What is forensic accounting and how can it benefit your business?
Created: September 2015
Forensic accounting is not a term, which is readily understood by most people in the business world, but it is rather like insurance – you quickly understand what it is and appreciate its value when you actually need it.
In its simplest form, forensic accounting is very much akin to forensic pathology. When the police discover a body, a local GP can very often diagnose the cause of death and ascertain whether or not it was due to natural causes. However, where there is the faintest suggestion that something is amiss, the authorities will call in a forensic pathologist who will conduct a thorough investigation.
Such an investigation has to be carried out by an expert in forensics because, the minute they are called into a new case, everything they do in the course of the investigation is done with one eye on the strong possibility that they may eventually need to stand up in a court of law and present their findings in the form of evidence.
The same is true of a forensic accounting professional. Services will be called upon whenever there is a suspicion of financial foul play. This is not only to confirm whether or not something is wrong and what it is but also to carry out their work in such a way that the evidence produced will stand up in a court of law. Moreover, someone who is very experienced in forensic accounting will need to be able to convey the findings in such a way that people with little knowledge of accountancy will be able to form a judgement based on the evidence put forward.
Forensic accounting is often called upon in criminal cases like complex fraud or in straightforward civil disputes such as ascertaining a spouse’s wealth in divorce proceedings. However, there are many occasions in which specialists in forensic accounting will be engaged in a commercial situation. The profession utilises a combination of accounting, auditing and financial investigation to provide the expert evidence required to settle disputes. Examples of where forensic accounting will be used in a business environment include establishing loss of business in insurance claims, checking for deliberate or unwitting underpayment of royalties by licensees and franchisees, identifying breaches of contract and confirming fraudulent activity.
Although most commercial disputes are normally settled out of court, forensic accounting professionals must ensure that their work is robust enough to stand up to scrutiny in any possible courtroom setting and that they are able to withstand cross- examination by the opposing forensic accounting team.
The majority of established businesses will doubtless require the assistance of forensic accounting on at least one occasion and, if you think that your own organisation could benefit from specialist forensic accounting services, then give the experts at Fisher Forensic a call to see how they can help.
Rafi Saville, Forensic Accounting Partner
T 020 7874 7967