International Conference on Business, Accounting ...

International Conference on Business, Accounting, Finance, and Economics (BAFE 2015) Universiti Tunku Abdul Rahman, Kampar, Perak, Malaysia, 9th October 2015 Forensic Accounting Tools in Detecting & Investigating Fraud in Malaysia. a

Sulaiman Qureshi , Mohd Danial Afiq Bin Khamar Tazilah

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[email protected] Department of Commerce and Accountancy, Faculty of Business and Finance, Universiti Tunku Abdul Rahman, ([email protected]).

Abstract

With continuing advances of computer and Internet technology, the use of digital devices has become embedded in our business and personal lives (Rogers, 2003; Rogers & Seigfried, 2004). For example, communication using email and online chat has become ubiquitous. The rapid advancement in ecommerce and the internet have extended fraud opportunities; this is in addition of series of fraud that have been committed both in private and public sector of the economy. As new techniques of doing things are emerging so also new ideas are developed for perpetrating fraud. These in no doubt fraud are committed under the supervision of the internal auditors and external auditors, yet fraud is been committed on a daily basis especially using technology. Hence, this paper discusses four aspects of computer aided fraud detection that are of primary interest to fraud investigators and forensic accountants: Digital Ingestion Manager, EnCase, Computer Aided Audit tools and Forensic Toolkit that are used in fraud investigations. It provides an informative background and then details the current status of research in each area. It describes what is currently unknown, and it proposes future research topics.

Keywords: Forensic Accounting, Fraud Prevention and Detection.

International Conference on Business, Accounting, Finance, and Economics (BAFE 2015) Universiti Tunku Abdul Rahman, Kampar, Perak, Malaysia, 9th October 2015 INTRODUCTION Fraud and white collar crime is a million dollar business which is rapidly increasing every year. Corporate is a reality which is difficult to stop, however organisations try to reduce the most by taking numerous actions. Over last years, several organisations have spent huge amount of money in order to improve their System used for mitigating fraud. These organisations also includes accounting firms who have incurred significant amount defending their cases filed by third parties who claim that they lost their investment, reputation and trust of shareholders due to auditor's failure in identifying fraud and material misstatement. The cost of fraud will absolutely affect the profitability of victimized organisations as well as the stability of the economy. However economic crisis also leads to increase in fraud and also increases the financial reporting fraud in Order to keep the financial statements Consistent (KPMG, 2012). Large amount of funds have been Spent every year in order to mitigate and reduce the frauds. According to Glover and Aono (2010) a result shows that "In USA, FBI alone spends over $86 million annually or approximately 24% of its budget to combat fraud". Even though, employment fraud percentage is higher than management fraud but management fraud costs large amount of money. Recent well known corporate fraud scandals such as Enron, WorldCom, Tyco, etc. have increased concern about management frauds as it wiped out billions of dollars of shareholders, result in reducing the confidence of investors in financial markets (Peterson and Buckhoff, 2004). The WorldCom fraud scandal can be a good example of management fraud in which about S3.8 billion for line costs (current expenses) were transferred in capital expenditures. By this transferring, WorldCom increased both its net income and its assets and remains undetected as the capitalized assets were depreciated. Elter, when the fraud was detected it leads the company to bankrupt and a loss of more than billions of dollars. With the spotlight on the accounting profession, a new market with a new breed of accountant’s forensic accountants has emerged. With the current economic downturn, we have seen an increased demand for forensic accounting services as the public deals with financial collapses, increased white collar crime and growing occurrences of occupational fraud. According to a survey occupational fraud losses cost organisations $994 billion annually. (ACFE, 2008)

1.1 Background of the Study It has been argued in a recent study that fraud is the number one enemy of the business world (Hamilton and Gabriel, 2012). There is no company or nation that is immune to fraud and it is found in all human endeavors Nwankwo (1991). Computer crime and computer related incidents continue their prevalence and frequency (CERT, 2003, 2006) and result in billions of dollars in losses (Singleton et al., 2006), which introduces the urgency to build a suitable workforce to contain, prevent and prosecute these crimes, frauds, and attacks by effectively conducting digital investigations (Yasinsac, Erbacher, Marks, Pollitt, & Sommer, 2003). However, computer and Internet technologies are very complex and dynamic, which require digital forensic practitioners to have appropriate knowledge and a wide set of skills (Carlton, 2007; Yasinsac et al., 2003). According to KPMG Fraud Survey 2004 it stated that most of the (62%) of respondents felt that fraud is a main problem for Malaysian business generally (KPMG Forensic Malaysia, 2005). The Fraud Survey done by KPMG 2004 which surveyed 130 listed companies showed that 83 % of respondents admitted they had experienced fraud, an increase of 33 % from 2002. The survey cited secret commission or kickbacks, lapping (involves withholding cash receipts) and kiting (to mistake account) and false invoicing as the three most common types of fraud experienced by businesses in Malaysia.( KPMG Forensic Malaysia, 2008).

