Forensic Accounting Name: Institution:

Forensic accounting, also referred to as investigative accounting involves in the utilization of accounting concepts as well as techniques in solving legal problems. It is the work of forensic accountants to investigate and document fraud (financial) as well as white collar crimes like embezzlement. They also assist attorneys in litigation support and law enforcement agents in investigating and solving financial inconsistencies (Silverstone, 2012). Corporations and Legal firms consult forensic accountants to aid in allegations of fraud. It is therefore important for forensic consultants to be very good at their work considering their clients. To be an excellent forensic attorney one needs to possess certain skills.

Important Skills that a Forensic Accountant needs to possess:

Firstly, a good forensic accountant must be competent in accounting. One must initially be a certified public accountant before considering working a career in forensic accounting. This is because one need to be familiar with basic as well as complex accounting in order to perform the necessary tasks that forensic accountants are contracted to do. CPAs are evaluated by the Certified Financial Forensics (CFFs) credential which is exclusively issued to CPAs who demonstrate expert ability in forensic accounting through their education, experience and skills (Singleton, 2010).

In addition, a forensic accountants need to have a high aptitude for accounting. This consists of an inquisitive mind, attention to detail, excellent communication skills (oral as well as written), and the tenacity to analyze and deal with a numerous documents containing evidence. One must be able to work under tight deadlines and therefore natural accounting aptitude is necessary for one to be outstanding in the performance of their contracts.

Good forensic accountants must also have excellent command of the law as well as legal procedures. One of their responsibilities is participate in court procedures and as such it is imperative that they possess extensive knowledge in areas such as tax laws. Primarily their role is to investigate crimes related to tax evasion, money laundering, and fraudulent accounting. A forensic accountant should understand the legal implications and parameters of whatever issues they are investigating.

Communication skills are also important skills in forensic accounting. Excellent oral and written skills are necessary to succeed in the execution of the various tasks carried out by forensic accountants in general. One must be able to communicate findings regarding financial statements with the subordinates, colleagues as well as superiors through the use of various business writing formats like letters and memos. The same may also need to be communicated orally especially when a forensic accountant is called upon to testify in a trial in court. In court they are required to be clear and concise while detailing the technical parts of their testimony particularly if they are appearing before a jury.

Most importantly, a forensic accountant should possess superior analytical skills. This is basically the relating to or using logical reasoning in order to solve potentially complex problems. These are the skills that give one the ability to visualize, analyze complex problems and decide on an accurate and informed conclusion (Golden, 2011). The complex findings that are made also have to be broken down or simplified to ascertain the core issues of the research or investigation.

Role of a Forensic Accountant in a Courtroom Environment and Legal Responsibility to a Business:

The role of the forensic accountant in the court room depends on the type of case and the various parties involved. They are used in cases where the damages are difficult to determine or ascertain. In most cases, large corporations do their own forensic accounting in order to measure the damages in some legal cases. This means that most cases never reach court but are settled out of court. These experts are valuable in developing a case which is strong enough to make clear to the opposing side that the going to a trial would be a waste of money as well as risky. However, if a case goes to trial, a forensic accountant can provide services as a witness in various levels of the litigation process.

The first level is where a forensic accountant may be contracted as an expert in the early stages of the development of the case. This stage is called the “Pretrial Support” where the attorney is able to develop a good relationship with the expert. At the pretrial stage the forensic accountant may be called upon to write a report on any findings in order to establish a rough idea of the connection between the defendant’s actions as well as the losses incurred by the plaintiff.

The next stage consists the gathering of facts. The issues at and are proved or disproved at trial through the submitting and identification of documents that contain evidence. As the attorney develops the case strategies, the forensic accountant aids in the identification the different kinds of business documentation that the attorney needs to request. Further, the forensic accountant aids the attorneys to prepare for disposition of any financial experts who may use technical financial terms or financial jargon while responding to questions. This is basically helping the attorney to understand the responses from these financial experts and formulate which questions to direct to them that will help in getting to the bottom of the issue.

