Department of Management Sciences
Faculty of Management
Uva Wellassa University
Passara Road, Badulla, SRI LANKA.
Department of Commerce and Financial Management
Faculty of Commerce and Management Studies
University of Kelaniya, SRI LANKA.
Abstract
In the aftermath of a storm of financial fraud, the repeated failures of conventional financial fraud investigations prompt a shift in knowledge, skills, and values in accounting. This study aims to develop a contemporary forensic skills, knowledge, and values model to implement forensic accounting for fraud mitigation. The research is deeply entrenched in institutional theory and institutional forces that necessitate modern skill sets. Furthermore, the study is supported by contingency theory, which indicates that the forensic accountant’s skill set is context dependent. Thus, the forensic accountant’s context-relevant competencies must align with institutional forces. Accordingly, the study considered 13 forensic knowledge, skill, and value components among forensic accounting practitioners’ perceptions of what components are essential for becoming a forensic accountant, including accountants and auditors, academics, forensic accountants, fraud investigators, and users of forensic services. Exploratory factor analysis is used to determine the structure of the variables and to understand the interconnection between them. As a result, the component analysis loaded three latent variables labelled as social and behavioural skills, cognitive skills, and technical skills, which explained 67.314% of the variation. All three variables demonstrated good reliability, with Cronbach’s alpha values over 0.82. The results derived from the confirmatory factor analysis supplement the above exploratory study, demonstrating a good and consistent fit to a range of forensic accounting knowledge, skill, and value components. Given that the existing literature is limited in scope, diverse, and fragmented, this study aims to provide a long-term, sustainable solution to combat financial fraud by promoting theoretical, practical, and policy reforms compatible with the new accounting paradigm. The findings contribute theoretically by extending both institutional and contingency theories through a skill-driven perspective. Practically, the study offers a sustainable skills framework to enhance forensic accountants’ ability to detect complex fraud, strengthen board accountability, and improve regulatory compliance. The framework also provides valuable insights for professional bodies, audit firms, and policymakers in designing targeted training programs to prevent future fraud.