International Conference on Business, Accounting, Finance, and Economics (BAFE 2015) Universiti Tunku Abdul Rahman, Kampar, Perak, Malaysia, 9th October 2015

1.2 Problem Statement With continuing advances of computer and Internet technology, the use of digital devices has become embedded in our business and personal lives (Rogers, 2003; Rogers & Seigfried, 2004). For example, communication using email and online chat has become ubiquitous. Businesses and organisations use computer systems and the Internet for e-commerce, business communication, and internal management. Society is very dependent on computers and Internet technologies such that the Internet infrastructure has become the foundation of communications, banking, healthcare, transportation, warfare, etc. (Berghel, 2003; Huebner, Ben, & Ruan, 2008; NIPC, 2003). With the high impact on our society, the computing infrastructure has become the target of criminals, fraudsters, and terrorisms (Berghel, 2003; Huebner et al., 2008; NIPC, 2003; Wolf, 2009). In recent years, many criminals employ computers and computer programs to commit sophisticated financial frauds (Singleton, Singleton, Bologna, & Lindquist, 2006). The rapid advancement in e-commerce and the internet have extended fraud opportunities; this is in addition of series of fraud that have been committed both in private and public sector of the economy. As new techniques of doing things are emerging so also new ideas are developed for perpetrating fraud. These in no doubt fraud are committed under the supervision of the internal auditors and external auditors, yet fraud is been committed on a daily basis. It is in the light of this that the researcher has undertaken this research to see if forensic accounting tools can be a useful measures in investigating and detecting fraud. Therefore the main purpose of this study is to see how effective forensic accounting tools can help in fraud investigation and detection. The study on automated tools of forensic accounting tools is so far limited & scarce on this particular area until now the world is conversing to technology there is a need to carry out a research about these new tools. 1.4 Objective of the study The main objective are as following   

To identify the tools used in fraud detection and investigation. To examine the relationship between types of tools used in detecting and investigating fraud. To recommend the appropriate tools used in detecting fraud by forensic accountants.

1.5 Research Questions   

Identify the tools used in detection and investigation of fraud? What are the relationship of the tools used in detecting and investigating fraud? What are the most appropriate tools to be used in detecting & investigation by forensic accountants?

1.6 Scope of study This research will lead to the awareness and acceptance level of forensic accountants. Furthermore, the result of this research would give understanding of the role of forensic accountants. This study hopes to reduce fraud practices happening in Malaysia by using advanced tools to detect fraud.

1.7 Limitations of the Study The limitation of this research is mainly about time limitation the second thing is difficulties in collecting primary data and also secondary data. The first limitation of this research will be conducting

International Conference on Business, Accounting, Finance, and Economics (BAFE 2015) Universiti Tunku Abdul Rahman, Kampar, Perak, Malaysia, 9th October 2015 in eight months; therefore less information will be collected in this time line. The second limitation is the difficulty in gathering primary data because there are few forensic accountants in Malaysia so it would be extremely hard for the researcher to conduct an interview with forensic accountants. Another limitation that was faced by the researcher was collection of secondary data. As the forensic accounting is not an old and experienced field so it was difficult because very limited information on digital tools is available to be used by the researcher. If we look upon the different categories of fraud, it is a vast term in real. There are hundreds of ways to mitigate fraud and preventing it but the branch that researcher has selected to detect and investigate fraud in corporate sector of Malaysia is by using Forensic Accounting tools. This is a term which is unheard by many people around us but it one of the most effective tools to detect fraud and interrogate its roots. Forensic accounting is an IT term collaborated with Assurance and Auditing with accounting. Forensic accountants are there to help us always for being secure from all IT based business frauds. Although there is scope of Forensic Accounting but only in some of the developed countries and very limited. The researcher has spent his efforts in determining some of the tools that are being used by forensic accountants but failed to succeed fully because of the limited resources and data available on this research and other major factor is the time constraint. 1.9 Conclusion In this chapter, the research paper clearly illustrates the problem of the study, together with the set of objectives. Moreover, it also provides a brief history about fraud and different types of fraud. Chapter 2: Literature Review Overview of fraud

