Forensic accounting is a specialized form of accounting that is needed when legal disputes or ligation are expected (or already in progress). The word “forensic” means “suitable for use in a court of law,” so forensic accountants base their work on the presumption that their findings, and possible testimony, must conform to that standard.
In matters of suspected fraud or corruption (including asset misappropriation, financial statement fraud and other schemes), it’s a good idea to have forensic accounting experts handling the investigation. Obviously, not every case will proceed to a courtroom. There are a few scenarios that can take place in a financial investigation.
- No fraud: In the best case scenario, the irregularities are found to be accidental or immaterial and do not constitute fraud.
- Handled internally: If fraud is discovered, some companies seek an agreement for restitution (and sanctions for the offending party) without necessitating charges or a trial. While the company might decide this is their desired option, the downside is that it can leave the perpetrator with a clean record – and free to move on and commit fraud at another organization.
- Prosecution: If significant fraud is discovered, it is likely that the company will press charges, and the investigation will advance into the legal process. Evidence that has been carefully gathered by forensic accountants will be used to help build a case that will be argued in court.
- Litigation: In a worst-case scenario, the target of an investigation might bring legal action, alleging wrongful dismissal, invasion of privacy or other issues. This is another situation where it is critical that forensic accounting experts who know the law have been working on the case. By following correct procedures and collecting evidence in a proper, legal way, the organization can defend itself from possible legal suits.
It’s clear from the scenarios above that when financial pressure leads to fraud, you need a qualified forensic accountant – or better yet, a team of them – to unravel the numbers and the facts of the case. It is a specialized skill for a task that should only be conducted by experts. CRI Group’s highly qualified forensic accountants, which include our Certified Fraud Examiners (CFEs), can certify your books, track potential fraud and ensure that your company is moving forward safely.
What types of investigations involve forensic accountants?
- Financial statement fraud
- Asset misappropriation
- Money laundering
- Securities fraud
- Tax fraud
- Cybercrime/computer fraud
- Business valuation
- Bankruptcy and reorganization
- Economic damages calculations
Forensic accounting experts can quickly find discrepancies in your finances and investigate the source of the problem. The future of your business depends on safeguarding assets and investments from fraud. Ask how CRI Group can help your business by preventing and detecting fraud — thereby improving your bottom line.