Forensic accounting


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Forensic accounting

  1. 1.  An orderly analysis, investigation, inquiry, test, inspection, or examination along a “paper trail” in the search for fraud, embezzlement, or hidden assets  Two parts: Investigative accounting Litigation support  Treats all figures as suspect until proven otherwise
  2. 2. Motive Rationalization Opportunity
  3. 3. Fraud is something the internal or external auditors were supposed to guard against through their periodic audits. Now that auditors can only check for the compliance of a company’s books to generally accepted accounting principles, auditing standards, and company policies, a new category of accounting was needed to detect the fraud in companies that suspected fraudulent transactions.
  4. 4.  Investigating and analyzing financial evidence.  Developing computerized applications to assist in the analysis and presentation of financial evidence.  Communicating their findings in the form of reports, exhibits and collections of documents.  Assisting in legal proceedings, including testifying in courts, as an expert witness and preparing visual aids to support trial evidence.
  5. 5. Often associated with investigations of criminal matters. For eg: A typical investigative accounting assignment would be an investigation of employee theft.  Review of the factual situation and provision of suggestions regarding possible courses of action.  Assistance with the protection and recovery of assets.  Co-ordination of other experts
  6. 6. Provides assistance of an accounting nature in a matter involving existing or pending litigation. It deals primarily with issues related to the quantification of economic damages.  Assistance in obtaining documentation necessary to support or refute a claim.  Review of the relevant documentation to form an initial assessment of the case and identify areas of loss.  Assistance with settlement discussions and negotiations.
  7. 7.  Criminal Investigations  Shareholders' and Partnership Disputes  Professional Negligence  Business Economic Losses
  8. 8.  Meet with the client  Perform a conflict check  Perform an initial investigation  Develop an action plan  Obtain the relevant evidence  Perform the analysis  Prepare the report
  9. 9. Niche consulting refers to the need to specialize. The need for niche consulting has become imperative because:  Recent corporate accounting scandals  Outcry for transparency and honesty in reporting  Fast based development in business
  10. 10.  Curiosity  Persistence  Creativity  Discretion  Confidence  Sound professional judgment
  11. 11.  Post Graduate Diploma in Forensic Accounting  Certificate Course in Forensic Accounting Profession  Certified Anti-Money laundering Expert  Certified Bank Forensic Accounting  Certified Vigilance and Investigation Expert
  12. 12. Forensic accounting has come into the lime light due to following reasons: -- rapid increase in frauds and white collar crime -- belief that law enforcement agencies have insufficient expertise Forensic accounting, in fact, integrates accounting, auditing, and investigative skills to conduct an examination into a company’s financial statements. While the forensic accounting and auditing practice had commenced in the US as early as 1995, the seed of this specialization has yet to take off in India.