What Kind Of Companies Need Forensic Accounting?   by Matthew Kerridge

in Finance / Accounting    (submitted 2010-02-18)

The field of accounting that concentrates on establishing and presenting legal testimony is referred to as forensic accounting. Professionals in this field will be presented with a range of assignments, including theft, fraud, and money laundering. They may also be called upon to determine the actual value of a business or to provide a fair computation of any losses it may have suffered. In general, they look not only at what has occurred but how it happened and who is responsible.
Law enforcement makes extensive use of forensic accountants to trace cash flow of individuals and businesses. Crimes such as money laundering, embezzlement, or tax evasion may be found or suspicions proven. As an example, suppose a factory is completely destroyed by a fire, and the question of arson has arisen. A forensic accountant can resolve the issue of whether the company stood to benefit from the fire or suffer as a result of it.
Divorces can sometimes trigger the need to uncover assets which one of the parties has hidden from the other. Or perhaps one of them owns a business to which the spouse is entitled a share and the value must be accurately determined. Often, when there are self employment issues, an appropriate amount for child or spousal support may need to be determined as well.
Those whose income is derived from payments of royalties may request an audit of the recording company or publisher if they suspect they are not receiving as much as they should. An audit can compare expenses and sales against payments to determine whether the payments are in order. If needed, the forensic accountant can then offer expert testimony about his findings.
Banks may request the services of a forensic accountant to examine the records of a company applying for a loan. By determining whether the company is guilty of any fraudulent or misleading accounting practices, a recommendation can be made as to whether or not the loan should be approved.
Forensic accounting is a growing accounting specialty for those who are interested in the field but would like to be challenged more than other areas would. There is a great diversity in assignments, and the job opportunities are likely to keep increasing.