Forensic auditors beef up teams

Mandates for forensic auditors now extend beyond financial statement analysis; former investigators, intelligence officials in demand

Forensic audits are no longer just about identifying dodgy entries in company books. Now, these also involve following suspects, investigations and other activities commonly associated with detectives, rather than professional accountants.

In line with this, there is an increased demand for people with such skill-sets, especially ex-law enforcement officials. Now, major accounting firms are trying to rope in former Central Bureau of Investigation (CBI) and Intelligence Bureau (IB) officials, in addition to police personnel. “We already have quite a few former senior police officials, CBI employees, IB officials and former regulators as team members,” said Rohit Mahajan, senior director and head (forensic services), Deloitte Touche Tohmatsu India.

“The experience they bring to the table in terms of their understanding of the law and how evidence is to be gathered is important, as many of the assignments end up involving courts or a police station…we look for retired officials or those who may have quit under VRS (voluntary retirement scheme),” said Arpinder Singh, partner and national leader (fraud investigation & dispute services), EY.

Forensic accounting practices of companies have been improving, following regulatory imperatives such as the New Companies Act, which requires greater safeguards against fraud.

Officials aged more than 60-65 are roped in for advisory roles, while those in their mid-40s are recruited as full-time managers, according to industry sources. These investigators work along with traditional accountancy professionals.

“Their investigative techniques and methods of identifying fraudsters have added great value to our clients. On many complex engagements, the combination includes ex-law-enforcement officials, along with forensic accountants and forensic technology experts. This has been a successful model in solving complex investigations. We are always on the lookout for good people with such skill sets,” said Dinesh Anand, leader (forensics and risk advisory services), Pricewa-terhouseCoopers India.

In 2010, EY India’s forensic division had a 30-member team; now, it is 450-member strong. Pricewaterhouse-Coopers India is considering adding 75 members to its 150-member team. Through the past year, Deloitte has tripled its headcount.

The hiring of former government watchdog employees is in line with global practices. In the US, it isn't unusual for an ex-Central Intelligence Agency official to be part of a team of forensic auditors, say the domestic staff of global companies.

For these roles, companies in India have typically hired from a pool of chartered accountants, from those with a master’s degree in business administration, or specialist forensic designations such as certified forensic investigator and certified fraud examiner.

While there has been an increase in the number of qualified personnel in recent times, demand outstrips supply, say industry sources. Major companies are relying on in-house training programmes for the skill sets needed for forensic accounting. Here, too, former investigators play a part. “Ex-law enforcement officials leverage their experience and mentor young CFE (certified fraud examiner) professionals,” said EY’s Arpinder Singh.

FILLING A GAP

• Mandates for forensic auditors now extend beyond financial statement analysis
• Requires investigation, surveillance skills to identify fraud
• Police personnel being recruited
• Ex-CBI, IB officials also in demand
• Those who have retired taken on as advisors
• Mid-level employees taken on payroll as managers
• They help in investigations and train personnel