Forensic Accounting-All you wanted to know!!!

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Forensic Accounting-All you wanted to know!!!

Forensic accounting is the combination or integration of auditing, accounting and investigative skills. “Forensic accounting” provides analysis of accounts suitable to the court which usually forms the basis for debate, discussion and ultimately dispute resolution. Forensic accounting encompasses both investigative accounting and litigation support.  Forensic accountants utilize auditing, accounting and investigative skills during an investigation procedure. Also it is equally critical for them to respond immediately and to communicate financial information concisely and clearly in a courtroom setting. Forensic accountants are trained well to look beyond numbers and deal with the business reality of the situation.

Litigation support provides assistance in a matter involving pending or existing litigation by means of accounting. It primarily deals with issues relating to the quantification of economic damages. Calculation of economic loss resulting from a breach of contract would be a typical litigation support assignment. Whereas investigative accounting deals with investigations of criminal matter. Investigation of employee theft would be a typical investigative accounting assignment. Some other examples of investigative accounting would be insurance fraud, securities fraud, kickbacks and proceeds of crime investigations.

Forensic Accountant: A forensic accountant is often recruited to interpret, analyze, summarize and present all the complex business and finance related issues in a manner which is both properly supported and understandable.  Forensic accountants can be engaged by insurance companies or public practice, police forces, banks, government agencies and other organisations.  Some of the responsibilities a forensic accountant often is involved in handling are as follows;

  • Analyzing and investigating financial evidence.
  • To develop computerized applications to help in the presentation and analysis of financial evidences.
  • To communicate their findings in the form of exhibits, reports and collections of documents.
  • To assist in legal proceedings, including preparing visual aids and testifying in court as an expert witness to support trial evidence.

To perform these services properly a forensic accountant has to have good knowledge and be familiar with legal concepts and procedures. Forensic accountant in addition to the above, must be able to identify substance over form when dealing with an issue.

Some of the ways in which a forensic accountant would be of assistance are as follows;

Investigative accounting:

  • Assists with protection and recovery of assets.
  • Review factual situations and provisions of suggestions regarding possible course of action.
  • Coordination with other experts like forensic document examiners, consulting engineers and private investigators.

Litigation Support

  • Assists in obtaining documentation necessary to support or refute a claim.
  • Relevant documentation review to form an initial assessment of the case and identify areas of loss.
  • Assists in settlement discussions and negotiations and a host of other areas.

 

 

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