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Fingerprints || Part 1 || Introduction

A Career in Forensic Accounting

What is Forensic Accounting?

Forensic accounting uses accounting, auditing, and analytical skills to perform an investigation into an individual's or business ' finances. Forensic accountants are trained to look beyond the numbers to address a situation's business reality. For fraud and embezzlement cases forensic accounting is often used to explain the nature of a financial crime for court.In another scenario, one could ask the forensic accountant to investigate many different types of fraud. Investigation is the process of deciding if criminal matters have occurred, such as theft of employees, securities fraud (including falsification of financial statements), identity theft or insurance fraud.
Forensic Accounting

FORENSIC AUDIT's/ ACCOUNTING's goal is to find the audit evidence that is legally acceptable and, in doing so, the company's corporate veil can be disregarded.

Any fraud or neglect is considered following points?

Is that material for the effect?

Who are the people responsible?

How much can they recover?

Forensic Auditing

What are the Common Types of Crime to be Investigated by Forensic Accountant or Forensic Auditor?

To provide an overview of the wide range of investigations that could be conducted, it is useful to categorize these types into three groups. The three types of fraud are corruption, misappropriation of assets and fraud involving financial statements.

A. Corruption: There are three forms of fraud involving corruption: conflicts of interest, bribery and extortion. 

The fraudster exerts its power in a conflict of interest fraud to obtain a personal gain that detrimentally affects the business.

Bribery occurs when money (or something else of value) is being provided to manipulate a situation.

Extortion is the opposite of bribery, which happens when money is requested (rather than offered) to secure a specific outcome.

B. Asset Miss-appropriation: The most popular frauds are by far those involving misappropriation of properties, and there are many different types of fraud that fall within this category. The common feature is the theft of the company's cash or other items, like: cash theft, inventory frauds, fraudulent disbursements, misuse if assets, etc.

finding facts

C. Financial Statement Fraud: This is also referred to as fraudulent financial reporting, and is a type of fraud that causes a material error in the financial statements. It may include intentional falsification of accounting records; omission of financial statements transactions, balance sheets or disclosures; or misapplication of financial reporting requirements. This is often done with the intention of presenting the financial statements with a particular bias, for example disguising liabilities to improve any liquidity and gearing analysis.

How You Can be a Forensic Auditor or Forensic Accountant?

Following skills are required for an efficient and fruitful Forensic Audit

1. Deep Knowledge of Accounting (You must have degree in accounting or forensic accounting)

2. Proper Understanding of Auditing (You can go ahead with a certification in auditing)

3. Required traits of Investigating (A forensic science degree will be a plus point)

4. Obvious should be distrusted (Your keen observatory skills)

5. Think differently and Develop an open mind (Analytical Skills)

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How Forensic Auditors Conducts the Investigation?

1. Accepting the assignments
2. Planning the investigation
3. Gathering the evidences
4. Reporting of the evidences to the client and to the court
5. Participate in court proceedings

Initially, the forensic accountant needs to consider whether their firm has the skills and experience necessary to accept the work. Forensic investigations are of a specialist nature, and the work requires detailed knowledge of techniques for investigating fraud and the legal framework.

The investigating team must carefully consider what they have been asked to achieve and plan their work accordingly. The objectives of the investigation will include: Identifying the type of fraud that has been in place, how long it has been in operation and how the fraud has been hidden, identifying the fraudster involved quantifying the financial loss suffered by the victim, collecting evidence to be used in court proceedings to warn against the recurrence of the fraud.

Court Proceedings

To gather detailed evidence, the investigator must understand the specific type of fraud performed, and how the fraud was committed. The evidence should be sufficient to prove, in the end, the identity of the fraudster(s), the fraud mechanics and the amount of financial loss suffered. If any evidence is inconclusive or there are gaps in the custody chain, then proof can be challenged in court, or even become inadmissible.


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