The TV series CSI popularized the field of forensics. CSI made the use of science in criminal investigations seem exciting, maybe even a little glamorous. While nobody is rushing out to make a TV show about forensic accounting (yet), the field is no less interesting.
Forensic accounting sits at the intersection of business, finance, auditing, investigation and the law. It is a specialty practice of accounting, often required for actual or potential disputes or legal actions. Frequently used in cases of fraud, malpractice, identity theft, and lawsuits, forensic accounting is a deep-dive into the numbers and data of the situation.
Here are a few areas in which the unique combination of skills possessed by a forensic accountant can be useful and helpful:
For owners of small businesses, the expertise of a forensic accountant can be useful in multiple scenarios, including disputes regarding contracts, business partnerships, complex tax situations, and investigations of financial irregularities. Small business owners can find themselves at particular risk of fraud, theft, and misappropriation of funds due to an environment with an assumption of trust and lack of processes and controls. A careful review by a forensic accountant can ensure that everything is running smoothly and fairly, and can help devise a system of controls to protect the business in the future.
Forensic accountants are often used in lawsuits involving medical malpractice, negligence, or fault. They are frequently called upon as expert witnesses in court to testify and quantify losses and damages. For example, in a case of medical malpractice, the forensic accountants would review insurance policies, coverages, losses, income, and future expenses.
In personal matters, forensic accountants can be used in divorce cases to sort out complex financial matters, verify income and assets, and sometimes testify in court. With their specialized set of skills, forensic accountants can often sort through this type of information faster, and for less money, than a lawyer or law office.
They say the “numbers don’t lie” and a forensic accountant works as proof of that concept. With their broad range of skills and knowledge, forensic accountants can uncover inconsistencies and help provide clarity and straightforward answers to complex financial matters.