Fraud is basically an act by which person deceive its organisation or other individual intentionally, whether in monetary or non-monetary terms, for own benefits. It can be committed by several ways such as stealing cash or any other assets, manipulating the inventories, misstating the financial statement, identity theft, etc. "The use of one's occupation for personal enrichment through the deliberate misuse or misapplication of employing organisation’s resources or assets" Association of Certified Fraud Examiners (ACFE, 2014). According to KPMG survey report of Malaysia in 2009, 66% of the respondents that fraud is a major problem in Malaysia which is 4% more than the result in 2004. However, the survey also tells that 30% of these frauds were detected by internal audit reviews which were in 2004. This shows the importance of internal auditors and effectiveness of analytical review procedures in terms of detecting fraud. 2.4 Fraud Detection and Investigation Methods: Fraud detection generally involves activities and actions taken to determine whether or not it is likely that fraud is occurring. It allows companies to identify suspicious or predications of fraud, and to discover a fraud that has been or is being committed. Detection does not include investigation procedures which is taken to determine motive, purpose, reason but begins by identifying symptoms, indicators, or red flags which provides indication for the occurrence of fraud. Moreover, there are three primary ways to detect fraud: (l) by accident, (2) by installing hotlines and whistle blower systems and encourage employees and others to report any suspicious activity they see, and (3) by examining transaction records, accounts, documents and other anomalies that could indicate fraud (Zimbleman and Albrecht 2012). Previous survey shows that from these three primary ways, of fraudulent activities are detected by 'accident' which suggests that many of the frauds might remain undetected. However, management and internal control should improve in order to detect frauds rather than detecting it accidently.

International Conference on Business, Accounting, Finance, and Economics (BAFE 2015) Universiti Tunku Abdul Rahman, Kampar, Perak, Malaysia, 9th October 2015 Preventing fraud is the most effective way to reduce losses and cost of fraud because once a fraud is committed, it can be detected but losses cannot be easily recovered (Singleton and Singleton 2010). Fraud prevention involves two elements (l) creating and maintaining a culture of honesty and high ethics and (2) assessing the risks for fraud and developing response to mitigate the risk and eliminate the opportunities of fraud. (Zimbleman and Albrecht 2012). 2.5 FRAUD INVESTIGATION STEPS There is a common tendency to interpret a successful investigation as one in which the fraud is detected, but for this to be achieved certain steps are usually involved in investigation and they include; planning, data/Evidence collection, evaluation of evidence and report writing (Ekeigwe, 2010).

2.5.1 Planning: This ensures that a guide of what needs to be done is put to place. It is the foremost step to be taken if a substantial result is required for it is the processes by which an organisation solves problem of determining its relationship with its environment (Anyaogu, 2011).

2.5.2 Data/Evidence collection: In order to present the formation obtained, the evidence collected needs to be evaluated using different methods, including automated tools so that an easy conclusion can be made (Driven, 2008).

2.5.3 Evaluation of Evidence: In order to present the formation obtained, the evidence collected needs to be evaluated using different method, including automated tools so that an easy conclusion can be made (Driven, 2008).

2.5.4 Report Writing: If the investigation confirms that fraud has been perpetrated or attempted, a formal report has to be written on the outcome of the investigation for presentation to senior management with a copy of it presented to anti-fraud officer (Driven, 2008). Document Management Tools 2.7.1 Digital Investigation Manager (D.I.M):

This is a digital evidence tracker software used in digital investigations. It was designed and developed to be used as digital evidence process support during computer forensic and incident response operations. (Accountant search, 2011). It allows the investigation process to be organized on a case basis as each case may contain one or more hosts (i.e. workstation, laptop, etc.), which in turn may be associated with one or more items of evidence obtained through the forensic acquisition process. This forensic acquisition process include media (hard disk, floppy disk, flash card zip drive etc.), network dump and log file. Special detailed forms are usually complied for each of these host or media when they are acquired. Also, the digital investigative manager application allows users to catalogue all pertinent information gathered during investigation and to make reports from those evidence gathered. This application is usually available in three (3) versions namely, standalone version, workgroup version and enterprise version (Forensic Focus, 2011).

