A result of the large scale corporate scandals in the US and Europe has been the growth in the field of Forensic Accounting. As a specialist area, it has existed for a very long time, but forensic accountants are now being quoted in the press, used by regulators and law enforcement agencies as well corporate organisations, and have even featured in soap operas and other TV series.
Forensic accounting is the application of the skills and training of a chartered accountant to investigations, disputes and other reviews, the result of which could end up in a court of law.
Fraud, by its very nature, is hidden in the accounting systems of organisations and therefore a forensic accountant is usually required to unravel the transaction history and reveal what has actually occurred.
As part of this, the forensic accountant is often called upon to quantify the value of the loss experienced by an organisation or individual. Any lost funds are traced from bank account to bank account to identify where the money (or other assets) have ended up before working with a legal team to secure the freezing and recovery of the funds or assets.
In cases of financial statement fraud, as seen at Enron, it is not so much the case of cash being stolen, but company losses or liabilities being hidden (or assets being overstated) by false accounting in the financial statements and records. The forensic accountant’s role is therefore to understand the accounting records and show the true nature of the transactions being recorded.
Similarly forensic accountants are a key part in the investigation of shareholder or director disputes, and insurance claims.
Ultimately, in all cases, the key skill of the forensic accountant is in communicating complex financial transactions or information in a succinct manner using pictures, graphs and language readily understandable by non-accountants and in particular the legal profession, the judiciary, and juries.
How we can help you
As part of our multi-disciplinary approach to Forensic services, our team comprises forensic accountants in both Auckland and Wellington. We have particular experience in investigating fraud, reviewing the details of corporate or shareholder disputes and investigating insurance claims. We also have specific experience in asset tracing and recovery, both within New Zealand and through different countries and jurisdictions.