Skip to main content

Dissecting the role of the forensic accountant in litigation




When people hear the term “forensic science,” they usually think “CSI.” What comes to mind when you hear the term “forensic accounting”? Similar to forensic scientists offering opinions about scientific matters, forensic accountants may be called on to investigate and serve as financial experts in commercial litigation. Here’s how.

Who they are

Forensic accountants specialize in conducting fraud audits and investigations to detect irregularities and troubling trends, looking for both telltale and subtle signs of white collar crime. Certified fraud examiners (CFEs) are specially trained in fraud discovery, recognition, documentation and prevention. They’re also generally knowledgeable about human behavioral factors and motivations that contribute to the commission of fraud, such as the ability to rationalize fraudulent conduct.

Often, forensic accountants are retained to detect misrepresentations of financial data or to locate missing funds. It’s important to investigate fraud suspicions as early as possible to help mitigate potential losses.

What to expect

When you or your attorney engages a forensic accountant, you can expect the expert to work closely with you to tailor an investigation to the situation at hand. Depending on the type of fraud suspected, the investigation may be performed on a comprehensive, companywide or random, spot-check basis.

Forensic accountants work to determine the scope of the fraud, including its duration and participants. Investigations typically require extensive document review. In a case involving asset misappropriation, for example, experts might search for forged documents.

They also look for evidence of compliance — or noncompliance — with Generally Accepted Accounting Principles (GAAP). Of course, GAAP compliance doesn’t guarantee legitimate accounting, so an investigation might also focus on specific areas that wouldn’t necessarily be caught in an audit, such as the use of assets at the operational level. Are they being used as intended or for the benefit of an employee? Are all of the assets accounted for?

When to expand the scope

Special investigations also can be effective in uncovering high-level financial fraud. A board usually receives its financial and operational information from a company’s executives. Investigations enable board members to get deeper, more detailed information without going through management. Experts can interview individuals “in the trenches” and review raw data, and then communicate their findings directly to the board.

Fraud investigations might be used to monitor the activities of top executives — even if only for policy lapses. Management members often are given greater latitude and may be tempted to bend the rules. When this occurs, it can influence a company’s ethical environment and encourage other employees to disregard policies or commit fraud.

When to call

If you suspect a financial impropriety, contact us. We can help minimize fraud losses, preserve confidentiality and admissibility of evidence, and possibly even reduce litigation costs.

Please contact us for additional information

© 2019


Popular posts from this blog

IRS Announces Employer Provided Parking is Now Taxable

On December 10, 2018 the IRS released an advance version of Notice 2018-99 as interim guidance for taxpayers to use in determining the amount of parking expenses for qualified transportation fringe (QTF) benefits for tax-exempt organizations to determine the amount of unrelated business income tax (UBIT) attributable to parking expenses.
IRS Tax Notice 2018-99 release


Please contact us for additional information

Offering COBRA to a terminated employee’s domestic partner

Many employers offer coverage to employees’ domestic partners under their health care plans. If your organization does so, you need to determine what rights domestic partners have regarding COBRA insurance.

General principles

One common question for employers is whether terminated employees may elect to continue COBRA coverage for their domestic partners. The answer is yes; a terminated employee who elects to continue health plan coverage under COBRA may also elect coverage for a domestic partner who was covered under the plan immediately before the employee’s termination.

The domestic partner’s COBRA coverage depends on the employee’s coverage. In other words, the domestic partner will be covered until the employee’s COBRA coverage ends, whether due to failure to pay required premiums or because the coverage period has ended.

This is based on the general principle that COBRA coverage must ordinarily be the same coverage that the qualified beneficiary (in this case, the terminated em…