Weekly Blog #3 - Introduction to legal framework

Q: The Honourable Kirby AC CMG considers that changing the regulatory environment will strengthen the profession of forensic accounting.  The challenge for forensic accountants, practising in the profession, is to keep up with the changes.  At paragraph 1.2 of APES215 (page 3) reference is made to "APES215 [setting] the standard for members in the provision of quality and ethical Forensic Accounting Services. Why is it important that forensic accountants understand and keep up with the development of this new "regulatory environment"?

It is crucial for forensic accountants to understand and keep up with the development of the new ‘regulatory environment’.  The regulatory environment consists of laws and regulations that have been developed by federal, state and local governments in order to exert control over business practices (DiGabriele, 2009).

As per APES 215 (2013), forensic accountants have a duty to the court (CPA, 2014). To properly perform this duty, they must be aware, understand and ably apply any new regulations.  In a recent discussion with a forensic investigator from KPMG, an example of a possible change to APES 215 was raised.  Should changes to key terms and requirements, including things such as amendments to expert witness reporting (APES 215, 2014, slides 4-5), occur, a forensic accountant who was unaware of these changes could fail in their duty to the court.  According to paragraph 1.2 of APES 215 (2013), presenting a forensic report to the court guided by out-of-date regulations would be a violation.

Courts function in accordance with a ridged framework of rules and regulations. Forensic accountants who understand and effectively apply these changes will be highly beneficial for the organisation they work for (DiGabriele, 2009)

References

Accounting Professional & Ethical Standard Board (APESB). (2014). Revised APES 215 Forensic Accounting Services.  Retrieved from:http://www.apesb.org.au/development/APESBCMS/ver1.3/uploads/news/speeches_presentation/25112014025238_APESB_Presentation_-_CAANZ_Forensic_Accounting_Conference_-_29_Oct_2014.pdf

Accounting Professional and Ethical Standards Board (APESB). (2013).  APES 215: Forensic Accounting Services.  Retrieved from:http://www.apesb.org.au/~apesborg/development/APESBCMS/ver1.3/uploads/news/media_release/11122014051214_revised-apes-215-december-2013.pdf

CPA Australia. (2014). APES 215: Forensic Accounting Services Fact Sheet. Retrieved from:http://www.cpaaustralia.com.au/~/media/corporate/allfiles/document/professional-resources/ethics/apes-215.pdf

DiGabriele, J. A. (2009). Implications of regulatory prescriptions and audit standards on the evolution of forensic accounting in the audit process. Journal of Applied Accounting Research, 10(2), 109-121. doi:http://dx.doi.org/10.1108/09675420910984673

Additional links to relevant information such as APES215 and keeping up with regulatory environment:

 https://www.cpaaustralia.com.au/~/media/corporate/allfiles/document/professional-resources/ethics/apes-215.pdf?la=en

 http://pwc.blogs.com/fraud_academy/2015/09/event-011015-the-regulatory-environment-recent-changes-and-how-they-impact-you.html