Digital Investigation Manager offers a variety of data security and team coordination options. The former, which for simplicity's sake we will term "backup options", allow the user to create a copy of local data in a centralized archive. This has a dual purpose: the user is assured of having a copy of

International Conference on Business, Accounting, Finance, and Economics (BAFE 2015) Universiti Tunku Abdul Rahman, Kampar, Perak, Malaysia, 9th October 2015 the work performed; and a central historical record is maintained of all cases involving a particular investigator. The backup option requires a properly configured back-end database server. Supervisors may access the back end for itemized queries (Forensic Focus 2011).

2.7.2 Encase: This is a complete forensic toolkit that covers much of the work that the ITM (information technology management) forensic analysis carry out. It is designed as “a computer forensic product produced by guidance software used to analyse digital media in civil or criminal investigations, network investigations, data compliance and electronic discovery”. Encase contains tools for several areas of the digital forensic process, acquisition, analysis and reporting.it is usually available to law enforcement agencies and corporations, for it has been used successfully in various court systems around the world. It is also generally considered as the de factor standard for criminal digital forensic evidence collection as it is globally recognized as a world leader in digital forensic, cyber security and e-discovery. (Oliver and Shenoi, 2006). The two (2) major attributes that make Encase software unique are the breadth of operating system and file system are separate, but they have a deep relationship on how information is stored and how the host operating system operates system that exists, there are number of different file system which the host operating system could utilize and the ability to deeply analyse a broad range of operating system and file system is a critical component of an enterprise investigation. (Guidance, 2014). Digital investigators need a solution that easily captures relevant data to support an investigation or compliance requirement and features sophisticated technical analysis capabilities for finding buried and/or hidden data. EnCase Forensic is a powerful investigation platform that collects digital data, performs analysis, reports on findings and preserves them in a court validated, forensically sound format (Guidance, 2014). Analytical Tool 2.10 Computer Aided Audit Tools (CAAT): It is also known as Computer Assisted Audit Tools and Techniques (CAATTs), it is growing field within the financial audit professions and a practice of using computer to automate or simplified the process by extracting data, analysing data and identifying exceptions that relate to fund. CAAT tools have a significant advantage over manual data testing techniques and they include; ACL Audit, Command language, IDEA Analysis, Wiz Rule etc. With these tools, forensic accountant can review, test and analyse the entire population of data which is not usually possible with the manual or traditional audit techniques (ACFE, 2009). Data Mining Software is a tool that provides models of database for the purpose of determining patterns and relationships among the data. This tool is an outgrowth of the development of expert systems. Computer-based data analysis tools can prove to be invaluable in searching for possible fraud. From the analysis of data, the fraud examiner can develop fraud profiles from the patterns existing within the database. Through identifying and understanding these patterns, the examiner may uncover fraudulent activity. The use of this software also provides the opportunity to set up automatic red flags that will reveal discrepancies in data that should be uniform (Ekeigwe, 2010). Also, it tends to enhance the productivity of forensic accountant, as it enable them make informed discussion to qualify the impact of financial statement errors by analysing them through CAAT, for CAAT gives a high level of comfort to the senior management about the overall quality of data within the organisation (Just answer, 2011). Investigation Tools 2.9 Forensic Toolkit (FTK):

International Conference on Business, Accounting, Finance, and Economics (BAFE 2015) Universiti Tunku Abdul Rahman, Kampar, Perak, Malaysia, 9th October 2015 The access data forensic toolkit (FTK) is another component forensic toolkit that is recognized as one of the leading forensic tools to perform e-mail analysis, as it can easily locate deleted e-mails. It includes a standalone disk imaging program called FTK imager. This FTK imager is a simple but concise tool that saves an image of a hard disk in one file or in segments which may later be reconstructed (Access data 2011). Also known as FTK, this application enables you to perform complete and thorough computer forensic examinations. FTK features powerful filtering and search functionality, and is recognized by law enforcement and corporate security professionals as the leading forensic tool for e-mail analysis (Access data, 2011). Forensic toolkit advances the investigation by giving more time, power, and insight to each cases. FTK provides you the following advantages: simple users’ interface, fast searching, EFS decryption, bookmarking, reporting, and password dictionary creation After you complete the case investigation, you can create a report that summarizes the relevant evidence of the case. FTK provides a thorough report wizard that allows customization of reports, including the placement of one’s own logo on the title page. The final report is in HTML format and is viewable in a standard Web browser. You can create a section in the report that lists file properties for different file types in selected categories (Access data, 2011). It can add files such as supplementary reports, search warrant information, and photos of the crime scene to the report. You can also add the case log to the report. The case log documents activities and events that occur in the case during investigation and analysis. Included files only require that the applications to view them must be installed on the computer the report is being viewed (Access data, 2011).

