What is the role of a forensic accountant?
We all spend a lot of time planning. We try to map out every facet of our personal and professional lives so that we can maintain a sense of order and control. However, life has a way of getting in the way of all of our best laid plans. Sometimes these interruptions are great, leading us to opportunities we never expected. Other times, they can be problematic: employee fraud, professional malpractice, marital dissolution, natural disasters, etc.
When we experience “problematic interruptions”, we are left seeking fair resolution. This is where the forensic accountant comes in.
Forensic accountants use accounting background and expertise to provide financial analysis for use in legal discussions and proceedings.
The analyses prepared by forensic accountants cover a broad range of services dependent on the facts and circumstance of each assignment.
Example 1
For instance, in the case of a marital dissolution where one spouse (or both) is a business owner, a business valuation will likely be needed to establish a fair and accurate value of the business piece of marital assets.
Example 2
In the case of fraud, a forensic accountant will use investigative skills (rooted in auditing experience) to track transactions and determine damages.
Example 3
In the case of a natural disaster, such as flooding or fire, a forensic accountant might be engaged by either an insurance company or claimant to aid in the determination of lost business profits for a business interruption claim.
These are just three examples in a multitude of different scenarios that require the expertise of a forensic accountant.
After the forensic accountant performs an analysis, he or she prepares and signs a report. The format of the report is dictated by the type of engagement. After a report is prepared, a forensic accountant might serve in a consultant role or as an expert witness in a trial setting.
The role of a forensic accountant is to provide expertise on financial matters that will support and expedite a fair resolution in a myriad of life’s problematic interruptions.