Enyi , P. E.
Detecting Causes of Variances In Operational Outputs of Manufacturing
Organizations: A Forensic Accounting Investigation Approach.
With the introduction of the International Standard on Auditing number 240 (ISA240)
there has been a paradigm shift in auditing as auditors are now required to identify and
assess the risks of material misstatements due to fraud at the financial statement level and
to evaluate the sufficiency, implementation and the effectiveness of the controls related to
those assessed prone to fraud. This, of course, implies that statutory audit must now take
the garb of forensic investigations. The problem with the present system of forensic
investigation is that it is focused more on financial transactions than on the totality of the
entity’s operations and often time neglects areas where there have been constant leakages
of other organizational resources that are of financial consequences but which are not
easily detected with a normal analysis of the financial statement. This paper attempts to
offer suggestions using real case problem on how to apply forensic accounting in
investigating variances and suspected fraudulent activities in manufacturing processes. It
employs both empirical and supervised experimental modules integrated with the normal
audit tools in unearthing fraudulent acts perpetrated over many accounting periods.
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