Accountancy is not the only competency that a Forensic Accountant requires, he or she must also be an accomplished presenter. Their use is in explaining complex accounting issues to the judge and jury within a court situation. These explanations will be in the form of formal evidence which might be given as a report or orally.
Often called expert witnesses, a forensic expert will usually work in two different areas. This is the financial investigation work preceding a trial and the actual hearing in court. The Expert Accountant is also an experienced fraud investigator.
Putting together investigation expertise with accountancy knowledge, they will inspect all aspects of the finances and business dealings of an assignment they are given. This could be in a number of different areas:
1. A divorce where one side has attempted to hide marital assets often requires a tracing or valuation exercise. The Forensic Accountant might be asked to trace assets that a husband has concealed or value a family business so that both parties can take their proper share.
2. A personal injury could involve the Forensic Accountant calculating how much a victim would have earned but for an accident – for the purposes of quantifying compensation payable by an insurance company.
3. A supplier might have defaulted on a contract and the claimant might ask the Forensic Accountant to calculate the resulting loss of profits.
4. A company might wish to sack an employee who has been defrauding their business – and need a forensic accountant to quantify and trace the losses.
5. In a criminal fraud trial the prosecution might want the Forensic Accountant to explain to the court how the fraudster was able to steal the money – or on the other hand the criminal might want to attempt to mitigate his own position by undermining the charges against him!
For many people, the thought of pages and pages of bank statements and other financial information is very daunting. A fraud can quite easily involve transactions between hundreds of different bank accounts. It is the Forensic Accountant’s job to distil this information to a simple form, such as a succinct table or a few lines of explanation within a report.
To simplify accounting information in this way it would be very easy for a Forensic Accountant to hoodwink the court, which is the reason why both sides will usually employ their own experts. This is unlikely when the best experts must be accredited by respected institutes, have extensive verifiable experience and be recommended by high ranking officials.
To get the best out of such an expert it is a good idea to bring them in at the outset of any financial dispute. Sometimes it is possible to prevent one or both sides from barking up the wrong tree and expending substantial costs in doing so.
Once the matter reaches the formal jurisdiction of the court, the Forensic Accountant’s other skills will be called into play. Sometimes the expert witness will be interrogated by the opposition barister to find any flaws in their opinion. Sometimes where this is not possible the barrister will seek to undermine the expert’s credibility by forceful questioning. Not only must the expert be able to respond in a way that assists the court to understand the complex issues, they must also withstand the barrage of sometimes unreasonable questions that are intended to weaken and even intimidate the expert.