Forensic Accounting And Corporate Governance Maturity: Case Of Public Listed Companies In Oman
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Date
2019-11
Authors
Ali Rehman
Journal Title
Journal ISSN
Volume Title
Publisher
Universiti Sains Malaysia
Abstract
Corporate governance maturity and forensic accounting can be considered as an essential component for the current business environment. Traditional audit activities have overlooked the role towards fraud detection which created expectation gaps; and due to this reason, inclusion of forensic accounting can be considered as an integral part in governance management system. In recent business environment, corporate governance system is becoming just a mere compliance check box tool; however, implementation of corporate governance maturity can overcome this traditional practice, as it defines how mature is the organization towards achievement of its goals, objectives and satisfied stakeholders. Thus present study developed a conceptual research framework for potential relationship between forensic accounting and corporate governance maturity. Research framework was developed in light of comprehensive literature review, observational study and expert opinions from academicians and professionals. Three management theories were applied namely agency theory for forensic accounting representing it as an agent, path dependence and convergence theory for corporate governance maturity as it defines structure and necessitated the required changes and fraud triangle theory for fraud risk assessment which is mediator in this study. Forensic accounting is independent variable and corporate governance maturity is dependent variable in this study. Forensic accounting is measured via its two dimensions namely preventive role and detective role, whereas corporate governance maturity is measured via its four major constituents namely board of director, audit and risk committee, remuneration committee and senior management. A quantitative approach through a survey question was used to collect data from all 115 public listed companies in Oman. Findings and results suggests that preventive and detective role of forensic accounting has positive significant direct relationship with fraud risk assessment and corporate governance maturity. Fraud risk assessment has positive significant direct relationship with corporate governance maturity and fraud risk assessment mediates between preventive role of forensic accounting and corporate governance maturity. Furthermore, corporate governance maturity does not significantly vary amongst different sectors. Contribution of this study lies in the fact that forensic accounting is considered as in-house activity and its impact on corporate governance maturity is measured for first time. Present study offered probable solutions and recommendations of including forensic accounting as part of governance management system and utilization of maturity framework to improve organizations' performance. Conceptual research framework proposed in this study can be utilized in any organization. This study can also be beneficial for regulators, governance management system of organization, professional bodies and auditors
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Keywords
Management