improved, sophisticated and advanced technologies. Such technologies facilitating highly innovative criminal cover-ups which have continued to prove invaluable for the set-up and facilitation of fraudulent and fictitious accounts which have not only encouraged money laundering activities, but also criminal engagement in bank secrecy and transfers involving tax havens