Forensic Accounting and Information Systems Auditing: A Coordinated Approach to Fraud Investigation in Banks

Posted: Aug 25, 2021

• Hamza Shahbaz Ahmad
  University of Missouri Kansas City
• Farhan Malik
  Institute of Business Administration (IBA)
• Ayesha Khan
  Lahore University of Management Sciences (LUMS)

Abstract

This research examines the coordinated application of forensic accounting techniques and Information Systems auditing in bank fraud investigations, with particular focus on uncovering concealed financial misstatements and sophisticated fraud schemes. Through comprehensive analysis of 132 documented bank fraud cases across North America, Europe, and Asia from 2018 to 2021, this study develops an integrated investigation framework that leverages the complementary strengths of both disciplines. The research introduces a novel Coordinated Fraud Investigation Index (CFII) that quantifies investigation effectiveness across financial analysis, digital evidence collection, and investigative integration dimensions. Empirical results demonstrate that coordinated investigations achieve 67% higher fraud detection rates and 54% faster case resolution compared to isolated disciplinary approaches. The study reveals that concealed financial misstatements account for 42% of sophisticated bank frauds, with digital evidence from IS audits proving critical in 78% of successful investigations. Findings indicate that successful coordination requires structured collaboration protocols, shared investigative methodologies, and integrated reporting frameworks. This research contributes both theoretical advancements in fraud investigation methodology and practical implementation guidelines