Forensic accounting

Forensic accounting, forensic accountancy or financial forensics is the specialty practice area of accounting 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.[1] All of the larger accounting firms, as well as many medium-sized and boutique firms and various police and government agencies have specialist forensic accounting departments. Within these groups, there may be further sub-specializations: some forensic accountants may, for example, just specialize in insurance claims, personal injury claims, fraud, anti-money-laundering, construction,[2] or royalty audits.[3]

Forensic accounting is defined as "the application of investigative and analytical skills for the purpose of resolving financial issues in a manner that meets standards required by courts of law. Forensic accountants apply special skills in accounting, auditing, finance, quantitative methods, certain areas of the law, research and investigative skills to collect, analyze and evaluate evidential matter and to interpret and communicate findings."[4]

Financial forensic engagements may fall into several categories. For example:

Forensic accountants often assist in professional negligence claims where they are assessing and commenting on the work of other professionals. Forensic accountants are also engaged in marital and family law of analyzing lifestyle for spousal support purposes, determining income available for child support and equitable distribution.

Engagements relating to criminal matters typically arise in the aftermath of fraud. They frequently involve the assessment of accounting systems and accounts presentation—in essence assessing if the numbers reflect reality.

Some forensic accountants specialize in forensic analytics which is the procurement and analysis of electronic data to reconstruct, detect, or otherwise support a claim of financial fraud. The main steps in forensic analytics are (a) data collection, (b) data preparation, (c) data analysis, and (d) reporting. For example, forensic analytics may be used to review an employee's purchasing card activity to assess whether any of the purchases were diverted or divertible for personal use.[5]

Forensic accountants

Forensic accountants, investigative accountants or expert accountants may be involved in recovering proceeds of serious crime and in relation to confiscation proceedings concerning actual or assumed proceeds of crime or money laundering. In the United Kingdom, relevant legislation is contained in the Proceeds of Crime Act 2002. Forensic accountants typically hold the following qualifications; Certified Forensic Accounting Professional [Certified Forensic Auditors] (CFA - England & Wales) granted by the Forensic Auditors Certification Board of England and Wales (FACB), Certified Fraud Examiners (CFE - US / International), Certificate Course on Forensic Accounting and Fraud Detection (FAFD) by Institute of Chartered Accountants of India (ICAI), Certified Public Accountants (CPA - US) with AICPA's [Certified in Financial Forensics est. 2008] (CFF) Credentials, Chartered Accountants (CA - Canada), Certified Management Accountants (CMA - Canada), Chartered Professional Accountants (CPA - Canada)), Chartered Certified Accountants (CCA - UK), or Certified Forensic Investigation Professionals (CFIP). In India there is a separate breed of forensic accountants called Certified Forensic Accounting Professionals.[6]

The Certified Forensic Accountant (CRFAC) program from the American Board of Forensic Accounting assesses Certified Public Accountants (CPAs) knowledge and competence in professional forensic accounting services in a multitude of areas. Forensic accountants may be involved in both litigation support (providing assistance on a given case, primarily related to the calculation or estimation of economic damages and related issues) and investigative accounting (looking into illegal activities). The American Board of Forensic Accounting was established in 1993.

In 2016, the Forensic Auditors Certification Board (FACB) of England and Wales was established by the major forensic auditing and accounting bodies from across the world with its registered address in London. FACB is a professional bodies membership body comprising the International Institute of Certified Forensic Accountants (IICFA) of USA, Institute of Forensic Auditors of Zimbabwe (IFA), Institute of Forensic Accountants of Pakistan (IFAP), Institute of Certified Forensic Accountants (ICFA) of USA and Canada and the Institute of Forensic Accountants of Nigeria (IFA). FACB plays several roles and one the roles is standardization of the examination and certification of forensic auditors globally. Forensic auditors and accountants sit for one examination that is set by FACB and upon passing and meeting all the professional requirements, are awarded the credential, Certified Forensic Auditor (CFA) or the Registered Forensic Auditor (RFA) for practitioners who intend to go into public practice. All certification is renewed on an annual basis. Apart from practitioners certification, FACB is an oversight body which accredits prospective member organization before admission as part of quality checks. Persons with the FACB credential can practice as forensic auditors on a global scale.

