What Does A Forensic Accountant Do?
Forensic accountants are accountants who specialize in investigating issues that involve money, assets and other financial matters. They are usually certified public accountants (CPAs) who have the ability to combine their accounting knowledge with keen auditing and sharp investigative skills in order to determine if there is evidence of irregularity in the records. They are typically called upon to look into and analyze data find out if crimes like fraud, embezzlement, money laundering and others have been committed.
There are many kinds of investigations where the expertise of forensic accountants is needed. For starters, they may be called upon to look at the records of an individual, business or agency to assist government regulators who have reason to believe that the entity is involved in some kind of misconduct. In these instances, they will study the financial records and other documents to prove or disprove the suspicion. They will then make recommendations to the investigating agency that will use the forensic accountant’s report to file a case in court or not. During court hearings, the forensic accountant may be asked to testify as an expert witness.
Forensic accountants may also be called in to settle disputes among partners or shareholders. In these kinds of investigations, they usually analyze many years of the company’s accounting records to be able to get a clear picture of its financial records. At other times, they may also be asked by company owners to determine if an employee who has access to financial records has committed fraud by funneling company earnings into his own pockets. Forensic accountants will look at the paper trail of evidence to find out the extent of fraud committed and identify who else are involved so that the firm may take prompt legal action.
In contentious divorce cases involving very wealthy individuals, one party may hire a forensic accountant to trace the existence of assets and properties of the other and evaluate their value. The role of forensic accountants in these instances is to ensure that there is equitable distribution of all assets between the divorcing spouses. There is a particular need for the expertise of a forensic accountant if one spouse suspects that the other may be hiding properties in order to lower alimony or child support payments or if he or she wishes to keep a particular asset after the marriage has been dissolved. Forensic accountants analyze documents and financial records to expose the existence of these assets.
Forensic accountants may also be asked to look into the deeper issues involving contract disputes, product liability claims, insurance claims and other types of investigations involving economic or business losses. They may also be called to investigate if a professional, such as a fellow accountant, has committed negligence in the performance of his or her duties. Professional intelligence can occur if the person under investigation has failed to follow established industry principles and standards. The forensic accountant will then be tasked with quantifying the losses that resulted from the negligence.
Some forensic accountants who have a lot of experience in the field also undertake further training in dispute resolution so they can mediate or arbitrate cases. As mediators and arbitrators, they try to facilitate the speedy resolution of disputes between two parties outside of the court system. They clarify the issues at hand and try to guide the parties towards a mutually beneficial agreement.
In order to come up with a comprehensive report about the matter being investigated, the forensic accountant will look at all records, including digital files and hard copies, meticulously. They don’t just focus on the numbers and figures but are also able to relate their calculations to the situation at hand. After they have gathered the necessary pieces of evidence, they would then proceed towards crafting their forensic accounting reports, seeking to make sure that it is clear enough for even the non-accountant to understand and ensuring that all the evidentiary support is cited.
If forensic accountants are being called upon to testify as expert witnesses in court, they may go a step further by creating PowerPoint presentations and other visual aids to enable everyone present to understand their explanations. They also prepare their documents and pieces of evidence to ensure that they are able to provide a comprehensive testimony.