Forensic Accounting Basics Principles

Forensic accounting, sometimes referred to as financial forensics or forensic accountancy, is a specialty practice area where accounting skills are utilized to investigate potential embezzlement or fraud through the analysis of financial information. This information is then eventually used in actual or anticipated legal proceedings, like litigation or disputes. In fact, the word “forensic” is defined by Merriam-Webster as “belonging to, used in, or suitable to courts of judicature or to public discussion and debate”. In layman’s terms, forensic accounting is the strategic integration of accounting, investigating, and auditing. As such, forensic accountants are often referred to as forensic auditors or investigative auditors.

Forensic accountants are commonly tasked with a great responsibility to testify in court as an expert witness. In those scenarios, their expert opinion and work product are subject to discovery and open to cross-examination. Forensic auditors perform an extensive variety of tasks covering a range of categories, most notably investigating and analyzing things like:

• Matrimonial disputes
• Post-acquisition disputes
• Tax fraud
• Business valuation
• Economic damages estimates
• Bankruptcy, insolvency, reorganization
• Money laundering
• E-discovery or computer forensics
• Securities fraud

In the process of analyzing complex financial issues, forensic accountants must run their investigation with strategy, intense attention to detail, and a commitment to a thorough collection of evidence. Some qualifications commonly held by forensic accountants include: Certified Public Accountant (CPA), Accredited in Business Valuation (ABV), Certified Financial Forensics (CFF), Certified Fraud Examiner (CFE), Certified Valuation Analyst (CVA), Accredited Valuation Analyst (AVA), Certified Forensic Accounting Professional (CFAP), Chartered Financial Analyst (CFA), and Master Analyst in Financial Forensics (MAFF).

At Smith, Stohlman, James & Gardere, P.A., we provide litigation services in both federal and state courts in a wide variety of cases including brokerage fraud, shareholder disputes, class action litigation, personal injury, marital dissolution, contract claims, business damages, lost profits, business and contract disputes and criminal cases. Our clients include both litigants and attorneys, and our services are provided both before the inception of and throughout the course of litigation. We are regularly retained in civil, criminal, and family law (divorce) matters, and often participate in the development of pleadings and in the discovery process.