Forensic Accounting

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In the present day forensic accounting plays a huge role in many of the court cases publicized by the media. With the spotlight on the profession, this is a good opportunity to discuss the following topics: 1) Five skills that a forensic accountant needs to possess.

2) The role of a forensic accountant within a courtroom environment.

3) Analyze the legal responsibility a forensic accountant has while providing service to a business.

4) Examine two cases where forensic accountants have provided vital evidence in a case, summarizing their importance to the case.

The word forensic is defined as relating to the use of science or technology in the investigation and establishment of facts or evidence in a court of law. Forensic accounting is defined as using financial knowledge and skill joined with investigative techniques to resolve a matter in a legally defensible manner exacting to the specifications of the law. (Brown, 2008) It is said that forensic accounting has been around since the Egyptian times when scribes had to account for all of the Pharaoh’s assets. The forensic accounting that we know today was coined in 1946, by Maurice E. Peloubet in an essay “Forensic Accounting: Its Place In Today’s Economy.” (Rasey, n.d.)

Forensic accountants are far more than the regular accountant in that they must possess key skills to carry out their duty of understanding financial documents and presenting any illegal activity portrayed in those documents to the court. Five key skills that a forensic accountant must posses are the following:

1) A forensic accountant must be analytical. This is the most valuable skill of the accountant in that they must be able to analyze a vast amount of financial documents and organizational actions in order to identify evidence to use in a legal case. Attorneys and Certified Public Accountants rated this skill as the number one skill a forensic accountant must possess in a 2009 survey. (Davis, Ogilby, Ferrell, 2010)

2) They must also be investigative. Just as they analyze financial documents, they must also investigate those documents thoroughly to find any illegal information to present to the court. The forensic accountant must be able to determine fraud from financial journals and reports.

3) Accounting skills are necessary by the forensic accountant in that they must be familiar with the financial documents they are analyzing. Understanding these documents and the ability to identify fraudulent activity in financial records and reports are key to the forensic accountant’s duties.

4) The forensic accountant must have pristine communication skills. In order to communicate their findings in a legal manner the forensic accountant will have to appear in court. They must be able to clearly and articulately communicate their findings when they testify in front of the court.

5) Forensic accountants must be extremely patient in order to thoroughly investigate and analyze several financial documents. This task can take weeks, months, and even years in some cases.

The role of a forensic accountant in the courtroom has expanded exponentially over the past two decades due to changes in business, politics and regulatory control. As businesses have turned to technology to both increase production and maximize efficiency, so too have the forensic accountants had to maintain pace in order to be effective. In today’s courtroom environment, forensic accountants are asked to competently present not only the numbers and statements of the business in question, but also the long lasting and far-reaching implications that these numbers, reports, and transactions have had on everything from employees all the way to competitors and the over-all market place. Many times the success of the forensic accountant in the courtroom hinges on their ability to explain the importance of their findings in an investigation,...
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