The overall benefits of Forensic Accounting are abundant. But what is forensic accounting exactly? It has been defined as:
The specialty practice area of accounting that describes engagements that result from actual or anticipated disputes or litigation. “Forensic” means “suitable for use in a court of law”, and it is to that standard and potential outcome that forensic accountants generally have to work. Forensic accountants, also referred to as forensic auditors or investigative auditors, often have to give expert evidence at the eventual trial. (source: wikipedia)
Fraud by both companies and employees is the most frequent circumstance requiring such expertise. Forensic accounting is becoming a foundation in protecting corporate assets and business interests in an ever-evolving environment. Developing technologies provide expanding opportunities for perpetrating and concealing fraud. Forensic accounting is now recognized as an integral part in litigation and investigating.
What is A Forensic Accountant?
A forensic accountant is someone who is hired by clients to perform a variety of tasks that involve analyzing, interpreting, summarizing, and presenting a complex financial and business related issue in a method which is both comprehensible and properly supported. This job often requires immense investigation and analyzing of financial evidence that pertains to a given case.
Forensic Accountant Responsibilities
Common responsibilities of a forensic accountant include:
- Communicating their findings in the form of reports, exhibits, and collections of documents that better help their client. The criminal activity exposed from their findings may include fraud, embezzlement, money laundering, and concealment of debt, the concealment of assets or other fraudulent activities, or even financial crimes.
- Forensic accountants may be called upon to testify in court as expert witnesses in criminal and civil litigation and appear in pretrial depositions. For this job one must be very educated with legal concepts and procedures as well as have the skill to identify substance over form when dealing with a dispute.
- Forensic accountant employment opportunities and career development may be improved with a master’s degree in accounting or in any of the business sciences. Entering the field of forensic accounting as a Certified Public Accountant is an additional advantage. As an adjunct to forensic accounting, career-minded accountants may also become a Certified Fraud Examiner. The CFE credential requires a course of study and an examination.
The AICPA recognizes the demand for forensic accountants who have the appropriate professional knowledge base and have developed a Certified Financial Forensics (CFF) designation and educational program. The certification is recognized worldwide, and employers look for it when forensic accounting is needed in this area. This certification is predicated on the current Certified Public Accountant (CPA) designation as the starting point for the new CFF designation and is designed to incorporate the broad scope of forensic accounting services.
From recent studies, the American Institute of Certified Public Accountants (AICPA) claims forensic accounting is in high demand. By the end of September 2009, the AICPA had awarded more than 3,500 Certified in Financial Forensics (CFF) certifications, which was more than four times the number of certifications projected. The Association of Certified Fraud Examiners (ACFE) estimates that occupational fraud losses cost organizations $994 billion annually.
The Value Of A Certified Forensic Accountant Is Often Underestimated
Common questions regarding this career and the abilities forensic accountants possess arise, but is frequently underestimated. One word that helps better interpret collective questions is ‘analytical.’ One must do extensive reviewing of the factual situation and provision of suggestions regarding possible courses of action. Additional tasks include assistance with the protection and recovery of assets, and coordination with other experts including private investigators and forensic document examiners. Forensic accountants also assist with the recovery of assets by way of civil action or criminal prosecution.
Litigation Support
Litigation support is a division of forensic accounting that involves multiple procedures including obtaining and reviewing documents relevant to a claim as well as the opposing experts’ report. Further actions such as taking part in discussing a settlement/negotiations, and attending at trial to hear the testimony of the opposing expert and to provide assistance with cross-examination are also necessary steps.
Forensic Accountants become involved in a wide range of investigations, covering many different industries. The practical and in-depth analysis that a Certified Forensic Accountant will bring to a case helps expose trends that bring to light the relevant issues.
Some major areas Forensic Accounting will often be involved in include:
- Business/employee fraud investigations
- Business economic losses
- Business interruptions/other type of insurance claims
- Criminal investigations
- Matrimonial disputes
- Mediation and arbitration
- Personal injury claims/motor vehicle accidents
- Professional negligence
- Shareholders’ and partnership disputes
Although the general idea of a Forensic Accountant is broad, each assignment is very unique. Accordingly, the procedures regarding the case will be specific to it. With every assignment’s individuality, many Forensic Accountants follow basic steps to help with each case.
What To Expect When You Get Started With A Forensic Accountant
The initial steps taken when first given a Forensic Accounting assignment are very detail orientated and time consuming. These specific steps include:
- Meeting with the client to obtain and understand the important facts
- Players and issues at hand
- Performing a conflict check once relevant parties are established
- Performing an initial investigation
- Developing an action plan
Once these steps are taken care of, the forensic accounting professionals then obtain the relevant evidence, perform the analysis, and finally prepare the report. People who retain a Forensic Accountant are often but not restricted to lawyers, police forces, insurance companies, government regulatory bodies and agencies, banks, courts, and business communities. You should always put into consideration before retaining a Forensic Accountant, their experience and qualifications.
For more articles about Forensic Accounting click below:
- Forensic Accounting: One Of The Fastest Growing Careers
- How To Save Money With Your Forensic Accountant
- Forensic Auditors Building Bigger Teams to Handle Challenges
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Contact certified forensic accounting firm Veriti Consulting LLC at (877) 520-1280 email us to learn more about our forensic CPA services.