A relatively less popular option, forensic accounting has suddenly shot into prominence during the last two years. What exactly does forensic accounting encompass? According to The American Institute of Certified Public Accountants Forensic accounting is the application of accounting principles theories and discipline to facts or hypothesis at issues in a legal dispute and encompasses every branch of accounting knowledge.
This field is a combination of accounting, auditing, investigation and analysis it involves the use of accounts and financial records to uncover frauds, malpractice and criminal transactions in organizations. While an auditor checks for adherence to accounting principles the role of a forensic accountant goes beyond that. The term forensic means suitable to be used in courts Hence all analysis and conclusions made through this tool form evidence in the court of law. Additionally a forensic accountant must be able to interpret analyze and explain complex financial maters in an accurate but easily comprehensible manner.
The two main arms of forensic accounting are litigation support and investigative accounting
Litigation support essentially refers to providing accounting support in a case which involves litigation. Such cases typically involve quantification and calculation of economic damages. However, it must be remembered that forensic accountants do not argue cases themselves. They merely provide expert inputs and present facts.
Investigative accounting involves the usage of accounts to trace and prove criminal activities such as fraud. The job profile of a forensic accountant includes investigation and analysis of evidence communication of findings in the form of reports and presentations and assistance in legal proceedings, including testifying in court as an expert witness and preparing visual aids to support trial evidence. That said each assignment is unique and challenging.
The areas of operation of a forensic accountant are varied and span across several types of roles. A forensic accountant may choose to get involved in criminal investigations and form reports which are submitted to the prosecution. He /she can take up assignments which involve corporate disputes between the share holders or partners in a firm. In personal injury claims, the forensic accountant may be asked to quantify the economic damages. Apart from these options a professional has the advantage of opportunities in areas such as insurance, fraud investigations and matrimonial disputes. A forensic accountant may also take up the role of a mediator or arbitrator. Forensic accountants are retained by various groups of people, including lawyers the police force, insurance companies, government regulatory bodies, and agencies banks and the business community.
A forensic accountant must have extremely good numerical and accounting skills. Additionally he /she must be able to look beyond numbers and consider the various aspects of a given situation. A good forensic accountant is focused, quick and diligent. He /she must be persistent think logically but should be imaginative in investigative techniques. Attention to detail is another must have quality. a profound knowledge of fraudulent schemes and the typical modus operandi of fraudsters is a must . Understanding the psychology of fraudsters can also prove to be helpful. With the increasing number of white collar crimes committed via the computer an in-depth understanding of computer systems is crucial. Awareness of the laws of the land and court room procedures is important too Additionally, the forensic accountant must be able to communicate effectively both inside and outside the courtroom. Lastly, patience is very necessary as cases may sometimes take months to solve.
There is no single streamlined method to enter this field. However, if you are looking at a career in forensic accounting, an under graduation in an accounts related course is a must. Aspiring forensic accountants should ideally complete their graduation either in commerce (accounting and finance) or CA. Thereafter, work experience is very important. This should include experience in internal audit as well as statutory audit. Subsequently one can pursue a master’s in Forensic Accounting from a university abroad. Additionally The Council of the Institute of Chartered Accountants of India has recently launched a 100 hour certificate course on forensic accounting and fraud detection using IT and CAATs.