Role of Forensic Accounting in Detecting Corporate Frauds: A Behavioural Analysis Perspective on Narratives of Deviance in Emerging India

Abstract

Corporate financial fraud is one of the major threats to a faster-growing economy like India. This study examines the capability of forensic accounting to detect corporate fraud and also studies the tools that can help in preventing it. For qualitative analysis, five case studies for major Indian financial fraud cases: Satyam Computers Pvt. Ltd., Punjab National Bank – Nirav Modi, IL&FS, DHFL, and Yes Bank are integrated with key behavioural fraud theories of Fraud Triangle, Fraud Diamond, and Fraud Pentagon. These theories are used to analyse the driving factors for fraud, such as pressure, opportunity, rationalisation, capability, arrogance, and competence. The major reason for large-scale manipulation and societal deviance, as revealed by the findings, includes a recurring pattern of weak internal controls, governance failures, and concentration of managerial power. Due to the compliance-oriented nature of traditional auditing mechanism, it fails to detect the early warning signals. Forensic accounting has various techniques like data analytics, transaction mapping, and behavioural risk profiling showcases strong potential for detecting early warning signals. Based on this analysis, an Integrated Behavioral Forensic Risk Framework (IBFRF) is created that links behavioral patterns with forensic accounting tools and a continuous monitoring system. The framework focuses on proactive fraud detection rather than a reactive investigative approach. This study contributes to the existing forensic accounting literature by providing a structured, application-based model with practical implications for auditors, regulators, and corporate governance systems in emerging economies.