Chapter 3: Research Methodology

This chapter describes how the study is designed and how will be conducted. It explains the sampling techniques and procedures adopted the data collection techniques, location of the study, research design, and finally data analysis.

3.1 Introduction

This chapter will cover conceptual framework, sampling and distribution, data collection techniques, methods of data analysis, population size and expected number of respondents used for this research. The main source of information will be mainly through qualitative data which includes questionnaires. 3.2 Research Design

Churchill (1996) defines research design as simply a framework or plan for a study used as guide in collecting and analysing data. It is a blueprint that is followed in completing the study. The research designed ensures that the study will be relevant to the problem and will use economic procedures. This study will use the case study design to obtain the necessary information both qualitative and quantitative data, case study design will be employed to collect both primary and secondary data; the researcher opted for case study design due to its ability to provide in depth insight of the issue being studied and because he is confident to collect reliable information at the required time. The research is based on primary source which are questionnaires and secondary sources which are books, accounting standards, journals and websites. Data will be collected through questionnaires.

International Conference on Business, Accounting, Finance, and Economics (BAFE 2015) Universiti Tunku Abdul Rahman, Kampar, Perak, Malaysia, 9th October 2015 A total of 100 questionnaires will be prepared and distributed to individuals who are familiar with accounting tools in detecting fraud and IT back ground in security users and professionals in accounting field. Out of 100 questionnaires, it is expected to have 50 respondents. Questionnaires will be a mixture of both open and closed ended questions. The number of closed ended questions will be greater than open ended questions. The questionnaires will be sent by e-mail to the corresponding companies. Non probability sampling will be used due to lack of time to carry out a deeper research and moreover, this type of sampling is cheaper and easier to conduct compared to probability sampling method. Furthermore, SPSS will be used for data collection, analysis and reporting. 3.3 Theoretical framework/model

Whether evaluating a qualitative or a quantitative study, it is prudent to look for a framework, which

EnCase

Digital Investigation Manager

Computer Assisted Audit Tools

Fraud Detection

Forensic Toolkit

& Investigation will guide this study. The below defines the relationship between two variables. The relationship between independent variable and the dependent variable shows how the tools help to detect & investigate frauds.

3.4 Research Hypothesis Null hypothesis (H0): Digital investigation manager is able to assist the investigator in managing their documents while carrying out their investigation on fraud. Alternative Hypothesis (H1): Digital investigation manager is not able to assist the investigator in managing their documents & creating reports while carrying out their investigation on fraud.

Null hypothesis (H0): EnCase is able to assist the investigator in managing their documents & creating reports while carrying out their investigation on fraud. Alternative Hypothesis (H1): Encase is not able to assist the investigator in managing their documents & creating reports while carrying out their investigation on fraud.

International Conference on Business, Accounting, Finance, and Economics (BAFE 2015) Universiti Tunku Abdul Rahman, Kampar, Perak, Malaysia, 9th October 2015 Null hypothesis (H0): Computer Assisted Audit Tools is used as an analytical tool to detect & investigate fraud. Alternative Hypothesis (H1): Computer Assisted Audit Tools is not used as an analytical tool to detect and investigate fraud.

Null hypothesis (H0): Forensic tool kit is used to detect and investigate fraud. Alternative Hypothesis (H1): Forensic tool kit is not used to detect and investigate fraud.

3.5 Data Collection

Data collection can be done through the use of primary data and secondary data. Primary data is the information attained first-hand by the researcher, whereby secondary data refers to information obtained through options already existing (Serakan and Bougie, 2009). This research will be conducted by using primary data as well as secondary data. The data for this research is intended to be gathered regarding forensic accounting tools used in detecting and investigating fraud. 3.6 Sample Size A total of 100 questionnaires will be prepared and distributed among the accountants, auditors and students specialized in IT security. Malaysia (Internal and External Auditors). Most of the questions in the questionnaire would be structured close ended, whereas there would be some open ended questions as well.

