Forensic Accounting

Table of Content


Meaning of forensic accounting

The area of forensic accounting is being an area of growth of late. It works towards the area of making sure that; there is a detection of frauds and white collar criminal activities with the help of accounting practices. In the case of forensic accounting, there is the usage of investigation and audit skills for ensuring that, financial statements of the organization are being checked. In case of Forensic accounting, the financial statements of the organization are being looked into deeply so that, proper results are being generated. 

            Forensic accounting is also being called by other names such as forensic accountancy or financial forensics. This is being defined as accounting analysis which is being carried out for the purpose of uncovering possible frauds being suitable for presentation in court. There are two different components of forensic accounting. The components of this kind of accounting include investigative accounting and litigation support. In this area, it is being identified that the organization needs to work well towards doing this analysis in a proper and appropriate way for the purpose of doing the activities being assigned. 

  1. Litigation support: To ensure that, disputes in business are being managed, forensic accounting is required to be used. This is a popular reason for hiring a forensic accountant. This helps in ensuring that, assistance is being provided in the matters of litigation being pending with the people. A forensic accountant helps in ensuring that, there are no disputes and even if there are disputes then, the same is being sorted out well without any issue arising.
  2. Investigative accounting: In this case, the investigation is being carried out regarding criminal cases. One of the activities would include investigation of theft being carried out by the employees in the workplace. The assignments in this particular case would include insurance, fraud, falsification of accounting records, and frauds related to securities in the workplace. 

The work regarding forensic accounting is to make sure that, there are analysis, summarization and interpretation business and financial matters within the organization. The Forensic accountants are being appointed by banks, police forces and insurance companies along with accounting firms and government-based agencies. Following are the tasks which are being carried out by a person who is being appointed at the post of forensic accountant. 

a.       Investigation and analysis of financial advice being related to the matter. 

b.    Development of computerized applications which are going to help in the analysis of financial evidence in court 

c.       Communication of findings with the reports being available to the person in the area of doing the tasks. 

d.      Providing assistance in legal proceedings such as presenting in court, as an expert witness 

A forensic accountant is being considered as a watch dog for the company. He carries out tracing of funds, does asset identification, recovery of assets and works towards due diligence reviews. These people can ensure that they have additional training being available to them in alternative dispute resolution. This is due to the fact that, they have a higher level of involvement in legal issues and have familiarity in the matters regarding the resolution of the disputes. A forensic accountant should have knowledge of various laws for doing his activities in a proper and appropriate way. 

Assistance by Forensic Accountant

Investigating accounting 

  1. Review of factual situations and providing suggestions regarding the actual outcome of the cases being taken into consideration
  2. Providing assistance for protection and recovery of organizational assets
  3. Assistance in coordination in experts such as consulting engineers and others
  4. Providing assistance regarding recovery of the assets 

Litigation support 

  1. Providing assistance in settlement of discussions and notifications
  2. Providing assistance in obtaining documents which are necessary for doing the activities.
  3. Hearing of testimony of opposing party by way of the presentation by trial and cross examinations are also being carried out.
  4. Review of documents which are essential for the review of the case
  5. Assistance in financial issues and formation of additional questions.
  6. Review of damage report and also ensuring that, weaknesses and strengths of all the positions are being taken into consideration. 

Characteristics of Forensic Accountant

            There are certain characteristics which should be there in a forensic accountant. The characteristics of a forensic accountant include confidence, professional judgment, discretion, creativity, detailed enrolment, and persistence. The forensic accountants are being mainly kept by lawyers, banks, courts, police forces and insurance companies. 

Forensic Accounting Assignments

            Each of the forensic accounting investigations is unique in their own way. A proper approach and procedure is being adopted by the forensic accountant for the purpose of doing the tasks. There are certain steps which are required to be followed by an individual at the time of doing the activities regarding forensic accounting at a particular point of time in the area of doing the working. 

  1. At the initial level, the forensic accountant has to meet with the client and identify the key points regarding the case being identified.
  2. A detailed conflict check is also required to be carried out by the person for providing support to forensic accountants.
  3. Initial investigation is being initiated by the forensic accountants in the area of doing the working at a particular point of time.
  4. Identification of key points which are being required in the course of doing the case being identified.
  5. After this, analysis of the findings is being carried out.
  6. On analysis of the findings, the final report is being prepared wherein, the organization works well for the purpose of doing the tasks at a particular point wherein, key areas are being taken into consideration. 

Types of Assignments by Forensic Accountants

a.       Investigations regarding criminals 

b.      Disputes in shareholders and partnerships 

c.       Personal claims of injury and motor related claims 

d.      Business and other kinds of insurance claims 

e.       Matrimonial disputes 

f.       Economic losses 

g.      Negligence 

h.      Mediation and arbitration 


            Fraud is an action wherein, certain tricks are being used for the purpose of ensuring that, the wrongful advantage of something. The accounting fraud is being intentionally manipulating the financial statement of the business for catering false image of the financial position of the company. This manipulation could be carried out by the employees or the organizations themselves. This fraud could be done for misleading the investors or shareholders. The characteristics of fraud are as follows: 

  1. Financial statements are fundamentals of the business consistency been one of the major crimes being reported in all survey.
  2. Accounting fraud includes falsely prepared financial statements could work towards deceiving banks, losses, vendors, and inventory regarding risks or decisions being misguided.
  3. The accounting fraud has been considered to be one of the major crimes reported in the area of survey. 

Types of Frauds

  • Corporate Fraud: These are the frauds which are being carried out by the company or any interested individual for giving an advantage to the interested individuals or the company. These kinds of frauds are which are ahead of the working of employees and these frauds which are being having an impact on employees of the organization in the course of doing the working.
  • Securities Fraud: These are the kinds of frauds which are being done for the purpose of financial gain of the company. These are the frauds which are being carried out by insiders in the organization. The misinterpretations are being carried out in the course of the frauds which are important in the course of providing false information to the individuals in the course of working towards doing the tasks without any issue or trouble arising.
  • Bank Fraud: This is a kind of fraud which is a kind of fraud which is illegal and dishonest activities are being carried out for ensuring that, money, property and assets which are being held or owned by financial institutions. This is a kind of crime which is being considered as a white-collar crime.

  • Cyber Fraud: These kinds of frauds are different kind of frauds. These kinds of frauds are being carried out only. These are the kinds of frauds which are being illegal and accordingly proper areas of working are being taken into consideration regarding cyber fraud being carried out. 

Forensic Accounting vs. Auditing

Forensic Accounting


It works towards proving that, fraud has occurred in the business and there is an apparent risk prone environment.

There is continuity in terms of certification of state art of business and efforts are being made to comply with market theory.

The planning tasks are being aimed at the time of documenting and doing calculative analysis

Sample procedures are being adopted for serving as a base for the conclusion of financial statements.

Necessary and particularly carried out for providing legal support in the area of doing administrative decisions.

Coverage of the fiscal year for substantiating of the activities accounting period.

The reports being generated are investigative and expert reports

The reporting is being carried out in financial statements, management, and letters and auditors’ report.

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