Assignment 3: Forensic Accounting in Practice
Forensic accounting is accounting performed in preparation for legal review. The word "forensic" means with relation to lawyers or law courts'. Forensic accounting is the specialty practice area of accountancy that denotes engagements which results from real or anticipated disputes and litigation. Forensic accountants help resolve problems involving complex financial information by taking a skeptical view, investigating below the surface of an organization's accounting system to find out what actually happened. They are often called upon as expert courtroom witnesses if a case goes to trial. ...view middle of the document...
Enhanced skills also affect the education and training for forensic accountants as they choose an area of specialization. The questionnaire addressed these issues in three questions, all of which were answered by the three groups of respondents (Davis, Farrell & Ogliby).
The respondents were asked to choose the top 5 items for each question from a larger number of attributes. For example, the first of the three questions was: “Please identify the five essential traits and characteristics for a forensic accountant.” The most striking finding in the traits and characteristics results is the highest value for “Analytical” in all three groups. The “Detail-oriented” choice is close behind for attorneys and CPAs. Complementing the analytical characteristic is the “Inquisitive” trait and the “Skepticism” trait. These highly ranked traits suggest the need for the forensic accountant to seek out all relevant information for an engagement, as well as be able to process it and solve the problem at hand. After looking over the results of the questionnaire, I chose “Ethical.”(Davis, Farrell & Ogliby).
The need to be analytical in forensic accounting is the most important characteristic, without this trait, other traits and abilities would be difficult to develop. The importance of analytical traits and abilities is supported by earlier studies like the study performed by DiGabriele (2008) that found that deductive analysis and analytical proficiency were important attributes for the forensic accountant. After the analytical traits, “softer” traits like the “Intuitive” trait was ranked in the top 5 only by CPAs, at rank #5. CPAs also chose the “Inquisitive” and “Skepticism” traits that support “Intuitive,” second and fourth highest overall, respectively. There is a developing belief that intuition springs from specific knowledge and abilities gained through experience. In addition, “Ethical,” was ranked third by those in the field, with academics ranking it second. The high ranking of “Ethical” is consistent with the mission of the forensic accountant (Davis, Farrell & Ogliby).
The Role of a Forensic Accountant within a Courtroom
The role of the forensic accountant within a courtroom environment is based on the type of case, the parties involved and the support needed. According to a Forensic Accounting textbook, a forensic accountant is most likely used when damages are difficult to determine or prove. In reality, most cases never make it to court. A forensic accountant can be valuable in building a case that is strong enough to show the other side that going to trial can be risky and costly, therefore, they settle outside of court. If a case does go to trial, a forensic accountant can provide services as an expert witness and support during the pretrial, trial, and settlement stages of the litigation process.
In the pretrial stage, a forensic accountant may be engaged as an expert very early in case development. An attorney may...