3.7 Data Analysis The data collected through the questionnaire would be extracted and analyzed. The results would then be presented together with the percentages and graph that would illustrate the results relate to the objectives.

3.9 Conclusion To put it in a nut shell, the general proposal report examined effective (knowledge, skills and independent) of the forensic accountants tools on how these tools helps to detect, and investigate this kind of fraud in an organisation, the research is conducted in examining organisations where by its easier to obtain information on this matter and in most developing countries corporate fraud has been occurring mostly in public sectors compared to private sectors. In general the research has relatively come to conclusion by discussing three Chapters and each chapter is discussed deeply with contents and also the use of past researches that have been done with other people around the world which has been helpful in getting the information and eventually be able to conduct and write this report.

Chapter 5 Findings 5.1 Introduction

International Conference on Business, Accounting, Finance, and Economics (BAFE 2015) Universiti Tunku Abdul Rahman, Kampar, Perak, Malaysia, 9th October 2015 In this chapter, the researcher will interpret the findings from the primary and secondary data, i.e. the questionnaires and the journals which have been collected. The aim of this chapter is to compare and match the findings from both sources of data. Moreover, in order to solve the objectivity of the research, this chapter will also provide a better understanding of the research objectives.

5.2 Respondent’s Segment According to the analysis conducted the age group of 26-35 was found out to be a core audience group which is comparatively high among all other age groups. The main reason of this is that, majority of respondents were auditors, academicians & accountants who are mostly between the age of 26-35 and above 40. Such respondents are expert in providing clear picture, and appropriate responds due to their vast knowledge and understandings on the topic. The respondents also include student mostly from the age between 18-25 most of them are either have I.T back ground or doing their forensic in accounting degree.

Variables DV_D & I F IV_DIM IV_EC IV_CAAT IV_FTK

Definition Dependent Variable – Detection and Investigation of fraud Independent Variable – Digital Investigation Manager Independent Variable – EnCase Independent Variable – Computer Aided audit tool Independent Variable – Forensic Toolkit

5.3 Research Objective & Hypothesis:

**. Correlation is significant at the 0.01 level (2-tailed).

International Conference on Business, Accounting, Finance, and Economics (BAFE 2015) Universiti Tunku Abdul Rahman, Kampar, Perak, Malaysia, 9th October 2015 *. Correlation is significant at the 0.05 level (2-tailed). Table :Pearson Correlation Analysis The main objective of this research was to identify the tools used in fraud detection and investigation, examine the relationship between these tools and to recommend which tool is suitable among them. Based on table, it can be seen that each independent variable are correlated to the dependent variable). For the test, the two-tailed significant level applied at 1% (p < 0.01).

5.3.2 Digital Investigation Manager:

International Conference on Business, Accounting, Finance, and Economics (BAFE 2015) Universiti Tunku Abdul Rahman, Kampar, Perak, Malaysia, 9th October 2015 H0: Digital investigation manager is able to assist the investigator in managing their documents while carrying out their investigation on fraud – ACCEPTED

The research analysis shows that 43% out of 84 respondents have the same opinion as the researcher. According to them digital investigation manager helps to assist the investigator in managing the documents in the investigation and also create reports at the end. So majority of the primary respondents accepted this hypothesis. “The digital investigative manager application allows users to catalogue all pertinent information gathered during investigation and to make reports from those evidence gathered” (Forensic Focus, 2011). Digital Investigation manager was found correlated to fraud detection & investigation as it has p value of 0.000 in which p < 0.05 and correlation value of 0.615. Consequently, the evidence to support the dispute is sufficient and that there is a strong positive correlation between Digital investigation manager and fraud investigation. The positive value of 0.616 indicates that there is a positive and strong relationship between Digital investigation tool and fraud investigation and detection. It allows the investigation process to be organized on a case basis as each case may contain one or more hosts (i.e. workstation, laptop, etc.), which in turn may be associated with one or more items of evidence obtained through the forensic acquisition process. This forensic acquisition process include media (hard disk, floppy disk, flash card zip drive etc.), network dump and log file. Special detailed forms are usually complied for each of these host or media when they are acquired. So on the basis of the primary and secondary evidences the hypothesis of the researcher is accepted.

