Forensic Accounting in Practice
Forensic Accounting in Practice
In this assignment I am going to determine the most important skills that a forensic accountant needs to possess and evaluate the need for each skill and describe the role of a forensic accountant within a courtroom environment. Also, I will analyze the legal responsibility a forensic accountant has while providing service to a business and research two cases where forensic accountants have provided vital evidence in a case.
With the actual economic slowdown, it is seen a raised need for forensic accounting services because society has to deal with collapses in financial sphere, multiple white collar law-breaking and increasing cases of occupational fraud. The Association of Certified Fraud Examiners (ACFE) estimates that annually organizations lose $994 billion because of occupational fraud.
Although forensic accounting is currently on the “hot” list of client services, there are plenty of accountants getting involved who shouldn’t be because they don’t understand the ins and outs of the niche...Many accountants think it is simply fraud investigation, and it’s not. It is really much more than dealing with the numbers. It’s no longer just basic fraud work (Kahan, S. (2006). “Sherlock Holmes enters accounting: Dramatic increase in fraud brings more CPA sleuths into the industry.” Accounting Today, 20(8), 1, 32-33).
The AICPA has recognized overall features of services forensic accounting is generally involved: • The usage of specific knowledges together with investigative skills that a CPA possess. • Collecting, analyzing then evaluating evidential affair • Interpreting and communicating abilities in the boardroom, courtroom and other legal or administrative venue (Durkin and Ueltzen, 2009)
According to the AICPA’s understanding, there are important skills that a forensic accountant should have that also include not only analytical characteristics but investigative and communication knowledge and skills: • Professional responsibilities, practice management
• Laws, dispute resolution and courts
• Planning or preparation
• Collection of information and saving (documents, electronic data, interviews/interrogations,) • Experts, reporting, and testimony (Durkin and Ueltzen, 2009)
Fraud prevention and financial statement offense of giving a false or misleading account by a company are considered to be the most important feature of forensic accounting. In these cases forensic accountants can: 1. Using their knowledge on consistent pattern of recording fabricated, altered or incomplete information about the specific business operations to find documentary evidence (or disproof) that an accounting data have failed to the actual content of economic activity, that became a subject of an investigation or proceeding;
2. Give an opinion on the characteristics of the individual business, which became the subject to investigation (phenomena sides);
3. Identifying unsubstantiated accounting operations, to give an opinion on their impact on the accuracy of recognition of economic activity and its results in the system of accounting data, define the particular individuals responsible for the improper performance of such operations;
4. Using knowledge on the protective functions of accounting and consistent patterns of their usage in the activity of auditing, research materials of audits, to determine (if any) methodological errors made by supervisors that didn’t allow them to uncover inconsistencies between user data and real content reflected in their business operations.
A forensic accountant's work of activity can ultimately lead to an appearance in a courtroom as a witness. He or she then face an extraordinary responsibility to say and do the right things. As a testifying expert, a forensic accountant must remember that there are important and distinct differences between...
References: Durkin, R., and Ueltzen, M. (2009). The Evolution of The CFF Credential, The Practicing CPA, July/August.
“Forensic Accounting: Fraudulent Reporting and Concealed Assets”, Code 731950
Freeman, S. How forensic accounting works. Retrieved from http://www.science.howstuffworks.com
Kahan, S. (2006). “Sherlock Holmes enters accounting: Dramatic increase in fraud brings more CPA sleuths into the industry.” Accounting Today, 20(8), 1, 32-33.
Smith, B (2009) “The forensic accountant 's role in business interruption and business income claims”.
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