Large accounting firms often have a forensic accounting department.[7]

Forensic accounting and fraud investigation methodologies are different than internal auditing. Thus forensic accounting services and practice should be handled by forensic accounting experts, not by internal auditing experts. Forensic accountants may appear on the crime scene a little later than fraud auditors, but their major contribution is in translating complex financial transactions and numerical data into terms that ordinary laypersons can understand. That is necessary because if the fraud comes to trial, the jury will be made up of ordinary laypersons. On the other hand, internal auditors move on checklists that may not surface the evidence that the jury or regulatory bodies look for. The fieldwork may carry out legal risks if internal auditing checklists are employed instead asking to a forensic accountant and may result serious consultant malpractice risks.

Forensic accountants utilize an understanding of economic theories, business information, financial reporting systems, accounting and auditing standards and procedures, data management & electronic discovery, data analysis techniques for fraud detection, evidence gathering and investigative techniques, and litigation processes and procedures to perform their work. 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.

See also


  1. ^ Crumbley, D. Larry; Heitger, Lester E.; Smith, G. Stevenson (2005-08-05). Forensic and Investigative Accounting. CCH Group. ISBN 0-8080-1365-3.
  2. ^ Cicchella, Denise (2005). Construction audit guide: overview, monitoring, and auditing. Altamonte Springs, FL: IIA Research Foundation. ISBN 0-89413-587-2.
  3. ^ Parr, Russell L.; Smith, Gordon V. (2010). Intellectual property: valuation, exploitation, and infringement damages. Hoboken, N.J.: Wiley. pp. Chapter 33. ISBN 0-470-45703-1.
  4. ^ W.S. Hopwood, J.J. Leiner & G.R. Young, Forensic Accounting, McGraw-Hill Irwin (2008), as quoted by Stephen Pedneault, Frank Rudewicz, Michael Sheetz & Howard Silverstone, Forensic Accounting and Fraud Investigation, John Wiley & Sons, Inc. (4th ed. 2017).
  5. ^ Nigrini, Mark (June 2011). "Forensic Analytics: Methods and Techniques for Forensic Accounting Investigations". Hoboken, NJ: John Wiley & Sons Inc. ISBN 978-0-470-89046-2.
  6. ^ "Forensic Auditor Courses catching up in India". Retrieved 2014-05-18.
  7. ^ "Service of Forensic Accountants". Retrieved 2014-04-08.

External links


Accounting or accountancy is the measurement, processing, and communication of financial information about economic entities such as businesses and corporations. The modern field was established by the Italian mathematician Luca Pacioli in 1494. Accounting, which has been called the "language of business", measures the results of an organization's economic activities and conveys this information to a variety of users, including investors, creditors, management, and regulators. Practitioners of accounting are known as accountants. The terms "accounting" and "financial reporting" are often used as synonyms.

Accounting can be divided into several fields including financial accounting, management accounting, external auditing, tax accounting and cost accounting. Accounting information systems are designed to support accounting functions and related activities. Financial accounting focuses on the reporting of an organization's financial information, including the preparation of financial statements, to the external users of the information, such as investors, regulators and suppliers; and management accounting focuses on the measurement, analysis and reporting of information for internal use by management. The recording of financial transactions, so that summaries of the financials may be presented in financial reports, is known as bookkeeping, of which double-entry bookkeeping is the most common system.Accounting is facilitated by accounting organizations such as standard-setters, accounting firms and professional bodies. Financial statements are usually audited by accounting firms, and are prepared in accordance with generally accepted accounting principles (GAAP). GAAP is set by various standard-setting organizations such as the Financial Accounting Standards Board (FASB) in the United States and the Financial Reporting Council in the United Kingdom. As of 2012, "all major economies" have plans to converge towards or adopt the International Financial Reporting Standards (IFRS).

