Forensic Accounting as a Tool for Financial Risk Management in Banking Services
DOI:
https://doi.org/10.54536/jebs.v1i2.6064Keywords:
Banking Sector of Bangladesh, Forensic Accounting, Financial Risk Management, Financial Fraud Detection, Internal AuditAbstract
The purpose of that article was to provide insights into the strategic use of forensic accounting in managing financial risk in a bank setting (particularly on how forensic accounting can be used by banks as an ex ante approach for minimizing fraud and malpractices) to help fill the gap in literatures involving its real-life applications especially in developing economies. The depth of banks’ exposure to financial crimes, fraud and non-performing loans notwithstanding, little was known on the firm effort theory role played by forensic accounting in reducing these risks. For the quantitative aspect of the study, a set of questionnaire was used which were filled by 500 banking professionals and out of them, 410 responses with valid data were analyzed using descriptive statistics and inferential statistics. Findings also indicated that forensic accounting was very useful in improving financial fraud detection (68% of respondents agreed to this), it boosted AML and KYC compliance was admitting by 61%. But, 37% stated it was being officially integrated into institutional risk management frameworks, suggesting some underuse. The main challenges identified were: shortage of trained forensic accountants (74%) and inadequate technical infrastructure (63%). It is the novelty of this research study to connect forensic accounting with financial risk reduction empirically in the context of Bangladesh banking. Policy suggestions include formalizing of forensic accounting in regulation, continued training programs and forensic audit that should be mandatory for high risk transactions as a way of ensuring financial resilience and transparency in the banking sector.
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