The integration of accounting, auditing and investigative skills yields the specialty
known as ‘forensic accounting’. According to the Webster’s Dictionary “forensic”
means, “belonging to, used in or suitable to courts of judicature or to public
discussion and debate”. Forensic accounting is, therefore, a legally accurate accounting
which is sustainable in a legal proceeding or in an administrative review. All finance
professionals including accountants operate within some commercial legal
environments. But, when a professional accountant accepts an engagement where he
anticipates that his opinion or analysis will be subject to judicial scrutiny or
administrative review, he will concentrate on the evidentiary details and analytical
precision and it can be said that his work is in the domain of forensic accounting.
‘Forensic investigation’ involves using investigative skills, so that the outcome would
be useful in a court of law. It may require inputs from other branches of knowledge
(other than accounting) like medicine, engineering, law, etc. The forensic audit (though
not formally defined anywhere) seeks to improve the quality and coverage of auditing
further, by taking cases of alleged fraud and corruption to a more advanced stage of
readiness for the investigative agencies. Such audit can be ‘internal’, i.e., by an employee
who examines to determine whether prescribed operating procedures have been
followed. It can also be ‘external’, i.e., by an auditor otherwise engaged in public practice.
‘Litigation support’ is a commonly used term which refers to an assignment primarily
with issues related to the quantification of economic damages, e.g., resulting from a
breach of contract. ‘Investigative accounting’, on the other hand, often refers to
investigations of criminal matters, e.g., investigation of employee theft, securities fraud,
insurance fraud, kickbacks, etc. Many times, forensic accounting involves both litigation
support and investigative accounting.
|