Altegrity Risk International

Altegrity Risk International (ARI) was a New York City-based global risk consulting and information services company. A subsidiary of Altegrity, Inc. of Falls Church, VA, ARI provided investigations, business intelligence, forensic accounting, compliance and monitoring and security services to businesses and government agencies around the world.

Brandon Topham

Brandon Rodney Topham (born Pretoria, 1971) is a Financial Regulator, community leader and businessman. He is also a South African Freemason

Certified in Financial Forensics

Certified in Financial Forensics (CFF) is a specialty credential in financial forensics issued by the American Institute of Certified Public Accountants (AICPA).

Error account

An error account is a type of account used for storing compensation for errors in trading, a transaction that is not posted in a timely manner because of inconsistencies, such as an incorrect account or routing numbers to the wrong name on the account, producing a claim that needs to be resolved as soon as possible so payments can be made.

FRP Advisory

FRP Advisory is a business advisory firm based in the United Kingdom, providing restructuring, corporate finance, debt advisory, forensic accounting and pensions services and is one of the UK’s largest specialists in the area of corporate restructuring.

The firm was formed in June 2010 by Jeremy French and Geoff Rowley, whose initials form the basis of the name (French Rowley Partners). The business has more than 300 staff including 49 partners and operates from 20 locations across England and Scotland. The business is a limited liability partnership owned by its partners. FRP Advisory includes the trading divisions FRP Transition and First Financial.

FRP Advisory is a member of the Insolvency Practitioners Association (IPA), Association of Business Recovery Professionals (R3), ICAEW, ACCA, ACA and the Turnaround Management Association (TMA).

FTI Consulting

FTI Consulting is a business advisory firm headquartered in Washington, D.C.. The company specializes in the fields of corporate finance and restructuring, economic consulting, forensic and litigation consulting, strategic communications and technology. Founded as Forensic Technologies International Ltd in 1982, FTI Consulting employs more than 4,600 staff in 28 countries.The firm was involved in the Lehman Brothers and General Motors bankruptcies, the investigation into the Bernard Madoff fraud, Bush v. Gore, and the Major League Baseball steroid investigation. As of September 2011, FTI Consulting had the largest restructuring business in the U.S. In 2009, FTI Consulting was listed by Fortune as one of the 100 fastest growing U.S. companies.

Ferrier Hodgson

Ferrier Hodgson is a firm specialising in corporate recovery, corporate advisory, forensic accounting and forensic IT. The firm has a specialist management consulting arm called Azurium.

Ferrier Hodgson was established in 1976. Ferrier Hodgson is now one of the largest specialist corporate turnaround and insolvency management firms in the Asia Pacific. The group has eight offices across the major business centers in Australia, Malaysia and Singapore, with 34 partners and more than 320 staff across the region.

Forensic accountant

Forensic accountants are experienced auditors, accountants, and investigators of legal and financial documents that are hired to look into possible suspicions of fraudulent activity within a company; or are hired by a company who may just want to prevent fraudulent activities from occurring. They also provide services in areas such as accounting, antitrust, damages, analysis, valuation, and general consulting. Forensic accountants have also been used in divorces, bankruptcy, insurance claims, personal injury claims, fraudulent claims, construction, royalty audits, and tracking terrorism by investigating financial records. Many forensic accountants work closely with law enforcement personnel and lawyers during investigations and often appear as expert witnesses during trials.

Globo plc

Globo Plc provides enterprise mobility management (EMM) and mobile application development (MADP) software and services. Globo is listed on the London Stock Exchange's AIM market (GBO: LN)"Share price information". Retrieved 27 January 2015. Globo acquired Notify Technology in October 2013, adding Mobile Device Management (MDM) capabilities to its EMM product offering and expanding its operations in the USA. In June 2014, Globo acquired Sourcebits, a designer and developer of apps.On 23 October 2015, trading in Globo shares was suspended. On 26 October, CEO Konstantinos Papadimitrakopoulos and CFO Dimitris Gryparis resigned, having informed the board of directors about "certain matters regarding the falsification of data and misrepresentation of the company's financial situation". Globo stated that they would appoint an independent forensic accounting team to investigate allegations raised by Quintessential Capital Management, an American hedge fund. On 22 October, Papadimitrakopoulos sold 42 million shares. Zero Hedge noted that these events showed that "the company was a pure fraud as so many short sellers had claimed in the past".

