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Is the service to provide evidence Is it expert evidence ? Is service in relation to an Investigat ion? Expert Witness Service Lay Witness Service Investigat ion Service Consulting Expert Service Report/ opinion/ Other YES YES YES NO NO NO THEORETICAL FRAMEWORK

Theoretical Framework

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Page 1: Theoretical Framework

Is the service to provide

evidence?

Is it expert evidence?

Is service in relation to an Investigation?

Expert Witness Service

Lay Witness Service

Investigation Service

Consulting Expert Service

Report/opinion/Other evidence

YES

YES YESNO NO

NO

Figure 1.1 Decision Tree to determine the type of Forensic

THEORETICAL FRAMEWORK

Page 2: Theoretical Framework

Figure 1.1 illustrates the decision tree which determines the type of Forensic Accounting

Service that the forensic accountant will be providing. Each type requires specific obligations

that are necessary to its purpose. That is why a Forensic Accountant needs to determine what

type of service he must perform. The researchers would like to prove the validity of this decision

tree in helping the forensic accountant determine what kind of forensic accounting service he

will be providing.

First, the forensic accountant should determine if the services they are about to give are

of providing evidence or not. If the service is to provide expert evidence, then the forensic

accountant should determine if the evidence to be provided is expert evidence or the other way

around. The service will be classified as an Expert Witness Service if the evidence to be

provided is expert evidence. On the other hand, if the evidence is not expert evidence, the

service will be classified as Lay Witness Service.

If the service is not to be done to provide expert evidence, the forensic accountant

should determine if whether or not the service to be performed is in relation to an investigation.

The service will be classified as Consulting Expert Service if the service is not related to an

investigation. On the contrary, if the service is in relation to an investigation, it will be classified

as an Investigation Service.

Expert Witness Service involves presenting expert evidences in court. The opinions

expressed by the expert witness are usually based on the specialized knowledge acquired by

the witness’s training, study and experience. Lay Witness Service involves presenting

evidences other than expert evidences on court. The evidence provided may be oral or written

in form, or both. Consulting Expert Service may involve activities such as an adviser, mediator,

or arbitrator. The consulting expert may provide assistance based from the specialized

Page 3: Theoretical Framework

Motive

Opportunity

Capability

Rationalization

Figure 1.2 The Fraud Diamond

knowledge gained from study, training, or experience in accounting, but is not to provide

evidence. Investigating Service involves assisting in the investigation concerning unethical or

illegal conducts in which the expert expects that the matter will be brought to the court.

Figure 1.2 shows the Fraud Diamond which illustrates the four elements of fraud: motive,

rationalization, opportunity, and capability. These elements are considered by the forensic

accountant in doing his work during the investigation process and litigation of the case.

Forensic accounting makes use of accounting, auditing, and investigative skills to

support in legal matters. Forensic accountants go beyond detection. They gather information,

examine and interpret it, and present it as evidence in the court. During their investigation,

Page 4: Theoretical Framework

forensic accountants use different procedures and techniques to aid them in collecting

evidence. The four elements presented in the fraud diamond can be used as a basis to collect

these evidences by using them as a guide on how the criminal’s thought process and how the

crime was committed.

Opportunity can be seen as the starting point of fraud and motive and rationalization can

draw the person toward it. In motive, the person thinks that he has a need to commit fraud while

rationalization means the person has convinced himself that the fraudulent act is worth the risk.

But person committing the act must have the capabilities of doing it. It means that he has the

ability to pull it off. For example, the person has an authoritative position in the company and

capability to understand and to take advantage of the organization’s internal control that will

enable him to commit the act. Considering these elements will be helpful for the forensic

accountant in tracing the money trail.