Forensic Accountants? – The Who, What, Why and How

When I’m introduced to someone and they ask what I do, the most common response is “Wow, that must be really exciting!”. This is quickly followed by the question, “Well what exactly does a forensic accountant do?

The actual job of a forensic accountant has always been in existence, but only in the last 15 to 20 years has the term “Forensic Accountant” become common.

Forensic accountants are experienced auditors, accountants, and investigators of legal and financial documents that are hired to look into possible suspicions of fraudulent activity within a company; or are hired by a company who may just want to prevent fraudulent activities from occurring. They also provide services in areas such as accounting, competition, damages, analysis, valuation, and general consulting. Forensic accountants have also been used in divorces, bankruptcy, insurance claims, personal injury claims, fraudulent claims, construction, royalty audits, and tracking terrorism by investigating financial records. Many forensic accountants work closely with law enforcement personnel and lawyers during investigations and often appear as expert witnesses during trials (Source: Wikipedia).

As you can see, forensic accounting is a broad area with many different specialties. Forensic accounting can be broadly split between corporate investigations and expert witness work (such as divorce), but as you can see there are also many other tasks that don’t fit this neat distinction.

Most forensic accounting assignments are complex matters. The complexity can arise from:

  • the number of documents (often in the thousands or even millions of documents or computer records)
  • the type of documents (these can be faded, handwritten or lengthy legal agreements). Alternatively they can be snippets of information from say a call centre database.
  • the unstructured nature of information. It’s common for a forensic accountant to extract key pieces of information from emails, letters, and other correspondence. This information can then be cross matched to other records. These records may be financial records, phone records or internet activity.
  • The number of issues. When a forensic accountant is brought into a matter, often the client has up to 20 different issues or allegations. The Forensic Accountant will review the allegations and the potential evidence which supports each allegation. If the allegation can’t be supported, the forensic accountant will often cull the number of allegations into something that can be evidenced and has a reasonable chance of success when legal action is initiated. Most forensic accountants also find that many of the allegations are based on emotion, hearsay or are breaches in the organisations policies but are not fraudulent in themselves.

Most Forensic Accountants are trained as CPA’s or Chartered Accountants. There is no legal restriction on a person calling themselves a “Forensic Accountant” unlike other professional designations.

As corporate data is increasingly held in electronic forms, forensic accountants need to be capable of working with a wide variety of computer systems and be able to analyse large volumes of information. If you have a matter that involves a large amount of information, it is beneficial that you engage a forensic accountant who has these skills.

Another important factor when you consider engaging a forensic accountant is whether they have criminal investigation and or expert witness experience.  There are many Forensic Accountants who have moved into the industry from auditing and other general accounting disciplines.  There is a danger that these individuals can compromise an investigation through their handling of the evidence or other oversight.

About the Author

Andrew Firth is a Forensic Accountant in Sydney and Director of Rushmore Forensic. He has over 12 years experience in financial investigations, commercial disputes and other aspects of forensic accounting. Andrew is a former investigator with the Serious Fraud Office, London. He has also worked for KPMG and Deloitte during his career.

Andrew is based in Sydney and provides forensic accounting services throughout Australia.  If you have a matter which requires expert advice, please don’t hesitate to contact Andrew Firth for a complimentary and confidential discussion.

Rushmore (Author)

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