What is Forensic Accounting?
Forensic accounting is an industry understood by few, but with the massive increase in fraud (and divorces) over the last two decades, forensic accountants have gotten busier and busier. The internet has given scammers the tools to commit fraud at a much more rapid rate. Plus, the pandemic has produced even more divorces than in the past. As such, forensic accountants have proved instrumental in combating the rise in fraud and missing funds. From investigative expertise to auditing proficiency, businesses and individuals rely heavily on experienced forensic accountants to find and recover missing money.
The specific roles that forensic accountants play in different cases varies greatly. For instance, some forensic accountants work with law firms, serving as expert witnesses in a high net worth divorce case. In other scenarios, a forensic accounting firm may work with an insurance company dealing with an insurance fraud investigation. So, when someone asks, “what is forensic accounting?” the answer is multifaceted. The complexity in the nature of their work means that forensic accountants must maintain a wide range of skillsets.
Forensic accountants must first obtain their certification as a public accountant (CPA) as well as a number of years of experience in the field. Additionally, forensic accounts often hold additional credentials such as a Certified Valuation Analyst (CVA) and a Certified Financial Forensics (CFF) credential, as well as passing the Certified Fraud Examiner (CFE) exam. This specialized knowledge lays the foundation for their ability to lend their expertise in all kinds of vases, such as:
- Bankruptcy
- Business Economic Losses
- Family and Marital Disputes
- Hidden Assets
- Insurance Claims
- Money Laundering
- Securities Fraud
- Tax Fraud
- Terrorism / Counterintelligence
When approached with a new case, forensic accountants must look at the scope of the issue and then determine the best approach possible. In fact, there are no two cases that require the exact same approach, as a custom protocol will be necessary for any case. While each case varies greatly, the general framework is as follows:
- Initial investigation
- Summary of findings / reporting
- Litigation
Again, the above steps is simply a general framework, as forensic investigations can take a range of paths. From the Lehman Brothers bankruptcy case to the Enron scandal, forensic accounting has played a major role in unearthing the most notable financial crimes in history.
At Ellrich, Neal, Smith & Stohlman, P.A., our firm’s litigation services department provides professional services to participants in the legal process. These services include forensic accounting, fraud detection and prevention, assistance with discovery matters, consultation, and expert witness testimony. 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. Contact our Miami, Palm Beach Gardens, or Orlando offices to speak with an expert.