The Role Of Forensic Accounting In The Current Business Environment
Added on March 27, 2018
With the current business environment in a constant state of change and evolution, we are seeing a growing role for forensic accounting. It goes well beyond a fundamental knowledge of both financial records, and generally accepted accounting principles. By definition forensic accounting is “the use of accounting skills to investigate fraud or embezzlement, and to analyze financial information for use in legal proceedings.” The following information further explains the role of forensic accounting.
The Need For Forensic Accountants
Forensic accountants investigate, and analyze potentially fraudulent situations. They may even be called into court as an expert witness during trials. There is also a need for specialists in computer technology, expert validation, statistics, and of course accounting and finance. The function of forensics accountants are an important aspect of achieving a positive outcome during financial settlements, and in the courtroom.
Forensic accountants provide much needed information and validation for a variety of situations. These include asset impairment, business valuation, and dissolution of marriage. Forensic accountants also investigate white-collar financial crimes, intellectual property infringement, financial reporting fraud, and partner or shareholder disputes to name a few. There are many circumstances where the expertise of forensic accountants are required to properly assess the situation.
Forensic Accountants Specific Responsibilities
Forensic accountants have four specific responsibilities for each and every case as listed below.
- Forensic accountants form the foundation of the case. They are responsible for reviewing documents during the discovery stage in order to build the framework of the case. In essence, forensic accountants identify the most pertinent information.
- Forensic accountants interview people that are important to the case. This function includes performing background research in order to assist with the gathering of applicable information.
- Forensic accountants incorporate the use of their expert skills in order to gather and analyze the proof that is needed to either support or dispute the case.
- Forensic accountants build reports based on the information that they have gathered during the investigation phase. They also testify as expert witnesses if needed. In some cases, forensic accountants are called upon to evaluate, and then dispute a report that has been presented by the opposition.
Other Uses For Forensic Accounting
Forensic accounting is often used to determine the magnitude of the fraudulent activity after the fraud has been discovered. For example, forensic accounting specialists help clients track down, and quantify the financial damages when cash and other assets are embezzled, or misappropriated. These activities included analyzing specific patterns and trends, investigating paper trails, reviewing accounting ledgers and records, and tracing assets.
The forensic accountants that conduct these actions must be able to analyze and interpret these details in a manner that determines the next steps. Forensic accounting can also be used for more personal matters such as divorce. For example, forensic accountants are able to review the specific financial situation of both parties in conjunction with their spending. This helps to determine the settlement process or can be used to establish accurate financial supporting figures for divorce attorneys to use in court.
The Navera Group provides expert forensic accounting services for a broad range of industries and has served as an expert witness for multiple legal actions. Our team of consultants each have deep financial roots and years of experience. If you have any questions regarding a particular situation or case or would like more general information about our array of services, please contact us.