Impact of Mature Corporate Governance on Detective Role of Forensic Accounting: Case of Public Listed Companies in Oman

Abstract

Organizational fraud is transpiring despite the availability of controls, regulatory directives, and governance guidelines. These controls, directives, and guidelines are only utilized as a compliance checkbox instead of being utilized to identify the control deficiencies and also to identify the maturity of corporate governance. Forensic accounting detective role is an activity which can be available within an organization that can be impacted and reformed by the mature corporate governance which can eventually assist organizations in the reduction of fraud and its related activities. Three major constituents of mature corporate governance are the board of directors, audit and risk committee, and senior management or executive management. All three significant constituents are vital to the achievement of organizational objectives and providing satisfaction to shareholders. With the utilization of agency theory, this paper intends to identify the relationship between mature corporate governance and detective role of forensic accounting within public listed companies situated in Sultanate of Oman. The descriptive cross-sectional survey has been conducted with the utilization of quantitative method, and data has been analyzed by utilization of PLS-SEM. Result suggests that mature corporate governance has a significant direct impact on forensic accounting’s detective role. In order to mitigate or eliminate fraud within organizations, it is highly recommended that organizations should have in-house forensic accounting detective role which can be strengthened with the mature corporate governance.

Can forensic accounting impact sustainable corporate governance?

“…Sustainable corporate governance (SCG) and fraud control activities are the two main pillars necessary for organizational successful business growth and business sustainability. Because of the organizational frauds, the recent past witnessed an intensifying concern for the sustainability in corporate governance (Lombardi et al , 2019; Crifo et al , 2019) and forensic accounting (FA) is the best-suited activity which can assist in eliminating and mitigating frauds (Rehman and Hashim, 2019).…”

“…Codes of corporate governance which are established by CMA in Oman are directed toward the basic requirements of corporate governance but do not explain or define the necessary elements required for the achievement of SCG. In the current codes, there is nothing mentioned toward business sustainability, business continuity and elimination or controlling of fraud (Rehman and Hashim, 2019). It is worth mentioning that the external auditors are obliged to provide their opinion on the compliance with codes of corporate governance, but provided opinions are more toward safeguarding external auditors repute rather than providing satisfaction to shareholders.…”

Impact of Fraud Risk Assessment on Good Corporate Governance: Case of Public Listed Companies in Oman

“…Several kinds of literature are available, which emphasizes on the implementation of corporate governance; moreover, compliance with the codes of corporate governance is also made mandatory by many regulators, including Capital Market Authority (CMA) in Oman (CMA, 2016). However, in the current business environment, corporate governance is just becoming a compliance checkbox (Abdel-Meguid, Samaha & Dahawy, 2014; Rehman & Hashim, 2019).…”

“…Organizations are adopting corporate governance for the sake of disclosure purposes, and the governance management system responsible for corporate governance appears to be of least concern. For this study, governance management is considered to be Audit and Risk Committee (ARC) and Senior Management (SM) of the organization as ARC is directly responsible towards the risk of fraud and SM is directly responsible towards the implementation of policies and detection of fraud (Rehman & Hashim, 2019; Mohd-Sanusi, Rameli, Omar, & Ozawa, 2015). Corporate governance is relatively new in Oman, as new codes have been introduced in the year 2016 (CMA, 2016).…”

Impact of Fraud Preventive Measures on Good Corporate Governance

“…Monetary value of the reported fraud cases is increasing yearly in spite of the availability of corporate governance codes, regulators, and conventional auditors (Vinita, Joe & Lee, 2008;Bhasin, 2013;ACFE, 2018;Rehman & Hashim, 2019). These rigorous and continuous frauds not only created expectation gaps (Xiaolu, Jieji, & Jian, 2016) but also necessitated improvement in the field of fraud detection and corporate governance.…”