3 Jun 2022

Forensic Accountant Insight – John McCarrick CPA

Forensic Accountant Insight – John McCarrick CPA

Introduction:

The role of the Forensic Accountant has evolved significantly over time. As expert witnesses, they play an essential role in assisting courts to make decisions on a range of complex financial issues.

These are important judgments that bring further clarity to the role of the Forensic Accountant. They also illustrate the contribution expert witnesses make to the prevention of wrongdoing & detection of fraud.

The Role of the Forensic Accountant:

The role of the Forensic Accountant is to analyse and interpret complex business and financial related matters and assist the courts in understanding financial transactions, fraudulent activities, uncover money laundering and seek out missing assets. Forensic Accountants act as an expert witness in court and have a duty to be impartial and independent.

Part of the work of the Forensic Accountant is to assist the court in understanding and explaining different accounting methods, audit reports and expert opinions. Forensic Accountants draw on their knowledge, experience and use accounting data and technology to support them in establishing the facts of a specific financial transcation.

The experience of being interviewed by an expert before trial, presenting your case in court and being cross-examined by opposing counsel is certainly a daunting prospect for any suspect. In my opinion, Forensic Accountants have a role to play in the reduction and occurrence of fraud.

The role of Forensic Accountant, as an impartial analyst in dealing with crime, is a definite deterrent for those who may wish to commit a crime or even reoffend.

Forensic Accountants focus on ‘evidence of economic transactions and reporting which is present within an accounting system they look for fraudulent financial reporting and falsification of accounting records and consider arguments relating to corporate failures due to fraud.

 The Role of a Forensic Accountant may involve:

• Calculation of damages/ Assessment of lost profits. For example, a Forensic Accountant may prepare a business interruption insurance claim for a client.

• Data Analysis. A Forensic Accountant may examine computer records and extract information from these accounting and IT systems.

• Consideration of economic and industry trends. The Forensic Accountant would look to bodies like the Central Statistics Office or Trade Associations for a broader picture of national trends and this data would provide a normative standard to compare against.

• Analysis of complex financial transactions/ valuation of business.

• Examination of transaction links. Including identifying related parties.

• Asset tracing. For example, examining banking transactions between related parties to ensure an equitable division of assets in Family Law.

• Interview of suspects. Forensic Accountants may arrange interviews to gather evidence and properly document the proceedings to be used to progress the case.

• Presentation of complex transactions in chart or diagram form as part of an expert report. Forensic Accountants can use these images to assist the court in gaining a clear understanding of what can often be complex financial transactions.                                                                                        

• Preparation of an Expert report on the issues and giving evidence in court. This is an important duty of the Forensic Accountant and it assists in the delivery of justice. There needs to be a consistency between the written expert report submitted to court as well as the oral testimony.

 

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