Forensic accounting is the practice of using accounting, auditing, and investigative accounting skills to assist in legal proceedings. Forensic literally means "used in a court of law" or for "public debate". When we combine accounting skills with legal knowledge, it is called forensic accounting.
A
Brief History of Forensic Accounting
Accountants have been using their investigative skills almost since
the dawn of time. Some of the earliest accounting records date back
over 7,000 years to ancient Babylon, Assyria and Sumeria where accounting
was used to track agriculture. Likely, even back then, people were
concerned about not getting short-changed in their business and
financial lives.
Modern forensic
accounting has its earliest reference in 1824 in an accountant’s
advertising circular in Glasgow, Scotland. Special accountants gave
testimony in court and in arbitration proceedings. Interest in forensic
accounting spread through the United States and England early in
the twentieth century. One of the first institutions to use the
services of such investigative accountants was the IRS. The story
of Al Capone the famous mobster being caught on a tax evasion scheme
is well-known. Of course even today, the IRS continues to use forensic
accountants in pursuing tax cheats among business, sports and entertainment
celebrities including Woody Nelson, Nicholas Cage, and Wesley Snipes.
As a profession,
forensic accounting continued to grow during the latter half of
the 20th century, until today, when almost no successful business
litigation claims is made without the assistance of a forensic accountant.
Modern Forensic Accounting
Modern forensic accounting focuses on 3 main areas: litigation support,
forensic accounting investigation, and dispute resolution.
Litigation
Support
Legal litigation support represents the descriptive presentation
of financial issues related to existing or pending legal proceeding.
The forensic accounting professional determines damages sustained
by parties involved in legal disputes and can assist in resolving
disputes, even before they reach the courtroom. If a dispute
reaches the courtroom, the forensic accountant may testify
as an expert witness.
Forensic
Accounting Investigation
Forensic accounting investigation is the process of deciding
whether criminal matters such as internal employee theft,
securities fraud (including falsification of financial statements),
identity theft, and insurance fraud have occurred. As part
of the forensic accountant's work, they may recommend actions
that can be taken to minimize future risk of loss. Forensic
accounting investigation may also occur in civil matters.
For example, the forensic accountant may search for hidden
assets in divorce cases.
Forensic accounting involves looking beyond the numbers and
grasping the substance of situations. It's more than accounting...more
than detective work...it's a combination. In short, forensic
accounting requires the most important quality a person can
possess: the ability to think.
I began my accounting career with Price Waterhouse Coopers
as a forensic accountant reviewing and investigating financial
statements of some of the world’s largest corporations.
As a forensic accountant, I have almost 30 years of experience,
and I know that my expertise can definitely assist you with
your investigative research in your personal or corporate
accounting needs.
Call us today at 713-661-1040 and let me put
our forensic accounting experience to work for you.