Forensic Accounting

Forensic Accounting encompasses both Litigation Support and Investigative Accounting

As Forensic Accountants, we utilize accounting, auditing, and investigative skills when conducting an investigation. (Three of our CPAs are licensed private investigators.) We are trained to look beyond the numbers and deal with the economic reality of the situation (Forensic Accounting: Litigation Support). But our work does not stop there. Equally important to investigative work is our ability to respond immediately and to communicate financial information clearly and concisely in a courtroom setting.

Forensic Investigation

(adapted from Forensic Accounting: Litigation Support)

A forensic investigation makes use of special investigative skills and techniques to carry out an inquiry in ways that will enhance the acceptability of our findings in a court of law. It may be grounded in accounting, medicine, engineering, or another discipline.

Forensic Audit
(adapted from Forensic Accounting: Litigation Support)

A forensic audit is a court suitable examination of evidence which determines if an assertion corresponds to established criteria. An example would be a forensic audit of sales under a lease agreement, which is the subject of litigation.

Once the investigator has completed the investigation, they communicate their findings in the form of reports, exhibits, and collections of documents. A Forensic Auditor will also assist in legal proceedings in any way necessary, including, but not limited to, testifying in court as an expert witness, preparing visual aids to support trial evidence, and developing computer applications to aide in the analysis and presentation of financial evidence.

In order to properly perform these services, a Forensic Accountant must be able to identify substance over form when dealing with an issue while also being familiar with legal concepts and procedures.

 

Cases in Which a Forensic Accountant May be of Assistance

(adapted from Forensic Accounting: Litigation Support)
• Investigative Accounting
• 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: private investigators, forensic document examiners:
   computer experts; and consulting engineers
• Assistance with the recovery of assets by way of civil action or criminal prosecution
• Litigation support

Types of Assignments a Forensic Accountant Performs

(assignments and descriptions of assignments were adapted from Forensic Accounting:Litigation Support)

Criminal InvestigationBusiness / Employee FraudProfessional Negligence
• Shareholders’ and
Partnership Disputes
• Personal Injury Claims /
Motor Vehicle Accidents
• Business Interruption / Other
Types of Insurance Claims
Matrimonial DisputesBusiness Economic LossesMediation and Arbitration

Criminal Investigations

Forensic investigations often relate to criminal investigations, and a forensic accountant may be retained by federal and/or local law enforcement and organizations such as the Law Society. While aiding in an investigation, a Forensic Accountant’s report is prepared to present evidence concisely and professionally. Back to Menu

Shareholders’ and Partnership Disputes

These assignments typically require the detailed analysis of several years’ accounting records to quantify the issues being disputed. (Example: the compensation and benefits received by each of the individuals involved in the dispute) Back to Menu

Matrimonial Disputes

For a Forensic Accountant, matrimonial disputes often involve the tracing, locating and evaluation of assets whether they be business, property or other resources. Back to Menu

Business / Employee Fraud

Business investigations may entail tracing funds, identifying and recovering assets, forensic intelligence gathering and due diligence reviews.

Employee fraud investigations routinely involve procedures to determine the existence, nature and extent of fraud and may concern the identification of the perpetrator. These investigations often require the interviews of personnel who had access to the funds and detailed review of the evidence. Back to Menu

Personal Injury Claims / Motor Vehicle Accidents

These assignments involve the quantifying of economic losses resulting from a motor vehicle accident. To perform these assignments, a Forensic Accountant must be familiar with legislation which pertains to motor vehicle accidents.

Medical malpractice and wrongful dismissal cases often involve similar issues in evaluating the resulting economic damages. Back to Menu

Business Economic Losses

Examples of business economic loss assignments include: contract disputes, expropriations, product liability claims, construction claims, and trademark/patent infringements and losses stemming from a breach of a non-competition agreement. Back to Menu

Professional Negligence

These assignments are generally dealt with from two different, complimentary perspectives. The first approach is technical – a breach of Generally Accepted Accounting Principles or Generally Accepted Auditing Standards or other standards of practice occurred. The second approach is loss quantification. If the individual being investigated is an accountant, a Forensic Accountant can be involved with both perspectives. If the issue involves a different profession, a Forensic Accountant will typically be retained to perform loss quantification. Back to Menu

Business Interruption / Other Types of Insurance Claims

As insurance policies have significantly different terms and conditions, these assignments involve a comprehensive review of policy to investigate coverage issues and the appropriate method of calculating loss. A Forensic Accountant is frequently asked to assist from either the insured or the insurer’s perspective in the settlement of a case.

Examples of these types of assignments include: business interruptions, property losses and employee dishonesty. Back to Menu

Mediation and Arbitration

As a result of their familiarity and comfort with legal issues and procedures, some Forensic Accountants seek out special training to become involved in alternative dispute resolution (ADR). ADR services include mediation and arbitration and are designed to help individuals and businesses resolve disputes in a timely fashion and with minimal disruption. Back to Menu

Sources:

American College of Forensic Examiners Institute Manual. 2012.
Forensic Accounting: Litigation Support. Alan Zysman B Comm, CA-IFA, CFE, FCPA.. Website

 

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