Intelligence work in accounting activities is a new concept to us. This puts forward a question whether it is possible to perform the work of Sherlock Holmes on the part of accountants. It is a matter of analysis to see how accounting performs the duty of a detective.
   Financial transactions are common phenomena to normal and legal persons. Transactions are born out of events which require recording in financial language and this leads to accounting functions. In accordance with the principles of accounting, each transaction moves around two aspects. This system of moving through two circles is known as the double-entry system. This is a universal system and so the statements prepared in compliance with the system is understandable to all concerned. As a result, accounting has acquired the status of a language. The medium of expression is language which can speak truth; it can present a false fact as truth as well. Accounting being a language can present true views and can also present false views as truth manipulating the concepts under which it operates. However, false statements are supposed to be detected through the mechanism of auditing. But scrutiny for the purpose of auditing is conducted over specific items on test basis, especially for large figures. In this way of audit work, accounting statements are certified as true and fair. But the traditional auditing cannot detect the real truth underlying the transactions.
   It is a matter of discussion under what circumstances intelligence work is required over accounting functions. This may be required for different purposes such as to detect the evasion of tax, to ensure genuineness of statements based on which capital will be raised from the capital market, to detect the black money presented in the statements unlawfully, to determine the assets and liabilities of bankrupt companies, to assist in disposing litigation, to curb terrorism financing etc. In addition to these, intelligence activities may be required for serving individual purposes. In the existing corporate culture, management of business firms is run by paid professional groups. For personal interest, they may adopt fraudulent means which, in coalition with the concerned people, can be regularised tactfully in the books of accounts. To curb such frauds and forgeries, the owners can conduct intelligence work over the performance of the professional groups. Apart from this, insurance companies can avail of such services of accounting intelligence to avert the efforts of frauds. Accounting intelligence aims at detecting fabricated presentation of figures in financial statements and underlying objectives thereof.
   Persons having specialised knowledge can identify problems in their respective specialised fields. Accounting is a practical area of activities. And so, the people working under this field are referred to as professionals like doctors, lawyers and engineers. As they work as professionals, they can be involved as detectives in detecting financial crimes.
   In the present times, ‘financial derivatives’, which are treated as financial products, are traded in the financial markets. Without underlying assets, the products can be marketed. Forensic accountants can easily identify such transactions which have no underlying assets. Such investigations can be undertaken by traditional detectives but ascertaining genuine facts may become a time-consuming exercise on their part.
   In the present system of our country, professional accounts are rarely involved in detecting financial crimes or examining statements furnished as per regulatory requirements. The authorities concerned try to equip their manpower for performing such professional work through short-term training courses. As stated earlier, accounting is a profession. The know-how of the profession cannot be imparted to anyone to any satisfactory level though a few days’ training. On the other hand, financial crimes and frauds are increasing rampantly. This leads to the framing of different laws/ordinances in the country. Under the existing laws and regulations, accounting intelligence can play an effective role in preventing and detecting financial crimes.
   In our country, there are two institutions (ICAB and ICMAB) to produce and train professional accountants but there is no institution to offer forensic accounting education. However, accounting is taught at graduation/post graduation level as a separate study of discipline; the products under such study are not recognised as professional. They are, rather, termed as academic accountants. But this academic background is essential to make forensic accountants. As an initial step, investigative issues can be included in the syllabus of higher studies. This can also be introduced in the syllabus of professional accounting studies. This will result in making forensic accountants in the country. The service of forensic accountants has become vital in the developed countries which have legal framework for enforcement of laws against financial crimes. It is high time to recognise the need of intelligence services to be rendered by accounting professionals.
   Mehdi Rahman
   Via e-mail