5 Reasons You May Need a Forensic Accountant

Forensic accounting is a field of accounting that specializes in financial fraud, embezzlement, money laundering, and bribery. It uses accounting techniques and data analysis to identify criminal activities within organizations or at an individual level.

Many people think forensic accountants are only required in legal proceedings. But that's not true.

What do Forensic Accountants Do?

Investigate Financial Crime

As mentioned earlier, forensic accountants specialize in investigating financial fraud through specialized tools, such as computer forensics and data regression analysis. They use these tools to go through different transactions, financial data, and even emails to identify patterns or irregularities that may hint towards any criminal behavior.

Litigation Support

Due to their expertise, forensic accountants can often be called upon in court to provide evidence or their research on any criminal activities within an organization or against a specific client.

Risk Assessments

Investigating criminal behavior isn't the only activity in which they partake. You can acquire forensic accounting services to assist you in investigating any financial risks you may have within the organization.

They could identify which aspects of the business may be at risk of financial fraud and even provide recommendations for better control and security.

5 Reasons You May Need a Forensic Accountant

Suspected Financial Fraud

If you believe your business is currently a victim of some criminal activity, a forensic accountant might help you identify and fix the problem. They might even aid in finding the source of the problem through technology to allow you to prevent anything similar in the future.

Family Dispute

Financials are usually at play during family disputes like divorce or property conflicts, and a will might have to be divided or an inheritance to be earned. It would be smart to call a forensic accountant to aid you in complex family matters and ensure that all parties are genuine. They can help to identify hidden assets, trace funds, and provide expert testimony in court proceedings.

Business Valuation

Suppose your corporation isn't doing as well as you had hoped and looking to sell. Maybe it is going too well, and other companies are looking to take over. A forensic accountant can aid you in valuing your business before selling. You may identify any potential risks and an accurate assessment of the business's financial health.

Declaring Bankruptcy

Suppose your business is declaring bankruptcy because of not making enough profits. Before doing so, you must contact an expert so they might identify any underlying reasons as to why it might've happened.

Risk Management

Even if you have not experienced financial fraud or irregularities, a forensic accountant can help identify potential risks and recommend strengthening financial controls and operations. It can help to prevent financial fraud and other irregularities from occurring in the future.

Things to Consider when Working with a Forensic Accountant

By now, you've understood why you might need the expertise of a forensic accountant. But before choosing one, how do you identify which individual or the organization you're hiring is genuine or right for you?

Certifications

When finding a service for your business or you individually, check out their background and certifications. Look for professionals with relevant certifications, such as Certified Fraud Examiners (CFEs) or Certified Public Accountants (CPAs).

Are They Transparent?

Effective communication and transparency are essential when working with a forensic accountant. Ensure you understand their work's scope and the processes they will use to conduct their investigation or analysis. Provide them the consent to go through your files before hiring them. They might have to investigate many confidential details of the corporation.

Cost

Finally, it is important to consider the cost and timing of working with a forensic accountant. Ensure you clearly understand their fees and payment structures, as well as the timeline for completing their work. It will help you plan and budget accordingly and ensure you get the best value for your investment.

Conclusion

Financial fraud poses too many risks to a business, especially today, where technology is very intelligent and allows many crimes. A forensic accountant can provide valuable expertise and support if you are facing a specific financial challenge or want to improve your risk management practices.