Forensic Accounting Exams

Forensic Accounting Exams: Forensic accounting plays a vital role in uncovering financial irregularities and bringing perpetrators to justice and in civil litigation to recoup losses. By combining accounting expertise with investigative skills, forensic accountants provide crucial support in legal matters, helping to ensure that financial transactions are accurate, reliable, and transparent. Recently I have been hired on more cases which involve disputes between partners. Usually one partner (or both) accuse each other of misappropriating assets. There are several issues:

• When did this start?
• How to quantify/document this?
• How to sift through the evidence to help the client in the case

Many times I receive a large data dump, and it can sometimes be in an unworkable format. For example, bank statements have thousands or tens of thousands of transactions, and often don’t have good descriptions. There are incomplete names and accounts/transactions referenced. It is of little help. Often I have the counsel go back to those who made the accusations and get more detail/evidence of the wrongdoings, and this becomes a starting point for my work. If there is a bookkeeper or CPA or if the client has already prepared spreadsheets tracking the transactions this helps to organize the case file. Once I know where to start I can re-check their work, summarize it and calculate damages. Or I can analyze summary financial statements for trends, ratios that are out of whack or otherwise determine malfeasance or irregularities. One recent case included millions of dollars of distributions to some partners but not others. The client wasn’t aware of all of this, and it became the focus of my work/conclusions. What they do with my findings is up to the attorney/courts but at least I have thoroughly reviewed the financials, somewhat like an auditor would do. The difference between my work and that of an auditor is that the auditor is mainly interested in preparing the financials in an accurate manner. Whereas I am looking for irregularities or unfair/inaccurate transactions. I rely on the original financials, and assume they are correct unless proven otherwise.