Steps Involved in the Forensic Accounting Process

Unearthing financial evidence and analyzing it to support litigation is an important element in numerous civil and criminal cases. Whether the forensic accountant is working on behalf of the prosecution or the defense, it is his/her responsibility to provide adequate support for the document presented at court.

Various organizations appoint the services of these professionals – government agencies, banks, police forces, insurance companies, etc. What exactly does the accountant do? Here are the basic responsibilities.

* Investigation and analysis of financial data
* Development of computerized applications that help in this analysis
* Presentation of the findings in a comprehensible manner
* Assistance in the litigation (by providing documentation or expert witness)

How does a forensic accounting assignment work? Every case is unique, and the specific circumstances dictate the steps in an assignment. However, there are certain common steps that every task follows. Here are the details.

1) Meeting with the client – is essential to understand the involved parties, the issues at hand and the facts.

2) Performing a dispute check – is important to understand the basis of conflict between the two parties.

3) Performing a basic investigation – is necessary to chalk out a plan of action that the accountant needs to complete the assignment.

4) Developing a strategy – is creating the master plan on the basis of the facts you got from the initial investigation, keeping in mind the goal of the task.

5) Accumulating relevant evidence – this involves locating data pertaining to the legal dispute.

6) Analyzing the evidence – includes tasks like calculating damages, tracing assets, summarizing transactions, performing sensitivity analysis, calculating present value of assets as per discount rates, utilizing computer applications and other tools for explanation of the findings, and such others.

7) Preparing the report – is necessary to explain the findings in a comprehensive manner. The goal is forensic accounting litigation support. Therefore, the report needs to provide ample data analysis to support, or refute, the claim in question.

While you are looking for a professional providing such services, it is important that you keep in mind certain considerations. A qualified, certified and experienced forensic accountant is the suitable one to retain for counsel. It is better to consider someone who has an in-depth knowledge of the legal procedure.

Timely counsel is imperative in case of forensic accounting. Otherwise, its scope as litigation support becomes limited. Moreover, the client needs to provide all necessary data to the accountant in order to maximize the opportunity of accurate investigation and analysis of the financial evidence.