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Forensic Accounting

By: Jack Claridge - Updated: 16 Jan 2016 | comments*Discuss
 
Forensic Accountant Money Fraud

Forensic Accounting is a field of forensic science that - although it may not sound particularly interesting - has its place and is very useful when it comes to investigating fraud cases.

It is worth mentioning at this point that not all aspects of forensic science are geared towards the solving of murders or violent crimes; sometimes crimes on a smaller, but just as important, scale require forensic assistance of one kind or another.

What Forensic Accountants Do

A forensic accountant is charged with the task of pouring over vast amounts of figures in order to find out where illegal financial practices have taken place and whether or not companies or individuals have been fraudulently treated by a person or company acting on their behalf.

In a lot of these investigations the figures of company accounts have been altered to show a shortfall or loss whereas in actual fact the company has made considerable profits and may not wish to pay the relevant taxes on them. Also members of staff who are positions of authority have been known to set up dummy corporations to siphon off large amounts of money which can then be used later for their own personal ends.

A forensic accountant will seek to trace any financial discrepancies within a company's accounts and use so-called 'paper trails' or 'audit trails' to try and locate missing monies and also to find out who misappropriated them to begin with.

Another of the forensic accountant's remits is to liase with officers of the Fraud Squad in order to keep them up to date with his or her findings and also to try and find out from them what it is they should be looking for.

Common Crimes For Forensic Accountants

There are many different ways in which accounts can be mismanaged or deliberately defrauded but the most common is the keeping of two sets of accounts; one which details exactly what is coming in and going out of a company's accounts, the other for the purposes of tax audits and the likes which show an entirely different set of figures and which can be used for defrauding the Inland Revenue and Customs and Excise.

A forensic accountant will also be asked to look into insurance claims where there are extremely high payouts to be made - not with the intention of refusing to make the payout - but to ensure that all is above board and that the payouts are not being made as a result of a fraudulent claim. It is estimated that the amount of money fraudulently claimed every year in the United Kingdom through this underhand practice runs into several billion.

It is important to mention also that a forensic accountant may not necessarily be employed directly by the police force investigating any wrong doings but may simply be acting as a third party - or expert witness - for the police who can call upon them if a criminal investigation goes to court. Forensic accountants have the power only to seize and examine only those accounts which are under scrutiny and any other documents or procedures can only be carried out - especially if a police investigation is ongoing - only with the police's express permission.

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