The concept of forensic accounting involves the use of accounting expertise and scrupulous auditing techniques to scrutinise complicated financial assets, arrangements and business accounts. Such is the skill level of a forensic accountant that they are often used as expert witnesses in court, with their findings used as evidence in the case. The work is extremely varied and can include an investigation into almost any area of complex finance and tax, or where the instructing party is seeking an independent view on an issue. No two cases are ever the same.
There are several key objectives of forensic accounting, which places the profession not just as a way to identify past crimes, but also as a preventative measure and a way to predict when unscrupulous activities may occur.
What is Forensic Accounting?
Before we look into the objectives of forensic accounting, we will first of all explain a little about the practice. It is the use of accounting skills to investigate potential fraud, embezzlement, and other activities hidden in complex financial transactions. As mentioned above, forensic accountants can be used as expert witnesses in court, but are also utilised for compliance efforts and to help prevent crime.
While traditional accounting looks at assessing business funds and properly conveying information to management, shareholders or investors, a forensic accountant is tasked with investigating the flow of funds through a company to evaluate the paths they take and determine whether any illegal activity has taken place. They do this by using a robust investigation process and several important techniques.
Forensic accounting can also be used in more personal matters. When a marriage is being dissolved, for example, a forensic accountant can review the financial situations of both parties to advance the settlement process and provide solicitors with accurate information to use in court. They are also able to trace assets through investment accounts, while also identifying hidden assets.
Typically, a forensic accountant is an experienced and qualified accountant who has chosen to undertake further formal training to specialise in the forensic accounting field. There are a variety of required skills, such as business acumen, strong communication skills, attention to detail, and an in-depth knowledge of financial reporting and tax legislation. Forensic accounting is definitely not for every accountant.
The Importance of Forensic Accounting
Forensic accounting requires deeper specialism than standard accounting. Due to their vast nature and extremely complex financial structure, large corporations will typically have a dedicated forensic accountant to ensure they are always compliant, and that all transactions are carried out correctly.
As a modern discipline, forensic accounting is also extremely important when it comes to using technology. With society becoming more and more reliant on technology, forensic accountants have become more in-demand than ever.
Online financial transactions give potential fraudsters a false sense of security because they believe they can easily conceal their tracks and use the internet to cover up illegal transactions. This is where forensic accountants can help. By analysing email communications and ledgers, they can uncover evidence of fraudulent activity with ease.
The Objectives of Forensic Accounting
The main objectives of forensic accounting is to provide proof of a crime and present the evidence in such a way that it can stand up in court. It is used to find financial information and trends that could indicate fraudulent activity, often through examining voluminous records, witnesses, and even carrying out stakeouts in more extreme cases.
As well as identifying whether fraudulent activity has taken place, forensic accounting will also seek to name the person(s) involved, with a view to take legal action against them. The use of proper documentation is vital to achieving this, which must:
- Prove the loss
- Prove who is responsible for the loss
- Prove the perpetrator’s motives and methods
- Comprehensively establish guilt
The forensic accountant’s skills can also be requested to find:
- Hidden assets such as houses, cash or cars
- Accounting irregularities in companies
- The true value of a person’s estate or assets
Forensic accounting is not just utilised to uncover fraudulent activity that has already taken place. Indeed, other objectives of forensic accounting are to prevent dubious actions from happening in the future, and also anticipate when they may occur.
The concept of forensic accounting is as much about the criminal than the crime itself. This means there is a lot more to the profession than simply analysing numbers. Forensic accountants must create a clear picture not only on figures but also the company’s or individual’s broader operations.
Why Work with Inquesta
Inquesta has amassed decades of experience in handling all areas of forensic accounting – including matrimonial disputes, commercial disputes and personal injury claims. We are specialists in providing a detailed analysis into the numbers and will leave no stone unturned when carrying out our investigations.
Our clients are of paramount importance, which is why we will take the time to thoroughly understand your circumstances and carry out a free preliminary review of the circumstances. We will also provide you with detailed information about the work we can do, whether it is worth doing, and the information we would require. Once this has been done, we will provide a guaranteed fixed-free quote for each phase. All of this ensures you can be confident that you are working with a company that is dedicated to providing you with the best possible result.
In addition to our investigative and quantification work, we are also able to assist in negotiations with opposing parties to help you reach a settlement at the right price. We have also amassed a great deal of experience in providing expert forensic accounting advice evidence under cross-examination in court.
All of our written communications are presented in plain English, so you can gain a thorough understanding of the process from start to finish. This is the case for all forms of documentation, whether it is a simple letter or an extremely complex report.
For more information about how Inquesta can help you, contact a member of our team today or request a free, no obligation consultation.