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Taxes

Introducing Diploma of Investigative and Forensic Accounting: A Case Study in Lebanon

DIFA, Diploma of Investigative and Forensic Accounting, is gaining acceptance due to its importance in facing corruptive business practices and financial theft. However, the absence of Forensic Accounting (FA) is still noticed in countries of opaque business practices. Furthermore, only few universities across the world are introducing DIFA, thus a major work has to be done to shed the light on the importance of the diploma in the first place and then offer it as an official diploma with courses relating to FA whether in universities or financial institutions.

The major concern lies in the fact that Forensic Accounting is neither provided in universities as a diploma, nor at financial institutions to detect fraud and make legal court reports. In many universities of Canada and the United States, the DIFA, is being included in the curriculum in order to recruit new students and provide skills set for career advancement through development of a specialized niche. One of the objectives of the Alliance for Excellence in Investigative and Forensic Accounting (Alliance), established by the Canadian Institute of Chartered Accountants (CICA), is to develop and manage a specialist certification program. This diploma is designed as a comprehensive program for someone who wishes to practice in this area. CPA, CFA, CIA are examples of certificates granted in Lebanon, however, no diploma is available related to Forensic Accounting. Therefore, it could be a diploma given in educational institutions that grant CPA or any other certification related to auditing or accounting.

Furthermore, the importance of adopting FA in the universities’ accounting curriculum is highlighted especially that its demand for it is increasing gradually. Such adoption has a huge potential to enhance students’ skills and competencies and could be used as a veritable resource from which fraud could be mitigated. Fresh graduates can as well attain the DIFA program that provides a broad range of knowledge and skills to carry out financial investigations. This range includes accounting, audit, income tax knowledge, fraud knowledge, knowledge of law and rules of evidence, an investigative mentality and critical skepticism, understanding of psychology and motivation, and strong communication skills (Stott, 2005).

The program focuses on knowledge and skills that can be best taught and examined in person: such as handling a face-to-face meeting with a client, interviewing skills, and testifying in court as an expert witness. DIFA supports accountants with the knowledge and skills needed to bridge the gap between existing quantification models and principles and different litigation contexts (Stott, 2005).

Based on descriptive statistics of survey results conducted in Lebanon, being a country of opaque business practices, to identify the certificates that a forensic accountant must possess showed that:

  • 59.09% of the respondents thought that a forensic accountant should have a DIFA;
  • 31.82% proposed that CPA is the needed certificate (Certified Public Accountant);
  • 20.91% thought that CFA is the appropriate one (Chartered Financial Analyst);
  • 10.00% mentioned other types of certification.
  • 2.12% of the respondents didn’t find it necessary to have any certification to become a forensic accountant.

Furthermore, the relation between occupation and the respondents’ opinion about the types of certifications that a forensic accountant must possess was also studied. The following breakdown shows the percentages of respondents who proposed that DIFA is the important certification based on job occupation.

  • 69.10% of the respondents working in banking or insurance
  • 51.60% of the respondents working in finance
  • 72.70% of the respondents working in education
  • 80% of the respondents working in management

However, most of the respondents in the accounting field thought that CPA is the type of certification that should be possessed by the forensic accountant with a 77.10%. People working in accounting usually tend to pursue a CPA degree for the help it provides in this domain.

In addition to the above, the relation between experience and the respondents’ opinion about the types of certification that a forensic accountant must possess was also studied. The results, based on those who choose DIFA as the needed certificate, were as follows:

  • most respondents with more than two years’ experience thought that DIFA is the needed certification to practice FA
  • 51.90% of respondents with 2 years’ experience and less thought that DIFA is the needed certification to practice FA;
  • 68.80% between 2 and 6 years of experience thought that DIFA is the needed certification to practice FA;
  • 55.40% of those with less than 2 years or no experience at all thought that CPA is the type of certification that should be possessed by the forensic accountant.

