What are Forensic Accounting Firms?
Accounting is a complex field that needs the services of qualified professionals with good years of training and formal education in the field of accounting. There are many sub functions that are part of the entire gamut of accounting and finance. Starting with the normal accounting functions to audit to taxation – all are important for an organization. Another field of accounting that has gained prominence is forensic accounting.
Forensic accounting firms are organizations that engage certified professionals in accountancy and train them in forensic accounting. Top firms prefer accountants that have been specially trained in this field of forensic accounting. Though accountants and lawyers were involved in investigating crime and other frauds related to financial transactions, the increase in such instances have given prominence to forensic accountants.
These accountants are called in when fraud is suspected or when a company enters into a financial dispute with any of its stakeholders – clients, suppliers, vendors, investors, etc. They also play a role during mergers and acquisitions. More and more, forensic accountants are being involved in routine audits as well to ensure that the company is compliant with all the rules and regulations.
Role of Forensic Accounting Firms
As discussed earlier, the forensic accounting firms are getting involved in a host of activities. They play an important role in investigating cases of fraud, embezzlement, money laundering and financial discrepancies. Other than this, forensic accountants also become a part of many financial disputes, even in divorce cases, and provide testimony in the court of law in any particular case that has their involvement at any point of time.
Role in Dealing with Fraud
A professional forensic accountant is one who receives intensive training and becomes certified fraud examiner (CFE). They perform in-depth study of financial statements to detect fraudulent and/or illegal activity and to discover funds that may have been embezzled. Their services are important to solve problems in internal matters of the company as well as in their dealing with external clients and stakeholders.
Role in Mergers and Acquisitions (M&A)
Investors perform due diligence in all deal and engage the services of a forensic accountant to do an in-depth review of the organization or company that they are negotiating with for M&A. They study the financial statements in detail with an eye for any discrepancy or window dressing that can prove costly for the company which is planning to take over or merge with the company under investigation.
Role in Legal Matters
Forensic accountants are frequently involved in court cases and hence, they are trained to give testimony, as an expert, in court. They frequently aid prosecutors in cases that involve theft as well as false financial reports. They get involved in both criminal as well as civil suits. They support the prosecution in finding evidence and making statements and reports for producing them as evidence in a trial.
Thus, forensic accountant are involved in a host of activities and can prove be a valuable addition to a company’s accounting staff itself.
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