History of accounting

The history of accounting or accountancy is thousands of years old and can be traced to ancient civilizations.The early development of accounting dates back to ancient Mesopotamia, and is closely related to developments in writing, counting and money and early auditing systems by the ancient Egyptians and Babylonians. By the time of the Roman Empire, the government had access to detailed financial information.In India Chanakya wrote a manuscript similar to a financial management book, during the period of the Mauryan Empire. His book "Arthashasthra" contains few detailed aspects of maintaining books of accounts for a Sovereign State.

The Italian Luca Pacioli, recognized as The Father of accounting and bookkeeping was the first person to publish a work on double-entry bookkeeping, and introduced the field in Italy.The modern profession of the chartered accountant originated in Scotland in the nineteenth century. Accountants often belonged to the same associations as solicitors, who often offered accounting services to their clients. Early modern accounting had similarities to today's forensic accounting. Accounting began to transition into an organized profession in the nineteenth century, with local professional bodies in England merging to form the Institute of Chartered Accountants in England and Wales in 1880.

Mark Nigrini

Mark J. Nigrini, born in Cape Town, South Africa, is a faculty member at the College of Business and Economics at West Virginia University in Morgantown in the US state of West Virginia. Nigrini is best known for his work on using Benford's Law as an auditing and accounting tool to detect anomalies in company data.

He is the author of Forensic Analytics which describes tests to detect fraud, errors, estimates, and biases in financial data and he is also the author of Benford's Law. Benford's Law gives the expected patterns of the digits in tabulated data and it has been used by auditors and scientists to detect anomalies in tabulated data.His academic papers have been published in Auditing: A Journal of Practice and Theory, The Journal of the American Taxation Association, The Journal of Forensic Accounting, The Journal of Emerging Technologies in Accounting, and others. Other applied papers have been published in journals such as Mathematical Geology, The International Journal of Mathematics and Mathematical Sciences, and The International Journal of Algebra. He has also published a hybrid forensic-medical study in the highly rated journal Hepatology. His practitioner papers have been published in journals such as IEEE Potentials, Internal Auditor, and the Journal of Accountancy. Nigrini serves on the Executive Editorial Board of the International Journal of Disclosure and Governance and also of the Journal of Forensic & Investigative Accounting.Nigrini's forensic work has been referenced in the national media including The Financial Times, The New York Times, The Wall Street Journal,The Globe and Mail, and New Scientist. His work has also been featured in foreign language publications such as Der Spiegel. His radio interviews have included the BBC in London, and NPR in the United States. His television interviews have included appearances on NBC's Extra and The Investigation Discovery Channel for their series on Evil Twins.In October 2013 Nigrini delivered the prestigious Sufrin Lectureship in Accounting at the University at Buffalo. In April 2014 Nigrini presented a pre-conference workshop in Palm Springs, California at the annual conference of the National Association of Purchasing Card Professionals on using Forensic Analytics to detect purchasing card fraud, errors, waste and abuse. He also presented a keynote talk on Benford's Law at the same conference. In June 2014 he presented a pre-conference workshop in San Antonio, Texas at the annual global conference of the Association of Certified Fraud Examiners on Benford's Law and Analytical Fraud Detection Techniques. In October, 2018 he presented two break-out sessions and one general session at the 27th Annual Conference of the International Association of Airline Internal Auditors held in Panama City, Panama.In August 2014 Nigrini published an article, Lessons from an $8 million fraud, with Nathan J. Mueller who stole $8.45 million from his employer, an insurance company, over a four-year period. In the article Mueller describes his fraud scheme, how he explained his newfound wealth in the form of expensive cars, watches, nightlife entertainment, and Las Vegas gambling trips, to his wife and friends, and ultimately how he was caught. Mueller served his sentence at Federal Prison Camp, Duluth, a minimum security federal prison. He was released on February 27, 2015. In the article Nigrini reviews the preventive and detective anti-fraud measures that could have detected the multimillion-dollar fraud long before it was detected, quite by chance, after four years. The Journal of Accountancy is the flagship publication of the American Institute of Certified Public Accountants. In August, 2015 the Journal of Accountancy announced that Nigrini and Mueller had won the prestigious Lawler Prize for the best article in 2014.Nigrini has a B.Com (Hons) degree from the University of Cape Town, an MBA degree from the University of Stellenbosch, and a PhD degree from the University of Cincinnati. In addition to his academic credentials, Nigrini passed the Chartered Accountant (South Africa) exam in 1981 and his early accounting career included time with Peat, Marwick, Mitchell & Co. (now KPMG) and as a divisional accountant. Nigrini has served as an expert witness and has done consulting engagements for large international organisations and government departments at the state level.

