Forensic Accounting in Practice
Professor Demetrius Carolina, Sr.
Bus 508-Contemporary Business
February 16, 2013
The purpose of my paper is to explore Forensic Accounting and the many aspects surrounding the field. I will determine the skills necessary to be a forensic accountant and its application to business operations. I will also describe the role the forensic accountant plays in a courtroom environment and the role played by the forensic accountant in the litigation process. I will also provide case examples where forensic accountants are used and have provided vital evidence in the case. Today, forensic accounting is a rapidly growing segment of ...view middle of the document...
An experienced forensic accountant should possess certain skills and characteristics to be successful. They should absolutely have a strong knowledge of accounting and financial analysis. They should have curiosity, discretion and sound professional judgment and the ability to listen effectively and communicate clearly. A wide range of skills are necessary because forensic accounting cases can span a wide range of business problems and disputes so a varied range of skills are required. I believe investigative skills are important because auditing and accounting skills provide the forensic accountant with core investigative competencies. These core skills are supplemented with experience in financial matters such as corporate financial planning and working capital management.
Computer skills are also critical to the forensic accountant’s investigative arsenal. The required skills often go beyond the need to use word-processing and spreadsheet software. Some forensic assignments require the use of financial modeling software. Estimating lost profits is accomplished by making assumptions about what would have been. Based on these assumptions, Pro forma financial statements are prepared. Pro Forma financial statements are the complete set of financial statements issued by an entity, incorporating assumptions or hypothetical conditions about events that may have occurred in the past or which may occur in the future. A budget may also be considered a variation on pro forma financial statements, since it presents the projected results of an organization during a future period, based on certain assumptions.
Interviewing skills come into play when gathering evidence. Knowledge of effective interviewing techniques is essential for most types of forensic investigations. The forensic accountant can’t just rely on paper trails, computer databases, and documents to provide evidence. A lot of times, the accountant must acquire the information from people possessing critical information. Through interviews the forensic accountant can obtain information that identifies key issues of a case. Leads can be developed to other sources of evidence. Information about the personal backgrounds of those involved can be obtained in interviews. Interpersonal relationships can be uncovered. Possible motives can be explored. Interviews can be used to obtain the cooperation of victims and witnesses.
Planning carefully is a key to a successful interview. A second chance to interview someone is often impractical. A field visit to a distant place is expensive, and a second visit isn’t practical in most cases. In the field visit, the forensic accountant may have only one opportunity for an entrance interview and an exit interview. Therefore, planning should encompass what information is needed and the interview techniques designed to obtain it. Interviews should be planned so that there is enough time to accomplish the accountant’s objectives. Time shouldn’t be spent...