In most legal cases that require the services of forensic accountants, the documents containing the facts pertinent to the case require a database to be developed and managed due to their large numbers. This is where a forensic accountant comes in. He has knowledge on database management on various information systems on a computer program. He can be of valuable help to the attorney through the easing the processes of collecting, analyzing as well as summarizing the numerous facts and relative documents (Pagano, W.J, 2005)

Finally, the forensic accountant appears in court as an expert witness where the expert’s credentials are presented to the opposing counsel so as to give them a chance to challenge the credentials. At the trial the opposing it is the opposing attorney’s job to try and diminish the forensic accountant’s power over the jury as well diminish their trust in him. The financial accountant’s opinion should be based on facts in the evidence presented to the court and not based on the conclusions of viewpoints of others (Silverstone, 2012). The information that the forensic accountant uses as the basis of his opinion should be of the kind that is more or less reasonably relied upon by experts in the field in forming opinions on the subject covered by the testimony. This means that the forensic accountant testifying as an expert can use accounting records, financial statements that have been audited as well as other documents in the business as the basis of their opinion as long as they have introduced the same as evidence to the court.

Another role of forensic experts is in settlement support. Business executives may weigh their options and choose to avoid a trial which presents many uncertainties and instead opt for private settlement. At this point the forensic accountant comes in to provide assistance to the attorneys in the settlement negotiation procedures. His job is to develop alternative settlements and attach values to them. For instance, the damages that can be claimed for lost profits consist of projections. The forensic accountant can come up with various values that are acceptable to both parties.

Case One:

After researching a number of legal cases I found a few that involved forensic accountants. The first involved an International firm which was attempting to reconcile a large account following the resignation of a trusted employee. After the employee vacated the post basic auditing revealed a large number of transactions that the firm was not aware of. The firm contracted forensic accountants to assist their attorneys to build a case against a former employee who had embezzled over $1.5 million funds from the company. The forensic accountants prepared the evidence and documented every step of the numerous transactions and prepared a summary of how the funds were used by following the paper trail. The evidence documented by the forensic accountants was presented in court and was accepted without dispute. It was used for settlement negotiations in every recovery action as well as to lodge a complaint with the Serious Fraud Office in order for the case to be prosecuted. Further, the work of the forensic accounts was used to analyze and strengthen a number of internal controls.

Case Two:

The second case is about a medium size business whose owner provided inaccurate information to the IRS. The owner shared this information with a former business partner and long time friend. After a disagreement between the two parties, the latter decided to report the information told to her in confidence with the IRS. The internal revenue service started surveillance on the business but did not unearth any information or evidence that was beneficial in the prosecution of a criminal tax fraud case. Eventually, the internal revenue service found out that the accused party had failed to declare payroll taxes on employee wages which were paid in cash. The IRS further claimed that the business owner had numerous cash receipts which were unreported. Forensic accountants were brought in and asked to calculate and unearth evidence which would prove that the IRS criminal investigator was making improper assumptions about the income as well as the expenses of the business. These assumptions were made by relying on industry standards which did not necessarily apply in this business in particular. Forensic accountants proved that the IRS’s figures were totally inaccurate and couldn’t possibly be accurate. This alternate expert analysis was accepted by the government and saved the business from further harassment by the IRS.

Conclusion:

In conclusion, Forensic Accountants are very important in the business world since they have proved to be essential in proving financial motive as well as the methods that are employed in the perpetration of white collar crimes. The opinions of these experts are held in courts as unbiased since they have additional expertise as investigators to support legal proceedings.

References

Singleton, T., & Singleton, A. J. (2010). Fraud auditing and forensic accounting. Hoboken, N.J: Wiley.

Pagano, W. J., & Buckhoff, T. A. (2005). Expert witnessing in forensic accounting. Philadelphia, Pa: R.T. Edwards, Inc.

Silverstone, H. (2012). Forensic accounting and fraud investigation for non-experts. Hoboken, N.J: Wiley.

Golden, T. W., & Golden, T. W. (2011). A guide to forensic accounting investigation. Hoboken, N.J: Wiley.

Nigrini, M. J. (2012). Benford's law: Applications for forensic accounting, auditing, and fraud detection.