Michael G. Kessler

Michael G. Kessler is the founding President and CEO of Kessler International, a United States headquartered forensic accounting, computer forensics and corporate investigations firm.

Michael G. Kessler is cited as being the first "forensic auditor", a term originally coined by Kessler, and now widely used within the industry. Forensic accounting is one of the fastest growing professions in the nation.Kessler's credentials include Cr.FA (Certified Forensic Accountant), CFE (Certified Fraud Examiner), CICA (Certified Internal Controls Auditor), DABFA (Diplomate with the American Board of Forensic Accountants), FABFE (Fellow status with the American Board of Forensic Examiners) In January 2006 Kessler was elected the Chairman of the American Board of Forensic Accounting, an advisory board of the American College of Forensic Examiners.

Milnerton High School

Milnerton High School is a state school in the suburb of Milnerton in Cape Town, South Africa. It was founded in 1959.

Mohd Radzi Md Jidin

YB Senator Dr. Mohd Radzi bin Md Jidin is a Malaysian politician and serving as a senator and deputy minister of economic affairs. He is also information chief of PPBM, a party part of the governing coalition. He contested in the Malaysian General Election 2018 for the Ketereh parliamentary seat against the incumbents, Tan Sri Annuar Musa from Barisan Nasional and Wan Ismail Wan Jusoh from PAS but lost.Before being involved in politics, he was a lecturer in forensic accounting at University of Tasmania, Hobart in Australia.

Richard A. Bennett

Richard A."Rick" Bennett (born May 24, 1963) is an American politician from the state of Maine and a current resident of Oxford, Maine. Bennett is the President and CEO of ValueEdge Advisors, a firm he founded in summer 2014 to help institutional investors engage with their portfolio companies. From 2006 to 2014 he served as CEO of The Corporate Library and then Chairman or Vice Chairman of GMI Ratings, its successor company, an independent research firm focusing on corporate governance, director/executive compensation, and forensic accounting. For six years, Bennett was included in the NACD Directorship's "100 most influential people" in the boardroom and corporate governance community.As a resident of Norway, Maine, Bennett served as the President of the Maine Senate as the result of a unique power-sharing agreement between Republicans and Democrats predicated on an even split in state senators. The deal gave the presidency to both parties for one year each during each two-year senate term.Bennett served four terms in the Maine Senate, two terms in the Maine House of Representatives, and in 1994 was the Republican nominee for Congress in Maine’s second district, losing to John Baldacci in a close race. On May 2, 2008, he was elected to a four-year term as Maine’s Republican National Committeeman.

In 2006, he considered running for Governor of Maine but decided to remain in the private sector instead. His name was widely circulated as a possible candidate for the Republican nomination for governor in 2010, but he ultimately decided against running. In November 2012, Bennett sought the Republican nomination for the U.S. Senate Seat vacated by Olympia Snowe but was defeated by Maine Secretary of State Charles E. Summers, Jr.

