Home - 2019 - November

Month: November 2019

What Are Forensic Accountants and How Do They Provide Litigation Support?

Posted on November 29, 2019 in Uncategorized

Forensic accounting is a highly specialized field of accountancy in which specially trained CPAs and business accountants provide litigation support for a range of civil and criminal legal disputes. Like other forensic fields, forensic accountancy involves an intense investigation of expenditures, account histories and the value of assets related to the legal case at hand.

Most practicing forensic accountants are Certified Forensic Accountants, or CFAs.

Forensic means “suitable for use in a court of law”, and the purpose of forensic accounting is to provide litigation support in the form of an accurate assessment of a business’ or individual’s assets and/or financial behavior. This information is reviewed by judges, attorneys and, in some cases, juries, and it may have a large impact on the case’s outcome.

There are several different types of cases which usually require the litigation support of a CFA. They may be criminal cases involving fraud or embezzlement, or they may be civil cases involving disputes over spousal support, breach of contract or business valuation. Generally speaking, this type of accounting may be divided into the following three categories.

Forensic Accounting and Criminal Fraud
CFAs are often called upon to assist in cases involving criminal fraud, particularly in business settings. It’s the forensic accountant’s job to investigate the accounting systems, history and accounting information presented by the defendant leading up to the alleged fraud. In other words, the CFA determines if financial figures have been tampered with and to what degree.

Forensic litigation support is particularly important in cases of embezzlement, which may involve false accounts and hidden assets which require the expert eye of a CFA.

In some cases, businesses may privately hire a CFA to further investigate not only who has tampered with funds, but where those funds were used, for what purpose and how the fraud went undetected. When a business or individual is unsure of whether or not fraud has been committed, a forensic accountant may be hired and his or her findings may be used as evidence if a lawsuit is subsequently filed.

CFAs and Family Disputes
CFAs are commonly called upon to investigate cases involving marital and family disputes, particularly those pertaining to divorce cases. In divorce cases, CFAs are responsible for analyzing the lifestyle, expenditures and assets of parties involved; this information is used to determine alimony, child support and equitable distribution.

Business valuation is often an important part of litigation support in divorce cases. Courts require an accurate assessment of the value of a spouse’s business venture in order to determine how to divide assets. CFAs may also provide counsel for non-divorce family disputes, such as inheritance disputes.

Forensic Accountancy and Civil Disputes
Non family civil disputes which require the expertise of CFAs include cases involving personal injury, breach of contract and disagreement over company acquisitions. In cases involving personal injury or breach of contract, it’s the CFA’s job to calculate an individual’s economic loss inflicted by the offense or breach of contract. For example, if a plaintiff sued an insurance company for damages due to unpaid insurance claims, the CFA would be responsible for quantifying the damage in financial terms.

Hot Career – Forensic Accounting

Posted on November 28, 2019 in Uncategorized

With the increase in white collar crimes in securities fraud, banking and investment misappropriations, comes the increase demand for forensic accountants with strong knowledge of accounting procedures and financial experience coupled with strong analytic and investigative skills. According to U.S. World and News Report, forensic accounting is one of the most secured job opportunities for the future.

Forensic Accountants work in major accounting firms. Their skills and expertise are in high demand for investigating on mergers and acquisitions, tax investigations, economic crime investigations, civil litigation support, specialized audits, and terrorist investigations. Forensic Accountants work throughout the business world, in public accounting, and in government agencies such as FBI, Internal revenue, Local Law enforcement and others.

Opportunities for qualified forensic accounting professionals are abound in private companies, particularly with the essential need of the Sarbanes-Oxley act (SOX). Publicly held companies are inviting those with these skills and knowledge as a part of their strong internal control team, to comply with governmental and market demands for accurate reporting. Beyond SOX, forensic accountants help prevent and detect misuse of company resources in private companies.

Recent major corporate scandals have encouraged business owners to turn to Forensic Accountants for more proactive fraud audits and prevention. The frauds which these professionals are looking for is usually one of these two general types: financial statement fraud or theft of assets. To uncover financial statement fraud, detail analyzations are carried out on the financial statements by using ratio analysis and data-mining techniques such as Benford’s Law. Other procedures performed include inspection of documents and records and conduct interviews with witnesses and suspects.

Divorce attorneys may call on forensic accountants to evaluate whether assets are being understated or liabilities are overstated. In addition, forensic accountants may be asked to determine the amount of the loss sustained by victims, testify in court as an expert witness and assist in the preparation of visual aids and written summaries for use in court. To be successful, these accountants needs knowledge of fraud schemes, investigation techniques, and the law to fulfill the expectations of his or her client or employer.

This profession can earn anything from $35,000 to $60,000 a year in an entry-level position. With experience, forensic accountants could fetch an annual salary of six figures. Forensic Accounting is one of the most interesting professions currently. It’s very challenging and at the same time exciting to work with prosecutors and attorneys in court cases. Forensic Accounting opens the door for you to become a high-end forensic detective.

How Forensic Accounting Can Help Your Business Prevent Fraud

Posted on November 26, 2019 in Uncategorized

Fraud is a concern for any business which employs employees, accountants or other hired professionals which have access to the business’ income receipt or funds. Essentially, all businesses are at risk of fraud to some degree. Fraud is most commonly committed in the form of embezzlement or skimming, acts which can be difficult to detect, even in small business settings.

What is Forensic Accounting, and What is a Forensic Audit?

Forensic accounting is a financial service which concentrates on identifying or preventing fraud in business settings; forensic audits performed by forensic accountants focus on identifying ways in which a business is vulnerable to fraud or identifying fraud which is being committed. Professionals who are qualified to perform forensic audits gather concrete evidence which is admissible in a court of law.

Common Aspects of Fraud

Embezzlement is the most common form of fraud in business settings. People who commit embezzlement typically do so systematically, in small amounts to avoid detection. Without the help of a forensic audit, embezzlement can often continue over a long period of time, adding up to significant financial losses for the company against which fraud is being committed. If tried, civil fraud cases (cases in which the victim is an individual, not the public) are often settled out of court, meaning that the person who committed fraud is able to walk free and commit fraud again.

When a forensic accountant performs a forensic audit, he or she investigates the business’ financial records in search of patterns which could indicate skimming or embezzlement. Forensic accountants also perform thorough background checks of employees, since people who commit fraud often have a history of doing so.

Detecting Fraud through Forensic Auditing

Forensic audits involve a very detailed, thorough investigation of every aspect of a business’ financial activities and history, a process which may involve detective work.

Take, for example, a restaurant owner who suspects that one of his waiters is skimming cash from his or her tables. In order to take action against the employee, however, the business owner requires proof. A forensic accountant might begin by hiring trained professionals to dine at the establishment in order to observe the employee in question take orders, place orders at the kitchen, deliver food and complete sales at the cash register. The professional might find that the employee completed credit card transactions normally, but voided the sale whenever dinner was paid in cash, pocketing the cash.

By itemizing all voided receipts, the forensic accountant could determine exactly how much money the employee was skimming, providing the restaurant owner with the evidence needed to press charges.

Forensic Auditing and Fraud Prevention

Forensic audits are not only used for detecting fraud; a forensic accountant may also investigate a company to find any areas in which the company may be vulnerable to fraud. By identifying these areas with a thorough forensic audit, companies can take action to prevent fraud by following recommendations such as using video camera monitoring, increasing management involvement, segregating duties or performing random spot audits.