Forensic Accounting’s main role is preparing statements that’s suitable to be presented in court depending on the auditing, investigation and accounting skills. It is a practice that emphasis the use of accounting skills to investigate fraud in the corporates and organizations, and analyze information drawn from such investigations for the purposes of use in legal proceedings. There are a common confusion between forensic auditing and forensic accounting. Forensic auditing displays a system of engagements that particularly revolve around investigative work. The investigation includes fraud investigation and financial negligence. Yet further, forensic accountants are requested as expert witness in the event the investigated fraud is subjected to judicial proceedings. Forensic accounting on the other hand refers to specific progressive procedures carried out to produce evidence (Gerson, J.
, Brolly and Skalak, 2011). It is a procedure that involves auditing techniques to identify and gather evidence to prove the nature of the fraud and develop the context of the fraudulent activity. Forensic auditing revolves around proving how the fraud has been conducted, partners involved in the fraud, and any suggestion of the motive to destroy evidence. Forensic accounting is a branch of forensic auditing that uses the set auditing principles to put financial fraud into context and prove the commitment of such crimes. According to the Forensic CPA Society, there are numerous types of forensic accounting engagements especially when it comes to civil litigations and disputes. These engagements include:Calculating and quantifying losses and economic damages, whether suffered as a consequence of extortion and/or breach of contract.
Disagreements relating to company acquisition, most specifically earn outs or breach of warranties. Unfortunately, it is the inherent feature of man to dishonor arranged agreements and pursue self interest especially where financial success is involved. Forensic accountants are useful in establishing whether there was any stated agreement in the first place in the event an organization or an individual fails to honor earn outs in terms of financial compensations, or even when there is a breach of warranties or contractsBusiness Violation: At times, forensic accountants are engaged in the procedural estimation of economic value of the investors’ interest in a business.
With the uncertainty that surround most of the markets, most of the investors and other financial market participants are willing to pay or receive compensations to affect the sales of their business or businesses of others. This is mainly in a bid to regulate competition in the marketplace. Forensic accountants drawing from their auditing and valuation skills in accounting do such valuations. Some of the necessary skills required of a forensic accountants include; researching skills, interpretation of the law, application of quantitative and qualitative methods in investigation and research, finance. Other include; law enforcement office insights, accounting skills and general auditing skills (Gray, 2008). Apart from these mandatory skills, other secondary skills such as organizational behavior and applied knowledge and skills are also very important. Apart from the difference in skills, there exist other necessary difference between forensic auditing and other transactional accountants and auditors.
Transactional audits focus at the evidence supporting the disclosure and number in the financial and transaction statement. The aim is therefore not to uncover fraud but to determine if the transaction statement presented by the management meets the General Accepted Accounting Principles (Lafountain, 2016). Forensic auditing on the other hand targets unsolved fraud in the financial transaction. While transactional auditing may discover fraud in the process of auditing, the main aim is not to uncover fraud, but rather to determine if there were procedural flaws in the process of transaction (Lafountain, 2016).
Considering the difference between other transactional auditing and forensic auditing, there has been strict regulation of the forensic auditing practice and industry in general. One of the most acclaimed body that provided forensic accounting certification and accounting education is the Forensic CPA Society. Instituted in 2005, and operating in over 37 countries, FCPA Society has developed a comprehensive “FCPA” certification study and testing courses upon which those who successfully undergo the course is accredited not only as a holder of CPA, but also a global certified forensic accountant (Forensic CPA Society, 2017). Other recognized certification bodies include Association of Certified Fraud Examiner (ACFE), Certified Fraud Examiner (CFE), American Institute of Certified Fraud Examiner (AICPA), among others.
Some of the forensic accounting career one may delve in upon certification by these regulatory bodies include, Government Officers (FBI, CIA, IRS), Work in Accounting firms, Corporate Security & Risk Management, Work in Law firm, Financial Firms, among other distinctive careers.