Moreover, the surveys conducted answered the question whether the respondents approve that the DIFA should be included in the Lebanese university programs. It demonstrates that:

  • 97.88% of the respondents accepted having a DIFA in the universities;
  • 2.12% of them didn’t accept having a DIFA in the universities;

This is especially important since most of the Lebanese people are in the stage of pursuing their educational degrees of which the highest percentage is studying finance.

Supporting the results of the surveys, interviews were also conducted to know about the type of certificates that a FA must hold. Most respondents approved that there should be a certification granted to a forensic accountant. This can be illustrated by what the accounting manager at “Malia Group Multinational Company” (with 5 years of experience) stated by saying: “It should be taught in universities and the business owners should request in their vacancies for an accountant with a certain certifications such as DIFA”

The interviewees’ answers stressed that it should be introduced in all universities and educational institutions leading to a certificate (DIFA), and candidates should have knowledge and a degree in accounting and auditing. As one interviewee, a partner at Bureau d’Analyse et de Revision Comptable (BARC) for auditing and taxation (with 33-36 years of experience) puts it: “It is a way to prevent corruption this is why I specify that it should be taught in universities because I strongly agree that it is implemented”. Relating interviewees’ recommendations to include FA in university programs, the head of audit department at “professional auditors” (11 years of experience) states: “FA is important for cheating methods, it can be introduced in universities“.

Interviewees gave different responses and suggestions about what is needed to perform Forensic Accounting. One interviewee coded that: “There are specific teaching programs such as CPA and there are special programs for certified financial forensic and DIFA”(Partner of an audit and taxation firm “Bureau d’Analyse et de Revision Comptable with 33-36 years of experience). Thus interviewees thought that a forensic accountant should be an experienced auditor or has a deep knowledge in laws; the type of certification needed could be CPA (certified public accountant), or have a license in accounting, a certification or a diploma from the LACPA (Lebanese Association of Certified Public Accounting). For instance the head of the audit department at professional Auditors indicated that: “Of course you need to have a license in accounting and maybe CPA, for example in our LACPA Lebanese association of certifies public accounting maybe you can get this diploma there”.

Other interviewees said that FA should obviously have a degree in accounting besides the needed experience to be able to detect suspicious acts, or have a BA degree with issues related to fraud and disclosure, CPA is a plus, or maybe have CFE. A lecturer and former partner at KMPG (with 15 to 17 years of experience) commented on this matter by saying: “On the educational level the best certification would be CFE if anyone wants to be involved in that topic he must go for such certification specialized in fraud examination”.

If anyone seeks to be involved in this domain he must go for such certification specialized in fraud examination. Others said that FA already has CPA or long experience. Furthermore, a forensic accountant, as an auditor have stated: “should have investigative skills and you should do the proper training in order to be competent”. Other interviewees also noted that a forensic accountant should have investigative skills and undergo proper training in order to be competent or be a certified accountant with certain skills and experience; the certifications needed are an accounting degree or a law degree since the forensic accountant may have to testify in courts. Or have a formal education in fraud; certifications could be CPA or CFE.

Another important statement coded from the interviewees is that “To become a forensic accountant, you need to be a certified accountant with certain skills and experience, the certifications needed are accounting degree or law degree since the forensic accountant could testify in courts” (Accounting Manager at Malia Group, with 8 years of experience).

In other words, FA accountants should be accountants in the first place, no specialized certification, but should be involved in training workshops or seminars that help enhance his knowledge and skills, or be an accountant or audit with knowledge about relevant laws. An accounting degree is enough but it would be better if he could take courses in investigative accounting if they are available in Lebanon. In addition they should have a degree in accounting with a profound experience and analytical skills; a certification would be a plus such as CPA or any other certification in accounting and auditing field.

Interviewees also reported that the certification that could be held by forensic accountant to practice FA is CPA since it is well known because it is available in many educational institutions. Almost all respondents conferred a high degree of importance for introducing FA in the educational sector in the financially corrupted countries.

