Forensic accounting is a professional field within the larger accounting industry which uses various skill sets to investigate the finances of a company or an individual. The investigations conducted by forensic accountants are usually aimed at revealing facts or motivations which may not be immediately visible from a cursory surface look at an entity’s finances. A forensic accountant in Chicago or elsewhere will use auditing, accounting and investigative skills to see beyond just the raw financial data in order to present an overview of the financial and business situation they are looking into. Many times, a forensic account will not only have education and training in accounting but also in the legal field.
What Exactly Do Forensic Accountants Do?
Forensic accountants may be utilized whenever a complex business or financial matter needs to be summarized and interpreted. Some common employers of forensic accountants are banks, law enforcement, public accounting firms, governmental agencies, banks and lawyers. Forensic accountants will document financial information and data. They usually develop computer applications to help manage the data collected and then will communicate their summaries via presentations or reports.
The legal field is one of the most common uses of forensic accounting. Forensic accountants may be asked to testify in court. They may also be tasked with preparing supporting visual aids for evidence in a trial. Parties to a lawsuit may use a forensic accountant’s findings to help in reaching resolution for legal disputes.
For instance, forensic accounting is commonly applied in disputes regarding benefits and compensation for workers. Also, forensic accountants may help with unearthing hidden assets during a divorce case. This can be quite useful if one party of the divorce case is purposely attempting to hide assets during the discovery phase in order to be awarded a more beneficial ruling from the judge.
They may also be useful for other types of civil legal disputes such as breach of contract cases, business valuation disputes, breaches of warranty, torts or disagreements regarding the acquisition of a company. Trademark and patent infringement disputes are another litigation area which uses forensic accounting. Also, forensic accounting can help determine the financial impact of violating a noncompetition or nondisclosure agreement.
Investigations into criminal matters also commonly involve forensic accounting. In this context forensic accountants can help determine whether or not a crime had been committed if it involved any type of financial transaction. This could include investigations into securities fraud, falsified financial statements, employee theft, insurance fraud or identity fraud.
Another area which forensic accounting may be useful is in the insurance industry. Insurance companies may hire a forensic accountant to calculate monetary damages caused in a medical malpractice case or a vehicle crash. The forensic accountant will have to review the insurance policies in order to the understand the coverage issues in a case. On the other hand, a forensic accountant may not only be useful for the insurer. Forensic accounting may also be utilized on behalf of an insured’s legal action against an insurance company.