Running Head: Forensic Accounting in Practice
Forensic Accounting in Practice
November 15, 2012
1. Determine the most important five (5) skills that a forensic accountant needs to possess and evaluate the need for each skill. Be sure to include discussion regarding the relationship between the skill and its application to business operations.
A forensic accountant is expected to be a specialist in accounting and financial systems. Yet, as companies continue to grow in size and complexity, uncovering fraud requires a forensic accountant to become proficient in an ever-increasing number of professional skills and competencies. Here are some of the broad areas ...view middle of the document...
*Thorough knowledge of company’s governance policies and the laws that regulate these policies.
*Command of criminal and civil law, as well as, of the legal system and court procedures.
2. Describe the role of a forensic accountant within a courtroom environment.
Forensic accounting is the specialty practice area of accountancy that describes engagements that result from actual or anticipated disputes or litigation. "Forensic" means "suitable for use in a court of law", and it is to that standard and potential outcome that forensic accountants generally have to work. Forensic accountants, also referred to as forensic auditors or investigative auditors, often have to give expert evidence at the eventual trial. Several organizations worldwide provide continuing education and certification for forensic accountants.
There has been a growing need for this specialized field with recent company scandals that have occurred. Forensic accountants utilize an understanding of business information and financial reporting systems, accounting and auditing standards and procedures, evidence gathering and investigative techniques, and litigation processes and procedures to perform their work. The main goal of their engagements is to provide the answers to the how, where, what, why, and who committed the alleged allegations. They will use the same basic procedures for obtaining evidence of the crimes that they investigate. They will examine records and interview suspects to determine the answers to these questions. Forensic accountants are also increasingly playing more proactive risk reduction roles by designing and performing extended procedures as part of the statutory audit, acting as advisers to audit committees, fraud deterrence engagements, and assisting in investment analyst research.
Most companies will not publicize that they have used the services of a forensic accountant because they do not want the public to know that something had happened, but sometimes it is out of their hands when it does become public knowledge. There are slight differences between an audit and the work of a forensic accountant. The audit is used to determine efficiency while the forensic accountant is used in determining exactly how the fraud was committed and how much of a loss has occurred.
3. Analyze the legal responsibility a forensic accountant has while providing service to a business.
A forensic accountant has to analyze, interpret, summarize and present complex financial and business-related issues for investigation. Forensic accountants carry out investigative accounting and provide businesses with litigation support. The services of forensic accountants are in great demand in the following areas:
* Detection of fraud committed by employees: Where the employee indulges in fraud, forensic accountants are engaged. They detect fraud, trace the asset (if any) created out of fund embezzlement, gather and review the evidence, and interview the employee...