The Role of Forensic Accounting in Preventing Corporate Fraud

Abstract

This study investigates the role of forensic accounting in preventing corporate fraud by employing a mixed-methods experimental approach that integrates both quantitative and qualitative analyses.Logistic regression analysis revealed a strong and statistically significant negative association between forensic accounting intensity and fraud incidence. Firms that adopted forensic auditing practices—such as whistleblowing systems, digital forensics, and data analytics—reported up to 40% fewer fraud cases compared to those without such mechanisms. Industry-level analysis showed that banking and insurance sectors exhibited higher levels of adoption and effectiveness, while manufacturing firms lagged behind. Governance quality was found to moderate this relationship, with organizations demonstrating stronger boards and audit committees achieving greater fraud reduction.The qualitative component, based on interviews with forensic practitioners and auditors, provided further insights into barriers, technological applications, and practitioner perspectives. Thematic analysis highlighted that artificial intelligence, big data, and predictive analytics have shifted forensic accounting from a reactive investigative process to a proactive fraud-prevention framework. Cross-country comparisons revealed that effectiveness is highest in jurisdictions with strong anti-fraud regulations. The integration of qualitative findings with quantitative results confirmed that forensic accounting significantly enhances fraud awareness, detection accuracy, and stakeholder confidence.Overall, the study concludes that forensic accounting has evolved into a preventive governance mechanism essential for safeguarding corporate integrity. Its effectiveness is maximized when reinforced by robust governance structures, advanced technologies, and supportive regulatory environments. These findings offer practical implications for policymakers, regulators, and organizations seeking to strengthen anti-fraud frameworks and contribute to the broader discourse on financial accountability and corporate sustainability.