When do you need forensic accounting and what does it entail?
What is forensic accounting?
Forensic accountants may be hired if a business suspects theft, fraud, or embezzlement. This is a specialised form of accounting conducted by an expert in a particular field. A forensic accountant may even testify in court as an expert witness.
Forensic accounting utilizes accounting, auditing, and investigative skills to conduct an examination into the finances of an individual or business and provides an accounting analysis that is suitable to the court which will form a basis for discussion, debate and ultimately dispute resolution.
When do you need a forensic accountant?
Forensic Accountants are trained to look beyond the numbers and deal with the reality of the situation. There are several areas that a forensic accountant can provide expertise:
- Marital separation and divorce
- Maintenance renegotiation
- Loss of earnings and personal injury claims
- Breach of contract, consequential loss, and commercial litigation
- Company Valuations / Due Diligence
- Shareholder/partnership disputes
- Professional negligence
- Government enquiries
- Fraud and white-collar crime
- Insurance claims
- Financial investigations
- Rent disputes
It is recommended that as soon as it is recognised that there may be a need for a forensic accountant, an expert in the area should be retained. Early involvement of a forensic accountant to examine the financial and business aspects of disputes often leads to speedy and cost-efficient resolutions.
This can also be used as a more preventative tool. A forensic accountant can provide advice on how to improve internal controls to decrease the opportunity for future employee fraud. They may recommend strategies such as segregating duties and dual-employee interaction when completing pivotal tasks such as bank reconciliation, counting cash and reviewing financial statements.
One thing that can open a business up to potential embezzlement is data breaches which we have seen a lot of this year. Newer systems such as cloud computing, paperless, in-app banking, picture depositing checks, the latest trends in conducting business and banking are creating increased exposure to global threats.
According to Fortune.com, the Identity Theft Research Centre reports the number of data breaches so far this year has already surpassed the total number in 2020 by 17% which could be a record-breaking year for data compromises. So far in 2021, 281.5 million people have been affected by some sort of data breach.
How can we help your company?
At Cronin & Company, our accounting professionals have expertise in compiling accurate and credible forensic accounting reports. For more information, please do not hesitate to contact our audit & assurance department.