Question

In refrence to accounting fraud

What do you see as the potential challenges to the indirect method of tracing illicit transactions? Do you think this method is just as reliable as the direct method?

Answer 1

Answer)

The inderect method mostly uses circumstantial evidence to analyse the relationship between suspects receipts and disposition of funds.But the major challenges in indirect method how could an evidence can be considered as there will be risk on part of analysers judgement.Along with it,the cost of obtaining circumstantial evidence may exceed benefit.

With available of proper circumstantial evidence an indirect evidence can be considered as more reliable than direct materials and mostly conparision of bank deposits,financials over period by period are examples of circumstantial evidence used in indirect method.But those kind of evidence cannot be obtained at every place.Hence considering the cost to benefit it is better to use both direct and indirect methods