Forensic accounting involves detailed research and analysis of financial information to identify financial manipulation and investigate monetary fraud. Forensic accountants are professional experts hired specifically for litigation processes, insurance claims, divorces, bankruptcy, insolvency, fraud, skimming, embezzlement, and any type of financial theft. This type of accounting utilizes auditing and investigative skills to assess and examine the finances of an individual or a business. The accountants who work in this field are typically a part of CPA firms; they scrutinize vital evidence and work for financial establishments, insurance companies, and law enforcement agencies. They can act as expert witnesses and testify in legal cases while analyzing economic records and accounts.
If you are facing an insurance claim, bankruptcy, or a manipulative financial discrepancy case, consult a renowned CPA in Seattle, WA, immediately. They are professionals and can guide you in the right direction, ensuring you don’t fall victim due to a lack of knowledge.
Preparing for Litigation:
You might be aware of the term “forensic evidence.” It means the evidence, whether in physical, chemical, or biological form, can be presented in a court of law to support a statement. Forensic accounting is the term used to describe the skilled professional’s thorough analysis of financial documents and account records, which is then used in court to strengthen a case. When bankruptcy or white-collar crime involving embezzlement occurs, a lot of screening of the business’s or individual’s personal or relevant accounts is required. This process can take months or even years and requires specialized accountants to act like detectives, turning over every financial activity to solve the mystery.
Typically, forensic accountants or CPAs are employed by clients who are looking to defend themselves and their cases or to prosecute someone. Many organizations, from small to mid-sized corporations, have a specialized and trained forensic accounting team that acts as various forensic auditors.
In cases of embezzlement or when a business declares bankruptcy to prevent asset or financial loss, courts or the parties owed money hire forensic accountants to evaluate the backstory of the filed cases and determine crucial evidence. It takes an expert accountant who is experienced and great at crunching the right numbers to reveal a raw look at the overall incurred damages in totality.
Different Types of Forensic Accounting:
There are numerous types of forensic auditing, which are often categorized by the kind of legal proceedings they fall under. The following are some common examples:
- Divorce Proceedings
- Securities Fraud
- Financial Theft
- Bankruptcy
- Defaulting on Debt
- Economic Damages
- Tax Evasion or Fraud
- M&A Related Lawsuits
- Corporate Valuation Disputes
- Professional Negligence Claims
- Privacy Information Theft
- Money Laundering
Criminal Investigation:
Forensic accountants look for hidden assets in divorce cases and investigate violations of contracts, torts, and disagreements in company acquisitions, such as warranty irregularities and business valuation disruptions. They look for information and analyze whether a crime or wrongful intent was involved in performing a financial activity. When faced with bankruptcy, which primarily consists of asset misappropriation, abuse, and economic fraud; forensic accountants provide an unbiased opinion of your financial history and books.
When hiring a forensic accountant, look for crucial factors such as experience, court appearance, likability to your case, personal skills, credibility, and most importantly, the cost and fee structure. Remember, a generic accountant may not be able to help you with your investigation of financial numbers, as forensic analysis of accounts requires in-depth knowledge and relevant experience in economic crimes. Additionally, you must check for factors like CFE (Certified Fraud Examiner) certification. Forensic accountants must be trained in areas of investigation, identifying financial discrepancies, detection, and various specialized auditing techniques.
