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What is A Forensic Accountant?

#accounting for litigation#audits#forensic accounting

Written by prositesfinancialJul 15 • 3 minute read

The term “forensic” may bring to mind crime drama on TV, but forensic accountants are more than just Excel jockeys who happen to deal with criminal or civil cases. These accountants possess many other skill sets that make them especially valuable. Forensic accountants themselves may conduct investigations. Because of this, they must be well versed in a wide variety of computer programs and systems, while also knowing how to communicate effectively with a wide variety of people.

These accountants may also specialize in certain industries susceptible to fraud such as banking or insurance. As such, they will also need to be familiar with the inner workings of their specific industry, along with its many rules, regulations, protocols, and practices. Forensic accountants work with companies and organizations who have very sensitive reputations, and so they must exercise the utmost discretion when working on their cases. It is vital that they remain independent and impartial so that they can do their jobs with integrity and accuracy.

Audit & Analysis

Many accountants conduct routine audits of corporate financials. However, when a forensic accountant conducts an audit, they are looking specifically for signs of fraud. Because people who commit crimes will often go to great lengths to cover their tracks and hide what they have done, forensic accountants must look beyond the numbers. They may consult court filings and internal databases to gather more precise information. They may conduct interviews to get each side of a story. They may also anticipate the future actions of the subject being investigated and take appropriate actions accordingly.

Key Steps in Forensic Accounting

The Discovery Process-The initial step is to meet with a government agent, attorney, or another client to gather the details of the supposed fraudulent activity. With the briefing facts of the case gathered, they enter the initial research phase and start doing their work. They investigate records such as bank statements, credit statements, databases, ledgers, journals, memos, and emails. They gather all the available information to paint the clearest possible picture of the entire financial situation surrounding the parties involved.

The Interview Process-With all the available records information collected, the forensic accountant will then enter into the next phase, which is conducting interviews. They may interview the accused and any other named parties to gather each circumstance and any irregularities uncovered during the earlier discovery process. This step is no easy task! The forensic accountant must possess excellent interview and investigative skills to detect even the slightest hint or subtle clue that could lead them to the guilty party or evidence of the crime. Some of the simple things the forensic accountant will pay attention to during the discovery and interview process are purchases such as luxury or sports cars, expensive vacations, or launching new business ventures with no outside or distinct capital.

The Legal Process-During the investigative process, if the case is a criminal one, the forensic accountant may work with law enforcement and the district attorney’s office. As a part of this process, they may need to obtain search warrants and legal subpoenas to collect physical evidence or gain access to electronic or other information relevant to the case. They may also use their skills to compel people to provide additional details about the case or the individuals and organizations involved. If the case is a civil one, the client will typically be the one with the authority to conduct accounting related investigations that involve their company, accounts, or organization.

The Analysis Process-When all of the information has been gathered and the interviews conducted, the forensic accountant will generally be ready to begin the analysis phase of the investigation. During this stage, they may trace the financial assets involved to determine where they ended up and calculate losses to see how much financial damage has been done. With the analysis complete, they may create a report summarizing their findings to present to the client, governmental authorities, or law enforcement. This may also include a suggested plan and detailed charts and reports of all relevant findings necessary to act on the case.

The Litigation Process-Lastly, in certain cases, a forensic accountant may provide litigation support to the client or government authorities. They may be used by attorneys to review the materials of the case and provide explanations to relevant parties. This may even include sworn court testimony before a judge in a trial. If not, they may simply give prosecutors or attorneys all the information and resources they need to take the case to completion. This may include key questions for witnesses, and reports to support any key arguments being made. With all the facts presented, the courts will then decide the case based on the evidence presented.

Forensic accountants can indeed be very valuable individuals. They are often the unsung heroes in obscure but important court cases that can help expose corruption and bring criminals to justice.

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