What is Forensic Accounting?
Simply put, forensic accounting is accounting that is suitable for legal review,
offering the highest level of assurance, and including the now generally
accepted connotation of having been arrived at in a scientific fashion.
That is, forensic accounting is sufficiently thorough and complete so that
an accountant, in his/her considered independent professional judgment,
can deliver a finding as to accounts, inventories,
or the presentation thereof that is of such quality that it would be sustainable
in some adversarial legal proceeding, or within some judicial or
Findings are based upon the scientific detection and interpretation of the evidences of phenomena introduced into the books and records of an accounting system (expansively defined) and the effects of such phenomena upon the accounts, inventories, or the presentation thereof. (Alternatively, if there is no impact on an accounting system, there is no accounting evidence, nor is there any effect upon the accounts, inventories, or the presentation thereof; and such situations are not within the realm of forensic accounting.)
The primary orientation of forensic accounting is explanatory analysis (cause & effect) of phenomena - including the discovery of deception (if any), and its effects - introduced into an accounting system domain. The primary methodology employed by forensic accountants is objective verification.
The utilization of specialized investigative skills in carrying out an inquiry conducted in such a manner that the outcome will have application to a court of law. A Forensic Investigation may be grounded in accounting, medicine, engineering or some other discipline.
An examination of evidence regarding an assertion to determine its correspondence to established criteria carried out in a manner suitable to the court. An example would be a Forensic Audit of sales records to determine the quantum of rent owing under a lease agreement, which is the subject of litigation.
An audit performed by an employee who examines operational evidence to determine whether prescribed operating procedures have been followed.
An audit performed by an auditor engaged in public practice leading to the expression of a professional opinion which lends credibility to the assertion under examination.
What does a Forensic Accountant do?
A Forensic Accountant is often retained to analyze, interpret, summarize and present complex financial and business related issues in a manner which is both understandable and properly supported.
Forensic Accountants can be engaged in public practice or employed by insurance companies, banks, police forces, government agencies and other organizations.
A Forensic Accountant is often involved in the following:
- Investigating and analyzing financial evidence
- Developing computerized applications to assist in the analysis and presentation of financial evidence
- Communicating their findings in the form of reports, exhibits and collections of documents
- Assisting in legal proceedings, including testifying in court as an expert witness and preparing visual aids to support trial evidence
In order to properly perform these services a Forensic Accountant must be familiar with legal concepts and procedures. In addition, a Forensic Accountant must be able to identify substance over form when dealing with an issue.
How can a Forensic Accountant be of assistance?
A Forensic Accountant can be of assistance in various ways, including:
- Review of the factual situation and provision of suggestions regarding possible courses of action.
- Assistance with the protection and recovery of assets.
- Co-ordination of other experts, including:
o Private investigators
o Forensic document examiners
o Consulting engineers
- Assistance with the recovery of assets by way of civil action or criminal prosecution
- Assistance in obtaining documentation necessary to support or refute a claim
- Review of the relevant documentation to form an initial assessment of the case and identify areas of loss
- Assistance with Examination for Discovery including the formulation of questions to be asked regarding the financial evidence
- Attendance at the Examination for Discovery to review the testimony, assist with understanding the financial issues and to formulate additional questions to be asked
- Review of the opposing expert's damages report and reporting on both the strengths and weaknesses of the positions taken
- Assistance with settlement discussions and negotiations.
- Attendance at trial to hear the testimony of the opposing expert and to provide assistance with cross-examination
Call US-IL Investigations Inc. for your free consultation. We have a Forensics accounting team available to answer any questions you may have. The consultations are discrete and confidential.