Spotlight on forensic accountants

Collin A.A. Greenland, GUEST COLUMNIST

Every now and then, a high profile matter, such as the JDIP debate, casts forensic accounting at the forefront of the public's interest.

In the interest of simplicity, forensic accounting can be seen basically as the integration of accounting, auditing and investigative skills in order to provide an accounting analysis suitable for the resolution of disputes (usually, but not exclusively) in the courts.

It is a highly specialised area of auditing.

Although criminal matters dominate the use of forensic accounting, the 'litigation support' provided by this branch of 'investigative accounting' has proven invaluable in facilitating the discussion, debate and ultimate dispute resolution required in civil litigation.

For those who require more technical definitions, forensic accounting, according to Jack Bologna and Robert J. Lindquist, is the "application of financial skills and an investigative mentality to unresolved issues, conducted within the context of the rules of evidence. As a discipline, it encompasses financial expertise, fraud knowledge, and a strong knowledge and understanding of business reality and the working of the legal system".

Critical to the success of a forensic accountant is the ability to respond immediately and to communicate financial information clearly in a court of law.

They are also trained to look beyond the numbers and deal with the business reality of the situation.

Consequently, these specialist auditors are retained therefore to analyse, interpret, summarise and present complex financial and business-related issues in a manner which is both understandable and properly supported. This normally entails:

Investigation and analysis of financial evidence;

Development/use of computerised applications to assist in the analysis and presentation of financial evidence;

Communication of their findings in the form of reports, exhibits and collections of documents; and

Assistance in legal proceedings, including testifying in court as an expert witness and preparing visual aids to support trial evidence.

In order to properly perform these services, a forensic accountant must be familiar with legal concepts and procedures and be able to identify substance over form.

Forensic accounting services include:

Review of the factual situation and provision of suggestions regarding possible courses of action;

Assistance with the protection and tracing of assets.

Coordination of other experts including: private investigators; forensic document examiners; consulting engineers; forensic document examiners, graphologists, consultants, scientists, lawyers, insurance assessors, computer experts - all have to be coordinated in a structured way; and

Assistance with the recovery of assets by way of civil action or criminal prosecution.

The types of assignments performed by forensic accountants are wide ranging and span many different industries. Some of the more popular include: forensic/criminal investigations; shareholders and partnership disputes; personal injury claims; motor vehicle accidents; business interruption and other types of insurance claims; business/employee fraud investigations; matrimonial disputes; business economic losses; professional negligence; mediation and arbitration.

demand for forensic accounting

Forensic accountants are retained by a myriad of clients but the following groups tend to use them more often: lawyers; police forces; insurance companies; government regulatory bodies and agencies; banks; courts; and the business community.

In fact, Accounting Today's 2007 survey of the top 100 accounting firms revealed that 77-78 per cent expected forensic accounting to grow. Currently, the profession is regarded worldwide as one of the '20 hot job tracks of the future'.

The demand for forensic accounting services is highlighted when one examines the World Statistics of fees earned in 2010 and published by the IAB in January 2011 (see graphic).

When engaging their services, one should consider the forensic accountant's experience, qualifications and personal qualities.

The personal qualities should include curiosity, persistence, creativity, discretion, organisation, confidence and good professional judgement.

His or her qualifications are best suitable if they include specialist type certifications that indicate relevant disciplines such accounting, information technology, fraud, and forensics.

By the way, the expertise though limited, does exist on our shores, and may be more effective since local culture and the ingenuity of Jamaican 'ginnals' often require more than the standard textbook approach to unearth evidence from which our courts can convict.

Collin A.A. Greenland is a forensic accountant. Send feedback to cgreeny.collin@gmail.com