5.3.3 EnCase: (H0): EnCase is able to assist the investigator in managing their documents & creating reports while carrying out their investigation on fraud – ACCEPTED.

As mentioned earlier in chapter 2 (literature review), “. EnCase Forensic is a powerful investigation platform that collects digital data, performs analysis, reports on findings and preserves them in a court validated, forensically sound format.” (Oliver and Shenoi, 2006). The p value for correlation between EnCase and fraud detection and investigation is 0.000. Thus, there is sufficient evidence to prove that encase was correlated to (fraud detection and investigation). It also shows that the coefficient correlation value is 0.762 which means that there is a positive & strong relationship between encase and fraud detection and investigation. Based on the analysis in chapter 4, the researcher asked the respondent on their opinion whether encase could help to assist it in managing the data and even create reports. Most of the responded agreed (50%), strongly agreed (27.4%) that it helps in assisting the forensic accountant. Encase contains tools for several areas of the digital forensic process, acquisition, analysis and reporting.it is usually available to law enforcement agencies and corporations, for it has been used successfully in various court systems around the world. This clearly shows that that there is a relationship between the finding of literature review and data analysis. Hence the hypothesis is accepted.

5.3.4 Computer Assisted Audit Tools (H0): Computer Assisted Audit Tools is used as an analytical tool to detect & investigate fraud– ACCEPTED.

International Conference on Business, Accounting, Finance, and Economics (BAFE 2015) Universiti Tunku Abdul Rahman, Kampar, Perak, Malaysia, 9th October 2015 The research analysis shows that 36.9% of the respondent rated Computer assisted tools and techniques the highest rank (5) for investigating fraud by simplifying the process of extracting data, analysing data and identifying exceptions that relate to fund. The result further shows that 27.4% of the respondent rated the software 4 because they believe that by using this analytical tool it would help to detect fraud. CAAT tools have a significant advantage over manual data testing techniques and they include; ACL Audit, Command language, IDEA Analysis, WizRule etc. With these tools, forensic accountant can review, test and analyse the entire population of data which is not usually possible with the manual or traditional audit techniques (ACFE 2009). Computer aided audit tool was found to correlate to fraud investigation as it has p value of 0.000 in which p < 0.05. Therefore, the evidence support the dispute is sufficient and that there is a correlation between computers aided audit tool and (fraud detection & investigation). Besides, the value of coefficient correlation is 0.531 which is positive. It means that the relationship between computer aided audit tool and (fraud detection & investigation) decision making are positive and strongly correlated. This result is supported by Mehra (2011), who carried out a research on how CAATs can be used to detect fraud in journal entries and other areas which included the review of unusual transactions, payroll cycle, and procurement cycle. He concluded that used to address the risk of fraud in all these areas and also detect potentially fraudulent activities from the analysis of data, the fraud examiner can develop fraud profiles from the patterns existing within the database. Through identifying and understanding these patterns, the examiner may uncover fraudulent activity. The use of this software also provides the opportunity to set up automatic red flags that will reveal discrepancies in data that should be uniform (Ekeigwe, 2010). CAAT enable forensic accountant to test large amount of data quickly and accurately and therefore provide red flags if fraud is taking place or not. It also enables forensic accountant to test the accounting systems and its records (e.g. disk files) at its source location rather than testing the printouts of what they believe to be a copy of those records. It is likely to be cost effective way of obtaining evidence year after year provided that the client does not change the accounting system regularly.

5.3.5 Forensic Toolkit (H0): Forensic Toolkit is used to detect & investigate fraud – ACCEPTED.

The research analysis shows that the majority of the respondent have the same opinion about this research question as the researcher about 45.3% of them rated it the highest that is 5 and 34.5% of them rated it 4 which shows that the respondent believe that forensic tool kit help the forensic accountant to carry out investigation on fraud. Forensic Toolkit advances your investigation by giving you more time, power, and insight to each cases. FTK provides you the following advantages. FTK allows you to view e-mail in a user-friendly HTML. The Known File Filter (KFF) is an FTK utility that compares file hashes of your evidence against a database of hashes from files known to be irrelevant. The end result of a successful investigation In FTK is a list of bookmarked data to be used as evidence. A bookmark contains a group of files that you want to reference in your case. Bookmarks help organize the case evidence by grouping related or similar files. FTK provides a thorough report wizard that allows customization of reports, including the placement of one’s own logo on the title page. Correlation between forensic toolkit and (fraud detection & investigation) has the p value of 0.000 which provides evidence to support that that there is a correlation between forensic toolkit & (fraud investigation and detection). Additionally, the positive value of coefficient correlation that is 0.856 has shown that the relationship between forensic toolkit and (fraud detection & investigation) decision making are positive and very strongly correlated. “Forensic toolkit that is recognized as one of the leading forensic tools to perform e-mail analysis, as it can easily locate deleted e-mails. Also known as FTK, this application enables you to perform complete and thorough computer forensic examinations. FTK features powerful filtering and search