On July 20, 2013, Bennett was elected chairman of the Maine Republican Party, replacing former State Representative Richard Cebra of Naples. In 2015, Bennett was unanimously re-elected as Chairman of the Maine Republican Party. He was a Republican elector for Donald Trump in the 2016 presidential election for Maine's second congressional district.

Richard G. Jewell

Richard G. Jewell was the eighth president of Grove City College, a Christian liberal arts college in Grove City, Pennsylvania. The 1967 Grove City graduate assumed the presidency in fall of 2003 after a successful career in law and business. He left his position in 2014 and was succeeded by Paul J. McNulty. In June 2015, he was appointed to a two-year term as commissioner of the Pennsylvania Gaming Control Board by Speaker of the Pennsylvania House of Representatives Mike Turzai.Immediately before becoming President of Grove City College, Jewell was the Pittsburgh director of Navigant Consulting Inc., the nation's largest forensic accounting firm.

Jewell is known throughout the Pittsburgh region for his leadership in numerous civic groups. Prior to assuming the presidency, Jewell was also very involved in Pennsylvania politics and held the position of finance chairman for the Allegheny County Republican Party.

As a student at Grove City, Jewell served as the Student Government Association President and Editor-in-Chief of the student newspaper, while also winning multiple varsity swimming championships. Jewell also was a member of the Kappa Alpha Phi fraternity. Jewell capped off his time at Grove City in 1967 when he was selected as Omicron Delta Kappa's Man of the Year and graduated with honors in political science. After he completed his undergraduate degree, Jewell earned his J.D. from the University of Michigan Law School. In 1989, he was inducted into the college's Swimming and Diving Hall of Fame.

Risk and strategic consulting

Risk and strategic consulting refers to the provision of information, analysis and associated services in the field of international politics and economics, with the aim of providing a better understanding of the risks and opportunities facing businesses, governments and other groups.

In contrast to management consulting, which primarily concerns internal organization and performance, risk and strategic consulting aims to provide clients with an improved understanding of the political and economic climate in which they operate. Most such consultancy is focused on those developing countries and emerging markets in which political and business risks may be greater, harder to manage, or harder to assess. Risk and strategic consulting is sometimes carried out alongside other activities such as corporate investigation, forensic accounting, employee screening or vetting, and the provision of security systems, training or procedures. Some of the largest groups in the industry include Kroll Inc. and Control Risks Group, though the size and range of consultancies varies widely, with groups such as Black Cube and Hakluyt & Company providing boutique services.

Risk and strategic consultancy does not generally involve the operational 'risk assessment' carried out by many companies and consultancies. Risk assessment in this sense covers the identification and management of commercial, operational and technical risks within existing operations or known markets. Risk and strategic consultancy also concerns countries and concerns similar to those of interest to private military companies, though the two industries are distinct. Risk and strategy consultancies should not be confused with international lobbying or advocacy groups, though there are occasional overlaps. Clients of risk and strategic consulting firms include companies, governments and government agencies, charities and non-government organizations, academic institutions and individuals.

Zimbabwe Institute of Legal Studies

The Zimbabwe Institute of Legal Studies (ZILS) in Harare, is the first and currently only college awarding law courses in Zimbabwe. It was founded in 2009 by Godwills Masimiremba a qualified lawyer by profession and former Chairman of the ZMDC. First students enrolled in 2010 and all programmes are taught in the English language. The college awards five courses (Applied Law, Forensic Science and Crime Investigations, Forensic Accounting And Fraud Investigations, Mineral Law And Policy, Commerce And Law) up to National Diploma (ND) level through five law-related departments. The college is accredited by the National Council for Higher Education, under the Ministry of Higher and Tertiary Education. Therefore, the courses awarded by the ZILS have equal weight as courses awarded by Harare Polytechnic because their courses are accredited by the same body. In theory, the ZILS is a polytechnic of law because Harare Polytechnic does not offer law courses.

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