EFFECT OF FORENSIC ACCOUNTING TOOLS ON FRAUD INVESTIGATIONS USING BENEISH FRAUD STATEMENT INDEX

The study examined the effect of forensic accounting tools on fraud investigation using Beneish fraud statement index. Forensic accounting has been pivotal in the corporate agenda after the financial reporting problems which took place in some companies around the world; for example, Enron, Tyco, and WorldCom. These scandals resulted in the loss of public trust and huge amounts of money. Forensic accounting goes beyond fraud prevention but inclusion of marital issues, disputes etc. The study employed Beneish fraud statement index. The M-Score uses eight financial ratios to detect whether a company has manipulated its earnings. The variables were generated from the company’s financial statements and create a score to describe the extent to which the earnings have been manipulated. The M-Score focused on earnings manipulation, the M-Score greater than - 2.22 indicate that the company has maneuverer with its earnings. It needs to be noted that fraud could be handled through three main strategies:; prevention, detection and control .