Forensic Accounting Services
A forensic accountant is a person who is specialized in assisting tax professionals, such as accountants, in providing tax-related services for court proceedings and criminal cases. The Certified Forensic Accountant (CFAC) program by the American Board of Forensic Accounting focuses on professional accountancy skills. The program consists of a learning component and a practice test. The Learning Component addresses the knowledge needed to prepare a forensic accounting report. This includes an introduction to accounting principles and practices, introduction to forensic accounting methods, introduction to management accounting systems, cross-examination skills, accounting summary reports, and accounting management techniques. The Practice Test addresses topics relevant to the area of forensic accounting.
There are many instances where forensic accounting services are used in litigation. One of the most common is evidence collection. Experts in this field collect financial information through a variety of means, including computerized data systems, depositions, testimony, and records. Experts in this area often work as investigators or retain consultants to assist in litigation.
Another example of forensic accounting services is litigating a dispute over a property’s value. In this instance, experts will often interview witnesses and make analysis of documents. They will also try to establish an accurate appraisal using real or virtual property value. If the case cannot be settled based on these appraisals, the dispute may end up in court. Experts participating in this method of dispute resolution will use methods to collect and evaluate information relevant to their arguments to arrive at their conclusions.
The American Board of Forensic Accounting offers resources and educational training to help participants understand what it takes to become an expert forensic accountant. Participants are taught how to spot red flags that could signal fraud or other potential problems, how to document the same, how to analyze the same, and how to communicate their findings to decision makers in the legal field. Because this is a very sensitive profession, trainees must pass a rigorous exam given by the ABA.
Another type of forensic accounting services involves the detection of fraud or other forms of neglect within an organization. Internal control is the process of managing business activities and ensuring that they are conducted in compliance with applicable laws and regulations. An internal control expert will determine whether or not a company’s management has been ineffective in controlling business practices. These include data analytics, which studies how people buy and sell goods and what factors influence their decisions, as well as management practices, such as the creation and management of policies and procedures, quality management, and the identification of risks.
Many firms rely heavily on external services, especially in complicated and sophisticated matters. Because of the specialized nature of many financial audits and investigations, even small firms must hire experts who have the knowledge and tools required for thorough and effective investigations and dispute resolutions. Whether performing an internal audit or conducting an external one, forensic accounting services can be an invaluable partner to management and law enforcement officials in detecting and correcting practices and errors and in resolving disputes related to unreported income and discrepancies that may exist between reported and unreported income.