Almost all respondents believed that FA should be taught in universities as a course or a graduate major or as case studies in an audit related course. Suggestions also included that FA could be a specialty in educational institutions that grant CPA or any other certification related to auditing or accounting.

Respondents and interviewees also suggested introducing FA through workshops and seminars with the assistance of experts and skillful forensic accountants. They also showed acceptance for online educational programs since DIFA is not available in most financially corrupted countries while it is available in the USA. Therefore online education could shorten the distance to people who cannot leave work and are interested to be specialized in forensic accounting.

The participants also recommended that the employees and managers, who are responsible for the financials of the company, should be educated and submitted to an intensive training to develop their skills to enable them to detect fraudulent activities within the company.

In sum, DIFA is designed to provide a broad range of knowledge and skills to carry out financial investigations. Employee and management fraud, theft, embezzlement, and other financial crimes are increasing, therefore accounting and auditing personnel must have training and skills to recognize those crimes. In addition, high-visibility corporate scandals, such as Enron and WorldCom, demonstrate the need to better prepare entry-level accounting graduates and practicing CPAs in the areas of fraud prevention, deterrence, detection, investigation, and remediation, Houck et al., (2006). Universities and educational institutions, as will be discussed later on, play a vital role in introducing DIFA and other FA related courses, certificates and diplomas. These formal certificates can deepen the students’ knowledge and sharpen their skills in Forensic Accounting through trainings under the supervision of an experienced forensic accountant, participating in various international conferences, reading relevant journals, books and other literature.

  1. Universities:

Universities play a constituent role in introducing FA since they can control the materials that could be taught to the students. Introducing it as a degree, Forensic Accounting could be one of the majors that exist in universities; the study proved that there are some educators who are knowledgeable in the field since most of them did their doctorate degree in the USA and UK. Therefore it could be an undergraduate or graduate degree in the universities.

Concerning the courses, Forensic Accounting could be given as a course in the university instead of being a major; it could be included as part of accounting, CCE, Law or any other major but customized for each specialty.

Regarding the case studies, in case FA is not considered as a major or given as a course, it could be highlighted through case studies where the students analyze many international fraudulent cases and the methods and the logics that were used by forensic accountants to detect and reveal the fraud.

  1. Educational Institutions:

Educational Institutions complete the role of the universities by covering the gap when some of the courses and degrees are not granted by the universities; they would be available in educational institutes or academies. The major course of actions that could be taken by these institutions is granting DIFA which must be an official certification given to the experts that want to practice Forensic Accounting in their countries. Yearly or monthly sessions must be announced through specialized means of marketing. Moreover, the certification could be incorporation with the government where certified accountants working in their departments and institutions could be sent to acquire it from a reputable educational institution. This certificate should be officially recognized and certified from the ministry of education, finance, and justice. The syndicate must hire qualified forensic accountants capable of studying, analyzing, suggesting policies, and training others.

Houck, M., Kranacher, M., Morris, B., Riley Jr, R., Robertson, J., & Wells, J. (2006). Forensic accounting as an investigative tool. CPA Journal. Aug2006, Vol. 76 Issue 8, p68-70. 3p,

Taha, N. (2014). Forensic Accounting in Countries of Business Opacity (1. Aufl. ed.). Saarbru�cken: LAP LAMBERT Academic Publishing.

Stott, M. (2005). “The Role of Investigative and Forensic Accountants and their Importance in Maintaining and Enforcing the Integrity of Canada’s Capital Markets”

Categories
World

Iraqi regime responds to mass protests with brutal crackdown

 

Iraqi regime responds to mass protests with brutal crackdown

By
Jean Shaoul

30 October 2019

The Iraqi police and security services have killed at least 250 people and injured thousands more in a brutal crackdown against the mass protests that first erupted earlier this month. In Karbala, 18 people were killed and 122 injured on Monday night. Three people died in Nasiriya as a result of injuries sustained earlier in the month.

