Research onForensic Accounting in Practice


The word Forensic means to bring to the court, which was previously done in a civil manner. But now as the world globalize, it brings with it new flavors, so modern world is now using the word in terms of both civil and digital manner. The process is emerged as a response by observing a rise in rate of computer related crimes that is increase in an objective of crime, an instrument that is used to commit crime or storage area of crime proofs.

Forensic accounting is a part of forensic sciences that deals with the incorporated advancements related to the field of accounting. It deals with the detective skills, investigative expertise along with the portions of auditing. The field has endowed people with absolute examination services related to accounting that can be fashioned in the court of commandment. These services further starts to deliberately discuss and argue issues in order to resolve disputes.

It is a unique field that comprises of lawsuit support along with investigative accounting standards. Considering the two components than lawsuits shores up actual illustration of facts related to economic questions whereas investigative accounting evaluates offenses associated with crimes. Forensic Accounting is a part of digital forensic science that deals with maintaining officially authorized proofs in an advanced digitalized storage units (Peter, 2002). The main purpose of this science is to inspect and scrutinize crimes and conduct investigation through digital media in a forensically sound environment that is to categorize, maintain, assess, present and interpret facts and figures in a proper way.

It is normally related to the investigation and exploration of crimes and sometimes it is efficiently utilized for general arrangements. Both areas involve same length of policies and procedures that is it encompasses with similar methods of recovering data. Forensic accounting is the aptitude and capability to make speedy reply to situations, and to be able to surpass on financial details in an apparent and comprehendible tone. The officially authorized evidences which are derived out from computer forensic system follows the same guidelines and specifications as that of any other digital proof. (Soomer, 2002)

Through, forensic accounting, it would be easy to control illegal part present in this peaceful world. The major significance that it carries includes recovery and analysis of concealed evidence. For example, hidden truths and concealed proofs can take several forms like from fingerprints left on a window to DNA evidence recovered from blood stains to the files on a hard drive. (Forensics, 2008)

The project that is assigned deals with Forensic Accounting and the skills that Forensic Accountant need to measure relationships between each expertise. It will analyze the connection between human skills and business operations. Besides that it will discuss the role of forensic accountant with that of courtroom environment. It will illustrate the officially permitted task that a forensic accountant has while providing service to a business and finally some of the cases will be presented to determine the significance of forensic accounting and the job duty of forensic accountant.

Skills that a Forensic Accountant needs to Possess and Evaluate the Need for Each Skill, Relationship between the Skill and its Application to Business Operations

Forensic accounting is a field that is introduced in twentieth century; before that, people were unaware about this field. Although forensic operations were a part of business world but the field was not assigned with a designation. This term came to be known after the incidents of Enron Corporation and JP Morgan. People who are interested in this field should be curious, intelligent and they must have interest in details of subject (Linda, 2013). Actually, this field is time consuming because a lot of time is required to research on criminal activities, but besides being complicated, this field is rewarding as well. They compensate their workers with a good salary package along with benefits and perks.

Employees of Forensic Accounting are bound to investigate white collar crimes like deceiving, fraud, burglary activities, illegal coverage of financial reports and unethical crimes related to investment. The recent research conducted by Federal Bureau of Investigation demonstrated that the rate of white collar crimes is on its increasing trend. It is estimated that white collar crimes have cost three hundred billion dollars to United States (Peter, 2002). It is necessary to trim down these activities otherwise United States will suffer a setback in terms of business loyalty.

A forensic accountant is a combination of skills and talents but the major five that he must be concerned with includes: effective communication skills because they have to interview, communicate, interact and cooperate with their team. Actually, department hires research teams for specific projects, the success of project depends upon the collaboration between people.

Besides effective communication, Forensic Accountants must be attention to details and their conduct must be professional. Attention to details determined their information gathering, focused, responsible and capable attitude. For example, if a forensic accountant has to audit a multinational firm than he would check the particulars behind each entry (Smith, 2012). He would search out data from anywhere. As far as ethical or professional behavior is concerned than without appropriate professional conduct people would take you light and easy. World is full of thieves, crooks, pocket lifters and burglars; leniency of forensic accountant can cost his career, personality and life. Professionalism adds to the personality and reputation of individual as well as respective field.

The fourth skill that a forensic accountant must possess includes sound judgment. He must be practical, open to experience, adventurous and a risk taker. He must have strength to face the hardships and he must be vigilant, integral and honest, no matter how worst the situation is.

Finally, it is discretion that adds to the responsibility of Forensic Accountant. They have to be talented and bright enough to recognize the difference between correct and incorrect. They have to present the information as they obtain and they should inquire the correct questions to get the information they require. Forensic Accountant has the authority to choose whatever communication methods he wanted to use. These people are allowed to use verbal, non-verbal, formal and informal means of communication.

