What is Forensic Accounting?
An orderly analysis, investigation, inquiry, test, inspection, or examination along a “paper trail” in the search for fraud, embezzlement, or hidden assets
Two parts:
Investigative accounting
Litigation support
Treats all figures as suspect until proven otherwise
The Fraud Triangle
Rationalization ----- Motive ----- Opportunity
The Need for Forensic Accountants
Fraud is something the internal or external auditors were supposed to guard against through their periodic audits. Now that auditors can only check for the compliance of a company’s books to generally accepted accounting principles, auditing standards, and company policies, a new category of accounting was needed to detect the fraud in companies that suspected fraudulent transactions
The Services a Forensic Accountant Provides
Investigating and analyzing financial evidence.
Developing computerized applications to assist in the analysis and presentation of financial evidence.
Communicating their findings in the form of reports, exhibits and collections of documents.
Assisting in legal proceedings, including testifying in courts, as an expert witness and preparing visual aids to support trial evidence.
Investigative Accounts
Often associated with investigations of criminal
matters. For eg: A typical investigative accounting assignment would be an investigation of employee theft.
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
Litigation Support
Provides assistance of an accounting nature in a matter involving existing or pending litigation. It deals primarily with issues related to the quantification of economic damages.
Assistance in obtaining documentation necessary to support
or refute a claim.
Review of the relevant documentation to form an initial
assessment of the case and identify areas of loss.
Assistance with settlement discussions and negotiations.
Functions Of Forensic Accountant
Criminal Investigations
Shareholders' and Partnership Disputes
Professional Negligence
Business Economic Losses
Typical Approach To An Assignment
Meet with the client
Perform a conflict check
Perform an initial investigation
Develop an action plan
Obtain the relevant evidence
Perform the analysis
Prepare the report
The need for niche consulting
Niche consulting refers to the need to specialize.
The need for niche consulting has become imperative because:
Recent corporate accounting scandals
Outcry for transparency and honesty in reporting
Fast based development in business
Characteristics to be possessed by forensic accountant
Curiosity
Persistence
Creativity
Discretion
Confidence
Sound professional judgment
Courses available in India
Post Graduate Diploma in Forensic Accounting
Certificate Course in Forensic Accounting Profession
Certified Anti-Money laundering Expert
Certified Bank Forensic Accounting
Certified Vigilance and Investigation Expert
Conclusion
Forensic accounting has come into the lime light due to following reasons:
-- rapid increase in frauds and white collar crime
-- belief that law enforcement agencies have insufficient expertise
Forensic accounting, in fact, integrates accounting, auditing, and investigative skills to conduct an examination into a company’s financial statements.
While the forensic accounting and auditing practice had commenced in the US as early as 1995, the seed of this specialization has yet to take off in India.
An orderly analysis, investigation, inquiry, test, inspection, or examination along a “paper trail” in the search for fraud, embezzlement, or hidden assets
Two parts:
Investigative accounting
Litigation support
Treats all figures as suspect until proven otherwise
The Fraud Triangle
Rationalization ----- Motive ----- Opportunity
The Need for Forensic Accountants
Fraud is something the internal or external auditors were supposed to guard against through their periodic audits. Now that auditors can only check for the compliance of a company’s books to generally accepted accounting principles, auditing standards, and company policies, a new category of accounting was needed to detect the fraud in companies that suspected fraudulent transactions
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| Forensic Accounting |
Investigating and analyzing financial evidence.
Developing computerized applications to assist in the analysis and presentation of financial evidence.
Communicating their findings in the form of reports, exhibits and collections of documents.
Assisting in legal proceedings, including testifying in courts, as an expert witness and preparing visual aids to support trial evidence.
Investigative Accounts
Often associated with investigations of criminal
matters. For eg: A typical investigative accounting assignment would be an investigation of employee theft.
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
Litigation Support
Provides assistance of an accounting nature in a matter involving existing or pending litigation. It deals primarily with issues related to the quantification of economic damages.
Assistance in obtaining documentation necessary to support
or refute a claim.
Review of the relevant documentation to form an initial
assessment of the case and identify areas of loss.
Assistance with settlement discussions and negotiations.
Functions Of Forensic Accountant
Criminal Investigations
Shareholders' and Partnership Disputes
Professional Negligence
Business Economic Losses
Typical Approach To An Assignment
Meet with the client
Perform a conflict check
Perform an initial investigation
Develop an action plan
Obtain the relevant evidence
Perform the analysis
Prepare the report
The need for niche consulting
Niche consulting refers to the need to specialize.
The need for niche consulting has become imperative because:
Recent corporate accounting scandals
Outcry for transparency and honesty in reporting
Fast based development in business
Characteristics to be possessed by forensic accountant
Curiosity
Persistence
Creativity
Discretion
Confidence
Sound professional judgment
Courses available in India
Post Graduate Diploma in Forensic Accounting
Certificate Course in Forensic Accounting Profession
Certified Anti-Money laundering Expert
Certified Bank Forensic Accounting
Certified Vigilance and Investigation Expert
Conclusion
Forensic accounting has come into the lime light due to following reasons:
-- rapid increase in frauds and white collar crime
-- belief that law enforcement agencies have insufficient expertise
Forensic accounting, in fact, integrates accounting, auditing, and investigative skills to conduct an examination into a company’s financial statements.
While the forensic accounting and auditing practice had commenced in the US as early as 1995, the seed of this specialization has yet to take off in India.
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