The strikes and protests against Prime Minister Adel Abdul Mahdi’s government, which are uniting workers across religious affiliation despite the confusion deliberately stoked by Iraq’s divisive political system, are the largest in decades. Centered in the country’s majority Shia population, the ostensible base of the ruling parties that make up Mahdi’s fragile coalition, the protests have shaken the regime to its core.

They reflect the enormous anger over endemic poverty, rampant unemployment, the lack of the most basic services and the systemic corruption that has pervaded Iraq since the 2003 US-led invasion and occupation and the bitter sectarian conflicts instigated by Washington as part of its divide-and-rule strategy, which have devastated the country.

Anti-government protesters control the barriers while Iraqi security forces fire tear gas and close the bridge leading to the Green Zone, during a demonstration in Baghdad, Iraq, Tuesday, Oct. 29, 2019. (AP Photo/Hadi Mizban)

The demonstrations in Iraq are part of a global upsurge of social struggles that have seen mass demonstrations in Chile, Ecuador, Egypt, Ethiopia, Lebanon and other countries.

Abdul Mahdi has made no attempt to meet the protesters’ demands for jobs, better living conditions and an end to corruption. He has dismissed their grievances with contempt, saying there is no “magic solution.”

Yet Iraq is OPEC’s second-biggest oil producer. It has the fifth-largest crude oil reserves in the world and last year took in more than $100 billion in oil revenues. But far from benefiting the Iraqi people, the cash went straight into the hands of international oil companies and their bribed hirelings in Iraq’s political and business circles. According to Transparency International, Iraq is the world’s 12th most corrupt state.

Mahdi imposed a dusk-to-dawn curfew and closed down the internet and social media in a bid to stop the protests from spreading. In addition, he ordered the deployment of heavily armed soldiers, members of Iraq’s elite counterterrorism squads and riot police to stop demonstrators from marching on Tahrir Square in downtown Baghdad and on the Green Zone, the heavily fortified center of the Iraqi government and location of the US and other Western embassies, as well as the numerous military contractors that prop up the regime.

Snipers were positioned on rooftops to pick off protesters and masked death squads were deployed to go to the homes of known activists and assassinate them. Thousands are believed to have been injured as a result of the security forces’ use of live ammunition, rubber bullets, tear gas and water cannon.

According to an Iraqi government committee that investigated the crackdown during the first week of October, 149 civilians were killed as a result of the security forces’ use of excessive force and live fire, with more than 100 deaths caused by shots to the head or chest. While it held senior commanders responsible, it stopped short of blaming the prime minister and other top government officials, claiming there had been no order to shoot.

But the government’s brutality served only to fuel the popular anger. In the impoverished Shia neighborhoods of Sadr City, part of the Baghdad conurbation where more than a decade ago militias confronted American troops, crowds set fire to both government buildings and the offices of the Shia-based parties that support the government.

The initial wave of protests stopped for two weeks for the Shia religious festival of Arbaeen before resuming last Friday, when demonstrators in various parts of the country demanded the government’s resignation. “We’re here to bring down the whole government, to weed them all out,” protesters shouted. They added, “We don’t want a single one of them. Not [Parliamentary Speaker Mohammed] Halbousi, not [Prime Minister Adel] Abdul Mahdi. We want to bring down the regime.”

The protests spread to the Shia-populated southern provinces, with some of the young people voicing their opposition to Grand Ayatollah Ali al-Sistani, Iraq’s leading Shia cleric, who urged protesters and security forces to show “restraint” and warned that there would be “chaos” if violence resumed.