Role of a Forensic Accountant within a Courtroom Environment

Students of forensic accounting must have a brief idea about the role and function of Forensic Accountant within a court room. There are certain assumptions regarding this field; some people consider forensic accountants as a source of presenting proofs and evidences while others perceives them as a security agent to keep an eye on criminals, but actually Forensic Accountants are responsible to expose hidden truths within a courtroom environment.

United States is already subjected to business unethical disciplines, corporate scandals, etc. and day by day it is boosting up, that is why field of Forensics is gaining popularity across world (Dixon, 2005). Traditionally, it was opted by law enforcement agencies but now it also utilized across corporate organizations.

Forensic accounting is the applianceand function of the expertise and preparation of a chartered accountant to search out, investigate, and find solutions to ethical issues. The result of all such disputes ends in a court of law (Smith, 2012). Accounting system is bound to deal with fraud activities therefore role of Forensic Accountant is to disentangle and untie the history of transaction and to expose what has actually occurred.

In terms of courtroom they have to present a numerical presentation of financial losses experienced by an organization or an individual. They have to sketch financial operations from a bank account to another bank account and they have to guard the recovery of assets. It has been noticed that numerous organizations beautify their financial reports with incorrect adjustments and wrong entries in order to outdo audit, therefore role of Forensic Accountant is to clearly understand it and to comprehend accounting reports and transaction in the court of law. Thus, they reveal facts associated with business corporations, investors, shareholders, upper management and insurance department (Linda, 2013).

Now, one can clearly understand, why communication is the basic skill that a Forensic Accountant must have? It is because they have to present, discuss, elaborate and justify each case properly.

As far as cases related to fraud activities are concerned than Forensic Accountants gets its report through investigation agents (Venansius, 2004).After having the required knowledge, they start exploration and inquiry along with other investigators. They research it till they find out the base of losses. When hard workand struggle have been done to cover upor obscure substantiation, members of forensic accountant technology team pull through and progress the digital confirmationand substantiation using complicated software. Furthermore, they carry out work with respect to contemporary procedures and advocatepedals to put off or trim down the prospects and chances of vendors’deceit (U.S. 2008).In terms of court room environment, they present documentations to the expert that serves as witness in communal and scandalous proceedings.

Legal Responsibility a Forensic Accountant has while Providing Service to a Business

Forensic Accountants are usually recruited by large organizations, ruling professionals and authoritative divisions to assist team in cases related to deception, scam, and fraud from accounting point of view.

As far as their legal authorities are concerned than Forensic Accountants are responsible to eliminate, investigate and search out illegal cases associated with white collar crimes, fraud activities in a bank, detection of terrorists and computer scams. Besides that, they are responsible to provide assurance in terms of economic protection; they have to create an environment that is safe for clients as well as business investors, they have to determine losses that a company faced and methods to prevent such action to be happen in future.

In such a way, investors will trust organizations; they can easily invest their amounts because of the support of authentic source. Forensic Accountants are responsible to provide job security because the field to which they belong is powerful enough to provide job opportunities to thousands of jobless citizens (Dixon, 2005). They are considered as head of ethical disciplines that is why they try to eliminate the terms like money laundering, inside trading, insurance fraud, etc.

Further, they keep an eye on illegal trading of drugs. Divorce commitments and marijuana trafficking. They use mathematics and logical operations to find out details.

Summarize the Cases and the Importance of the Forensic Accountants’ Role during each Case

Although United States is full of cases where Forensic Accountants participated as a whole but one cannot mention each and every case. So, some of cases where Forensic Accountants applied efforts are as follows:

The case study that I will explain is related to a divorce issue. It is a factual representation of an African American class fellow to whom I met in the classes of business law in 2011. Actually, that guy was married some years ago but he possesses some concealed benefits for which his wife was unsure since the time of their wedding (Venansius, 2004). Now, after a decade of their marriage her wife caught him and revealed that her husband possesses some family monetary assets confined. Now, when she comes to know about the secret, she fought with her husband. They had a severe fight that leads to divorce.

Forensic Accountant plays a prominent role in the scenario that is defined above. These are the people that assist and support divorce proceedings by assuring wife that she will be granted with portion of hidden assets. Forensic Accountant investigated the case; the team explored and inspected the hidden treasure and helped family by transferring property to their name.

The second case that I would be presenting is related to criminal tax fraudulent actions. There was an individual who possess a small family owned business. He along with his family did not provide detailed information about their business to governmental institutions. In such a way they were not taxed on fair basis (U.S. 2008).The family told unreported narration of twenty five hundred and forty thousand dollars to a close relativewhohelped the family for generating Internal Revenue Service in the case of criminal fraud. The business later progressed for a year because internal members of organization were supporting them. None of the personnel or agent was able to explore the illegal action. Finally, a team of Forensic Accountants was hired to find out the inappropriate conduct. They find out and pointed their finger towards the party that failed to withhold payroll taxes. Later, they claimed owners of that businessto pay off the debt and unreported amount.