Do You Need a Forensic Accountant?
Summary: Forensic accountants can value a business as well as calculate losses and potential legal damages. Might they be able to help you? Click through to learn when you need to employ a forensic accountant and how forensic accounting works.
If you discover money missing from your business, you need a forensic accountant. Forensic accountants are qualified to audit your firm and determine whether you were robbed or taken advantage of financially. They’re the people you need when you need to find out where the money went. These experts can research and analyze your firm’s finances and then present facts to judges, jurors and mediators as witness testimony, substantiating damages and proposing settlement figures.
Fraud cases aren’t the only ones that can benefit from a forensic accountant’s testimony. A forensic accountant can also provide evidence in cases involving breach of contract, product liability, construction claims or intellectual property infringement — any unjust commercial loss. Many times, he or she can help your company reach an agreement with the plaintiff before you ever see the inside of a courtroom.
Perhaps commercial insurance is not following through on claims. A forensic accountant can investigate coverage issues and calculate how much your insurer owes you. You may have a personal injury claim in which you need the investigator to put together a picture of losses and damages, including everything from medical bills to lost wages. Insurance cases can involve accusations of wrongful termination, medical malpractice and even wrongful death.
Last, a forensic accountant can help you if you’re embroiled in a partnership dispute over who gets what. He or she can look at the entire picture and come up with an amount of compensation or benefits owed.
Take an in-depth look at your business
In cases of fraud, you will need a forensic accountant to work with your auditor to detect and respond to the malfeasance. An auditor working alone is not enough, because the auditor’s role is to validate bookkeeping against financial statements, verifying that your financial statements are not materially misstated. His or her primary concern is making sure your financial statements are presented fairly to stakeholders. Fraud is typically concealed within your expenses by the fraudster. It’s the hidden nature of fraud that makes it so difficult to identify.
Forensic accounting may even prevent fraud from occurring. Early planning can help prevent a sequence of events from happening that would result in a customer or client committing fraud against your business.
If your business suspects theft, fraud or embezzlement, you may call in a forensic accountant. Employee fraud may occur because an employee is under financial pressure due to a divorce, gambling addiction or medical issue. Employees may rationalize the behavior by thinking their pay isn’t sufficient or they were passed over for a promotion. A thieving employee may have been in a position of trust for many years and knows where the vulnerabilities are and how to exploit them.
A shield for ongoing protection
A forensic accountant can investigate data in financial transactions and suggest how to modify policies to better protect your business. If data is stored on multiple computers across various platforms, a forensic accountant can work to recover the information.
A forensic accountant can also advise you on how to improve internal controls, recommending such strategies as segregating duties and dual-employee interactions when completing pivotal tasks like bank reconciliation, counting cash and reviewing financial statements.
A forensic accountant may be able to get the discovery process moving quickly, saving time and hassles. Look for someone who has a strong background in accounting and financial analysis, as well as strong communication skills and perseverance. Let us know if you think you need forensic accounting help.
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