What is Forensic Accounting?
Forensic /fəˈrɛnsɪk/ relating to courts of law, from Latin forensis ‘in open court, public’,
A forensic accountant provides accounting services in disputes; they hopefully help to resolve financial issues!
Skills of a forensic accountant
- The forensic accountant needs specialised technical knowledge derived from training, study and experience, for example, business valuations and quantifying damages
- The forensic accountant needs hefty investigation skills: collecting, analysing and evaluating
- Finally and most importantly, the forensic accountant needs to be able to communicate clearly. To critically think and interpret. To be able to explain numbers to arithmophobic lawyers and judges. To match the story with the numbers.
The secret to a successful cross-examination starts with the report. Having great attention to detail. Staying objective. Having opinions fully supported and backed up. Thinking through the objections.
Forensic accountant services
According to the Accounting Professional & Ethical Standard 215 on Forensic Accounting Services, the following key services are considered forensic:
- Expert witness services — the forensic accountant expresses an opinion or provides other evidence to the Court based on knowledge, experience and training
- Investigation services — the forensic accountant performs, advises or assists on an investigation
- Consulting expert services — the forensic accountant acts as an advisor, arbitrator, mediator, referee or provides expert determination
Types of work
The types of work typically completed by the forensic accountant include:
- Valuations — valuing businesses, shares, assets and liabilities, for use in shareholder disputes and transaction disputes
- Valuing Economic Damages — calculating actual and potential damages such as lost earnings, lost profit, lost business and the physical loss of property
- Family disputes — uncovering hidden assets or undisclosed sources of income, valuing business interests and preparing a statement of assets and liabilities
- Investigations — examining financial statements to identify irregularities, such as overstatements, understatements, and omissions and calculating the effect of such issues
Other forensic accounting work commonly includes: identifying documents that need to be discovered, extraction of financial information and interpretation of financial information.
Often a matter can involve a large amount of information and or be complex. The role of the forensic accountant is to sift through the information and identify relevant and pertinent facts.
Simon is a Chartered Accountant Accredited Business Valuer and Accredited Forensic Accountant.
LOTUS AMITY
Business Valuations | Forensic Accounting
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