A forensic accounting engagement applies accounting, auditing, and investigative skills to examine, analyze, and report on financial information in a manner suitable to the court. An audit is performed by an internal or external auditor, who must adhere to a certain set of standards established by the American Institute of Certified Public Accountants. Forensic accounting services are usually necessary when there is a dispute or lawsuit already in place. The goal of the forensic accountant is to analyze, report, and assist the court in understanding the financial aspects of the case.
At my firm, the most common types of cases we work on are: ponzi schemes, embezzlement fraud, damages, estates, and bankruptcy analysis. Clients also engage us, as forensic accountants, when they suspect somebody is misappropriating funds from their business. During these engagements, we analyze the financial information, interview employees, and help them implement effective internal controls for their businesses.
Very often we uncover that the fraud was performed by a long-time trusted employee or someone in a management position. This investigation could be in relation to a trial or some form of mediation. Most of forensic audits and forensic examinations are conducted by Certified Fraud Examiners CFEs , or forensic accountants who are normally considered experts in a specific field of forensic accounting. As you can see, an internal audit is about more than just money. It provides a complete picture of how the organization operates and where it needs to improve policies, procedures, and practices.
When in doubt, your organization should reach out to both a forensic accountant also known as a forensic auditor and an internal auditor to further discuss your needs. These professionals can assist you with determining which service offering is more appropriate for the scope of the matter as well as ensure that the most qualified person s are on your engagement team.
The aftermath of fraud can leave an organization reeling, regardless of size. The extent of the damages can have a lasting impact on an organization and recovery can be difficult. A fraud examiner can help you break down the information, so you can detect and prevent questionable activity.
Now that we have explored the similarities between forensic accounting and auditing, it is time to discuss how the two are different. The first point to consider is this: all auditors are accountants, but not all accountants are auditors. This is because forensic accountants are those who, by virtue of their skills, attributes, and experience are experts in uncovering and documenting fraud in financial transactions. They also need to have knowledge of how to gather evidence of and document fraud for criminal and civil purposes, how to interview third-parties, and how to testify as an expert witness should a case go to court.
Another important difference between forensic accounting and auditing is how the disciplines are utilised. Forensic accountants are specifically deployed to uncover cases of fraud.
Their primary objectives are to find out who committed the fraud, how it took place, how much money was taken, and how to stop it from happening again in the future. While a properly planned and executed financial audit can sometimes uncover evidence of fraud, this is not the main function. An audit will not analyse every single transaction, nor will it look for fraud specifically. For more information about the objectives of a forensic accountant, please read our blog on the subject.
Auditors owe primary allegiance to the investing public, to ensure that shareholders are not being duped into parting with their cash on the basis of falsified financial statements.
This is an ongoing responsibility, meaning their remit is often general in nature. When it comes to forensic accountants, however, their remit is extremely specific. Their objectives are clearly defined in an engagement letter, while their work is typically directed through counsel, and is therefore privileged and confidential.
0コメント