Forensic accountants are accounting professionals who work to investigate cases of financial fraud. They frequently work in divisions of public accounting firms, insurance companies, law enforcement, and risk consulting companies. They are skilled at finding all types of financial frauds. Most of these experts start in conventional accounting jobs where they obtain experience auditing.
Once they move over to the fraud examination department, their tasks and duties change. They then use forensic ways to track how money or funds are being laundered through seemingly legit assets like real estate. They help analyze financial information to look for any irregularities that might indicate fraudulent activities. Then they gather what they found to provide testimonies in court, as well as for internal investigators.
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Why hire forensic accountants?
Usually, this job provides litigation support using accounting methods. They use software and tools like digital forensics, observational methods, and historical accounting to find and prosecute financial crimes. These data can also be used in cases where the defendant has been wrongfully charged or when individuals or entities need to prove a case.
There are a lot of reasons that an organization or person might hire forensic accountants. They have certain skills that make them the perfect professionals for investigatory auditing. It is a requirement in most cases. Here are some situations in which individuals and firms turn to forensic accountants.
Marital assets and divorce
When it comes to dividing marital assets, things can get pretty ugly. Finances can be especially hard in the case of couples with a lot of money and valuable properties. Investment portfolios, far-flung real estate, multiple bank accounts, or other investments always complicate things.
Not only that, one party may try to stow away money in offshore accounts, jumble financial records, or obscure assets from their former partners. Divorcing partners are known to hire different underhanded ways to hide their money or properties. That is why these professionals are needed to check out all marital accounts, as well as financial statements.
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They can discover funds that may be hidden or obscured and uncover multiple irregularities. When both parties submit nonsensical and disordered financial records, these professionals can sort through all paperwork with maximum efficiency, as well asconduct the analysis promptly.
When divorce cases involve complicated and substantial asset portfolios, finding and hiring reputable forensic accountants are important. Suppose both parties have mutual claims on or have owned a corporation. In that case, the organization’s financial statements must come under the scrutiny of professionals who are specifically trained to find irregularities and patterns consistent with fraudulent activities or fraud.
Their final report may be vital to the organization, possibly helping them solve possible problems and patch leaks or opportunities for malfeasance. As a matter of fact, when it comes to high-value divorce cases, these experts might be called back to conduct further investigations.
For example, one party may later claim economic changes that can impact the divorce case. Maybe the claim will have a huge impact on child support or alimony payments. These claims need to be assessed in light of forensic audits that can uncover unethical accounting practices or wrongdoing.
Acquisitions and mergers
When one organization merges with or buys another, a good deal of financial analysis will be involved. If there are mergers of companies with equal value, both sides may wish to examine the other party’s financial records for the purpose of finding possible frauds.
If it is a one-sided sale, the buying party will thoroughly audit the organization they plan to buy. Investment bankers may hire professionals such as forensic accounting in Los Angeles to find out if the books of both parties are all in order. As a matter of fact, some people argue that forensic analysis and audits need to be part of every acquisition and merger because of the diligence period.
They have special skills and tools that can help uncover outright frauds and irregularities that conventional accounting methods do not detect. Their job will help parties involved move forward with better confidence. After all, it’s not unheard of for workers of targeted companies to loot the funds in advance of the sale.
During full forensics, because of diligence audits, even tax pictures of target firms can be unveiled to provide the complete picture of future tax exposures that might surface from previous fraudulent activities or other issues. Not only can these professionals discover the occurrence of crimes, but they might find out that the target firm’s statements when it comes to projected earnings, asset values, or debts may have been erroneous or inflated.
It may have been the result of simple human error, but the acquiring organization will want to adjust its bid depending on the report. Naturally, it could also happen that target firms have somehow undervalued themselves, tipping purchasers that they are getting better deals compared to previous ones.
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Additionally, target organizations may wish to conduct an analysis of the other party. After all, if a firm has worked hard to establish product lines or top-quality services, they do not want to see their hard work disappear when their firm is bought by another organization that is ruined by fraud and embezzlers.
Usually, any time corporate acquisitions or mergers are in play; these professionals should be an important part of the process. Their pursuit of unethical or fraudulent irregularities can make both parties at ease and confident with the merger or acquisition.
Currently, the government does not particularly track accounting, but they show that auditors and accountants will grow by at least 10% by 2026. In contrast, Info Security Analysts will be up by at least 25% in the same time frame. As for their salaries, a Certified Forensic Accountant is earning at least $140,000 per year. That is why it is pretty easy to see that having this kind of career is a wise career move. Compared to other professionals, this kind of job is a pretty lucrative career if you love crunching data and numbers.