International Conference on Business, Accounting, Finance, and Economics (BAFE 2015) Universiti Tunku Abdul Rahman, Kampar, Perak, Malaysia, 9th October 2015 functionality, and is recognized by law enforcement and corporate security professionals as the leading forensic tool for e-mail analysis” (Access data 2011).

5.4 Summary The findings indicate that the objectives of the research, as well as the answers procured for the research questions, are in line with the theoretical framework that the study was based on. The objectives of the study were met as the research was developed to identify the factors in enhancing audit quality toward minimizing corporate frauds. The research questionnaire not only proves the variables and meets the objectives in accordance with the problem statement but also gives a light on various different techniques and procedures that auditors can use in order to prevent and detect corporate frauds.

No H01

H02 H03

H04

Statements

Hypothesis Findings

Digital investigation manager is able to assist the investigator in managing their documents while carrying out their investigation on fraud.

Accepted

EnCase is able to assist the investigator in managing their documents & creating reports while carrying out their investigation on fraud.

Accepted

Computer Assisted Audit Tools is used as an analytical tool to detect & investigate fraud.

Accepted

Forensic Toolkit is used to detect & investigate fraud.

Accepted

International Conference on Business, Accounting, Finance, and Economics (BAFE 2015) Universiti Tunku Abdul Rahman, Kampar, Perak, Malaysia, 9th October 2015 Chapter 6: Recommendation & Conclusion 6.1 Recommendation The research noted some problems which might be solved from the following suggestions. An aspect within computer forensics that is often overlooked is the reporting phase of an investigation. We find that the ability of the forensic tool to report, and assist the forensic accountant in the investigation, is just as important as the tools' ability to view the contents off storage media. As mentioned in the background, storage device capacities are increasing at alarming rates. This implies that the search area that must be covered by the forensic accountant is also increasing. Therefore, comprehensive reports of all activities undertaken by a computer forensic software during an investigation would contribute positively to an investigation. It is the researcher suggestion that reporting functionality be added to those tools lacking such reporting functionality and improved in the tools currently supporting this functionality. Within the tools that supported imaging, we found that the process was consistently carried out successfully. Specifically, it’s recently stated that the imaging functionality within the Encase tool was flawless. This statement can be accepted without hesitation since Encase is considered an industry leader in the forensics software market. It should also be noted that the integrity of image files were always verified by the hashing functions supported within that imaging tool. I would recommend that encase and forensic toolkit to be the recommended tools to assist forensic accountant in carrying out their investigation. They are the best tools available in the market and encase has the function to generate reports and is compatible with forensic toolkit.

6.2 Limitation Each research has its own limitations. The limitation of this research is mainly about time limitation. The second limitation of this research is difficulties in collecting the secondary data. As forensic accounting is not an old and experienced field so it was difficult task for the researcher to collect information on digital tools. 6.3 Future Research Future researchers are welcomed to use this study as a reference on the study related with new tools used to detect fraud detection and investigation. There are various fraud tools to be used as variables for new research; therefore, this study can only be a reference to future research. This is advisable for future research to conduct new research using Bedford’s law, ACL or data mining

6.4 Conclusion Computer aided fraud detection is a new field for accounting researchers. In this research we discussed some of the forensic software tools that forensic accountant uses during their investigations. Four of these tools were evaluated with respect to their functionalities and effectiveness within the forensic investigation methodology. Finally, a discussion about these tools was given. It is very important that forensic accountant are able to stay ahead of cyber-criminals through the use of forensic tools that allow them to reliably carry out their tasks within an investigation. The researcher believe that if the suggested improvements to these tools are further researched, prosecutions of cyber-crimes will definitely increase.


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