Billions Digital Fraud Saviour : In The Hand of Forensic Accountants

By Jennifer Djaukar & Fangky Nggallu

Have you ever heard about digital fraud and forensic accounting? Digital fraud has become an urgent global issue in recent years due to the use of digital technology in daily life. Some forms or types of fraud include email phishing, account takeover fraud, payment fraud, and crypto fraud. A while ago, Hong Kong, which is known as one of the advanced countries in the financial sector, reported that the fraud causing the highest level of loss is email phishing, with losses reaching HK$1.4 billion and has become a prime target for digital fraudsters. In fact, the losses caused by digital fraud in Hong Kong increased by 20% to HK$2.1 billion in 2022.

A country or government certainly should not and cannot remain silent in the face of this issue, and Hong Kong is no exception. One of the solutions adopted by Hong Kong is the enhancement and use of forensic accounting. Forensic accounting is a professional accounting discipline involved in a wide range of practices, such as fraud examination, investigation of corruption and bribery, business valuation, expert witness, cybercrime management/cybersecurity, and litigation support (Crumbley et al., 2015).

Forensic accountants play a crucial role in combating digital fraud which is one of the new challenges faced in the digital era. Automation data make the evidence more complex and complicated which align with 4V concept of big data (volume, velocity, veracity, and variety). Forensic data analytics (FDA) use AI-based data analytics to fight this by analyse and trace digital documents, voiceprints, fraud trend, potential frauds, or abnormal transactions. The output is a real-time information and long-term monitoring for the business. Seeing this development, forensic data analytics become an effective and important weapon for combat issues related to fraud, phishing, and other crimes.

Although forensic accountant is important, the shortage of professionals in this field still is still happening and it is a concerning issue. According to a report from the Association of Certified Fraud Examiners (ACFE), the number of forensic accountants in the world in 2022 was about 50,000 people. This number should not make relevant parties feel at ease in the long run because digital fraud will be worse at this point.

The shortage of professionals in the field of forensic accounting also has a significant impact on the increase in the number of crimes in the form of fraud, which is very likely to occur due to the weakening of the existing financial system. The Association of Certified Fraud Examiners (ACFE) notes that the number of forensic accountants in the world in 2023 will be around 150,000 people, a number which at first glance looks like a lot, but in fact the number is said to be very small. However, in contrast to this, the number of cases of digital fraud and digital crimes in the financial sector in the world in 2022 will be 2.4 trillion US dollars loss. This number has increased by 10% compared to 2021. Because this biggest threat ultimately leads to distrust and dissatisfaction among investors, which also results in losses for companies and the country.

In addition to facing the scarcity of professional forensic accountants, other challenges arise in the field of forensic accounting, such as the complexity of handling digital evidence, conducting cross-border investigations, the lack of awareness, and the availability of resources. Furthermore, ethical considerations, such as privacy and confidentiality, maintaining the chain of custody, and handling bias during the investigation become a distinct concern for forensic accountants.

Seeing all the gaps and voids that exist, some decisive actions certainly need to be taken by the government and other relevant authorities. In the previous case, the Hong Kong government needs to increase the availability of forensic accounting education by incorporating it into the curriculum and implementing it in universities, provide funding for the development of digital forensic accounting investigations, and establish a digital forensic accounting center to provide centralized support for digital forensic accounting investigations. With various recovery and prevention measures, the role of digital forensic accounting will certainly run at its maximum and optimal, thus becoming a solution for sustainable development and the security of companies.

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