As well as marching on Baghdad’s Green Zone, demonstrators targeted the headquarters of various militias across southern Iraq, including that of the Badr militia in Amarra and the Asa’ib Ahl al-Haq in Diwaniyah. The headquarters of the Sayyidd al-Shuhada in Nasiriya was also set on fire—a significant development given how strong the group is in that area. Demonstrators also attacked the political parties and the government buildings they control, burning the Dawa Party headquarters in Diwaniya and the al-Hikma Party headquarters in Samawa, as well as provincial governorate buildings in the southern provinces of Dhi Qar, Qadisiya and Wasit.

Once again, the government imposed a curfew, closed the internet, turned off the electricity in Tahrir Square, warned school and university students not to join the protests and gave the green light to the security forces to attack the demonstrators. According to Iraq’s High Commission for Human Rights, 63 demonstrators were killed on Friday and Saturday and more than 2,500 demonstrators and security forces were injured, largely by parastatal forces. The photos and videos of some of those killed and injured are horrific.

But the protests have continued this week. Students—some 40 percent of Iraqis were born after the 2003 US-led invasion of the country—defied the government and joined the thousands demonstrating against the government and calling for its resignation, despite the security forces’ use of tear gas against them. In Baghdad, soldiers were seen beating up high school students.

Activists in Baghdad occupied Tahrir Square throughout Monday night in defiance of the curfew. Reuters news agency reported one protester as saying, “No, we will stay. They have now declared a curfew and severe punishments for anyone not going to work, this is how they fight us. We will stay here until the last day, even if there are a thousand martyrs.”

On Monday, the first cracks in Mahdi’s fragile coalition appeared, as Muqtada al-Sadr, the cleric who backs parliament’s largest bloc and was instrumental in bringing Mahdi’s coalition to power, called for early elections.

These protests reflect Iraqis’ anger over the truly terrible conditions they have been forced to endure. Despite the $1 trillion in oil revenue generated since 2005, the level of poverty is appalling. According to World Bank figures, around seven million of Iraq’s 38 million people live below the poverty line, and youth unemployment is 25 percent, undoubtedly a huge underestimate.

According to the World Food Program, 53 percent of Iraqis are vulnerable to food insecurity, while a massive 66 percent of the two million internally displaced as a result of the civil war against ISIS are susceptible to food insecurity. Malnutrition is rife.

Life expectancy has fallen to 58.7 years for men and 62.9 years for women as a result of the destruction of Iraq’s health care system following years of economic sanctions in the 1990s and the occupation and civil war that followed the US-led invasion.

Most households no longer have access to a regular water supply, but face constant interruptions and have to resort to tanker trucks or open wells.

Housing conditions are truly shocking. The US war and its aftermath destroyed hundreds of thousands of homes and displaced millions of people. Many are living in breeze block shacks with corrugated iron roofs. Fifty one percent of Iraqi households are crowded, some with as many as 10 people living in one home.

The protests are part of a broader upsurge in the class struggle that is taking place all over the world and testifies to the primacy of class over ethnicity, nationality and religion. The Middle East and North Africa have witnessed strikes and demonstrations in Algeria, Sudan, Jordan and Egypt, and most recently, Lebanon.

Thirteen days of mass protests against the government’s corruption and economic measures that have impoverished the working class have brought Lebanon to a standstill. Many roads are blocked, and businesses, schools and universities are closed. The banks have remained shut throughout, fearing a currency devaluation and mass withdrawals. Riad Salameh, the director of the Central Bank of Lebanon, speaking on CNN television, said that without a political solution, the Lebanese economy was just days away from collapsing. Hours later, Prime Minister Saad Hariri handed in his resignation to President Michel Aoun.

These struggles expose once again the political bankruptcy of the national bourgeoisie, not only in Iraq but throughout the Arab world, which has proven to be organically incapable of resolving any of the democratic and social demands of the Arab masses or establishing any genuine independence from imperialism.

These demands can be won only by unleashing the enormous power of the international working class. This can be developed through the establishment of popular assemblies and workers’ committees in all the oil installations and workplaces throughout the country, aimed at mobilizing the independent strength of the working class in a struggle against the world capitalist system and for socialism.