When one hears the phrase “forensic accounting”, it is usually followed by “oh wow, that sounds exciting”, and it is! The StarTribune calls it “CSI for the number-crunching crowd” in an August 1, 2015 publication. Forensic accounting is a comprehensive analysis of financial and accounting records in order to provide a basis for the courts to use in a dispute between two parties. Traditional accounting expertise is used as the basis for forensic accounting, however the analysis of records goes many layers deep, as forensic accountants trace the source of funds and follow each transaction through it’s full life until it reaches it’s final destination.
Forensic accountants are used in many situations where there is a suspicion of fraudulent activity, but they also work to prevent fraudulent activity from occurring. It is impossible to eliminate the risk of fraud, however forensic accountants can help develop and implement various controls to minimize risk, identify problem areas, and react in crisis situations.
In closing, I want to highlight a question that our managing director, Eric Stephens, was asked in August for the above referenced publication:
Q: What is the difference between forensic accounting and regular accounting?
A: “Conventional accounting is more a function of balancing the books with a goal of producing accurate financial statements. Forensic accounting provides a more in-depth analysis of the underlying data with a goal of detecting or investigating fraudulent activity. For instance, in a traditional accounting setting, the cash account would tie to a bank statement and be reported on a balance sheet. In a forensic accounting arena, many areas would be investigated, the source of funds, the movement of cash, the veracity of the underlying data — is it really liquid or illiquid, and does it consist of U.S. currency or non-U.S. currency? The result of those questions, may lead to a set of questions surrounding, for instance, FCPA violations, money laundering, or any number of other potential risks.”
Within forensic accounting, expertise spans across various types of fraud, industries, cultures, etc. If you have questions about the types of services we offer directly please visit our website at www.intellexforensics.com.
Please let me know if you have any questions or comments.