Financial crimes account for 3.6% of the global GDP, and companies struggle to lower the numbers. The increasing use of technology has made it even easier for fraud and embezzlement to occur, making it imperative for companies to find ways to get rid of it. One effective way of curbing financial crimes is through the use of forensic accountants who combine their accounting, auditing, and investigative skills to identify financial crimes.
A forensic accountant is responsible for investigating fraud upon confirmation of suspicion. This is an intensive process that analyses data to identify possible discrepancies. The forensic accountant will check the bank statement, journals, databases, emails, ledgers and memos to determine the following;
- The type of financial crime taking place
- The period of the crime
- Involved parties and how they concealed the fraud
- Impact of the fraud on the company
From here, they interview the management and employees of the company for insight into the irregularities. Forensic accounting relies on observation skills to identify hints and clues leading to the perpetrator.
Even after getting information from all parties, forensic accountants use their analytical skills to speculate what transpired. After reaching a conclusion, they create a plan and inform the company about the next steps. Employees, managers and other personnel are expected to cooperate throughout this period.
2. Analysis and Reporting
The forensic accountant will involve law enforcement in investigating suspects based on the available evidence. The analysis process consists in checking the company assets, calculating losses, tracking transactions and determining how the crime occurred.
They will use this data to generate a comprehensive report to submit to prosecutors and law enforcement officers steering the case. This report includes charts, graphs, and sheets to explain the case clearly.
3. Litigation Discovery
Forensic accountants conduct litigation discovery by engaging attorneys to review investigation reports and their significance. These accountants will provide any additional information that will assist in questioning witnesses. If there is a damage report, the business advisory accountant will review it to determine whether it is factual and beneficial to the case.
4. Testifying in Court
After the case is taken to court, the business advisory accountant takes the stand as an expert witness. They use their knowledge about the events in the case to testify against the perpetrators. They will also present their evidence in simple terms that everyone can understand. The judge and the jury will use this testimony to deliberate and give a final verdict. Based on the court findings, the judge will issue orders for recovery and compensation if a financial crime is committed.
Forensic accountants are now indispensable in assisting companies, businesses, and institutions in uncovering financial crimes. Besides accounting, investigation and auditing skills, forensic accountants must also show a sense of urgency and commitment. They must report promptly to ensure civil litigation proceeds efficiently for timely settlement. In addition, companies must also dedicate their resources towards forensic accounting processes to identify security gaps encouraging fraud and embezzlement.