IMPACT OF FORENSIC ACCOUNTING KNOWLEDGE ON DETECTING FRAUDS IN LISTED COMPANIES IN SRI LANKA: EVIDENCE FROM PRACTITIONERS IN SRI LANKA

Abstract

This study explores the role of forensic accounting knowledge in fraud detection in Sri Lanka, an emerging industry with limited research and unresolved scandals in recent years. It could highlight how the findings differ from global trends or how they address specific challenges faced in the Sri Lankan context, while investigating the most significant skills and knowledge needed for forensic accountants to address fraud-related issues. By reviewing global and local perspectives, the study develops a conceptual framework that incorporates accounting skills, knowledge of procedures, forensic accounting expertise, and a legal background. A sample of 203 practitioners working in listed companies in Sri Lanka was surveyed using a structured questionnaire. The analysis employed descriptive statistics, factor analysis, and regression analysis to identify the most critical factors influencing fraud detection. Findings reveal that knowledge of forensic accounting and legal background are the most significant predictors of fraud detection, while accounting skills and procedural knowledge are less impactful. Moreover, practitioners with forensic accounting experience emphasised the importance of legal and forensic accounting knowledge, while those without such experience did not find any of the variables significant in fraud detection or prevention. This study underscores the need for specialised forensic accounting education and professional development in Sri Lanka to enhance fraud detection capabilities in the corporate sector.