The field of forensic accounting has become more prominent in the public eye due to the increase in high-profile corruption and fraud cases. To illustrate, the UK-based bank, Barclays, is the fourth largest bank in the world, with operations in over 50 countries; they recently received a wealth of negative publicity concerning its manipulated reporting of interest rates, which go into the calculation of Euribor and Libor rates.
It has been suggested that Barclays are not the only bank to have misreported interest rates; there have been numerous other reported cases of banks misreporting, including UBS and The Royal Bank of Scotland, as well as the accounting scandals at Enron and WorldCom.
Each one of these scandals has shocked the world; they have also laid bare the true nature of corporate greed, which is accompanied by a propensity for deceit and fraud. These scandals, and the subsequent investigations, have afforded the general public an insight into the world of forensic accounting.
In each of these scandals, the tireless forensic accountants have been an unsung hero; they have been tasked with piecing together the financial labyrinth after the fallout of these banking scandals.
A forensic accountant is the financial equivalent of James Bond; they must uncover financial statement fraud, discover hidden assets, rebuild entire financial systems, trace funds, and much more.
The field of forensic accounting is generally defined as “the integration of accounting and auditing skills with investigative techniques and professional scepticism”. The combination of these skills allows a forensic accountant to provide an accounting analysis,which is suitable for the court; this account analysis will form the basis for discussion, debate and ultimately dispute resolution.
This means that the work of a forensic accountant must be of an extremely high quality, as it is generally done in anticipation of a litigation case; this means that the work must be able to withstand the scrutiny of judges, lawyers, and juries. Forensic accountants will be cross-examined on the findings of their report, which means that they will be subject to criticism if the report is found to not be of the highest professional standard. A forensic accountant will also be responsible for critically analysing the report prepared by the opposing expert forensic accountant.
However, forensic accountants are not just confined to high profile cases; the skills of a forensic accountantcan be employed in a range of different situations, including:
- Shareholder and partnership disputes
- Matrimonial disputes
- Professional negligence claims
- Personal injury claims
- Business interruption and similar insurance claims
If you feel as if you or your business needs the skills of a forensic accountant, there are a number of expert forensic accountants available; Frenkels Forensics are one of the industry’s leading forensic accountants, and can provide a forensic accounting service on a national and international basis. Alternatively, RGL Forensics provide a similar forensic accounting service in the US.