What is Forensic Accounting, and What is it Used For?

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Forensic accounting is a specialized field of accounting that uses financial information to assist in the resolution of legal disputes. Forensic accountants are often called upon to help determine whether fraud has occurred within an organization and, if so, how much money was lost due to the fraud. They may also investigate whether someone who has been accused of fraud committed the crime and how much money was lost due to it.

In addition, forensic accountants can be used by companies or individuals when they are being sued for damages related to their business practices or products. For example, if you’ve been injured by a faulty product manufactured by a company and want to sue them for damages related to your injury (medical bills), you might hire a forensic accountant. 

The accountant would analyze all aspects of how the product was made (and therefore how it might have malfunctioned) as well as other factors related to its manufacturers like employee training records or manufacturing processes in order to get you compensation. 

In short: forensic accountants find out what happened, so everyone involved precisely knows why you’re suing — which means more chances for justice! Now, if you were paying close attention to the new Batman film, you’ll have noticed that the Riddler’s job was as a forensic accountant. 

It was this profession that allowed the Riddler to uncover the breadth of financial fraud that had taken over Gotham city. This should tell you a little bit of the power that forensic accounting can have. But for now, let’s look at how it’s used.

Forensic Accounting Is Used to Find Exact Dollar Amounts for Damages to a Company

Forensic accounting is used to find exact dollar amounts for damages to a company. Forensic accountants are trained to look at documents and other evidence, such as emails and phone records, from employees or companies to find out where the transactions have taken place.

Forensic accountants use their findings in court cases that involve fraud or embezzlement by business owners or others who have been entrusted with money. The information also can be used in divorce settlements when one spouse needs proof of how much money has been spent during the relationship or marriage so they can get an equal share of assets upon divorce. Forensic accountants may work for private investigators who act as legal counsels for individuals involved in litigation cases.

Forensic Accounting Can Be Used in a Variety of Situations, Such As:

Forensic accounting can be used in a variety of situations, including:

  • Civil and criminal fraud cases, including embezzlement. In these cases, forensic accountants look at the evidence to determine whether or not fraud was committed and by whom. They may also be asked to determine how much money has been stolen or lost to the scam.
  • Insurance claims. When someone files an insurance claim for property damage or personal injury, it’s up to the insurance company’s legal team (and sometimes its own internal auditors) to investigate the validity of that claim before processing it. A forensic accountant would review financial records such as bank statements and credit card bills in order to help determine if there is any discrepancy between what was claimed on paper versus what actually occurred based on those sources of information. Bankruptcy cases where companies need their debts restructured due to financial difficulties but still wish to keep operating without being forced into liquidation by creditors who are owed money by them. In divorce cases where one spouse wants out but cannot afford it because 100 percent ownership would mean having all assets liquidated just when things were looking up again after having lost everything during hard times—the other spouse might want some kind of settlement agreement instead so as not feel too bad about letting go with less than 50 percent ownership stake remaining on paper.”

Civil and Criminal Fraud Cases

Forensic accounting is generally used in a wide range of areas, including:

  • Fraud investigations. Specialists in forensic accounting can help companies and individuals determine whether fraud has taken place. This includes civil and criminal fraud cases, environmental law violations, and employment liability issues.
  • Insurance claims. Forensic accountants can help insurance companies determine whether the claim is valid or not, using techniques like data analysis to identify patterns and trends that might indicate fraud or other irregularities. They may also be called upon to estimate damages for things like floods or fires when there’s no reliable way to do so otherwise.
  • Bankruptcy matters. Forensic accountants are often asked by creditors or trustees (who oversee bankruptcy proceedings) regarding how money has been spent during a bankruptcy proceeding—or whether it was misused at all—so that they can make an informed decision about whether the debtor should be allowed more time before liquidating assets or selling the property after declaring themselves insolvent.”

Forensic Accounting Can Be Used to Determine the Exact Amount of an Asset, Liability, or Damage.

Forensic accounting can be used to determine the exact amount of an asset, liability, or damage. This is critical in a variety of situations. For instance, if you have been injured at work, your employer might provide you with workers’ compensation benefits to help with medical bills and other expenses while recovering from your injury. 

If a dispute arises between you and your employer over how much money has been paid out in workers’ compensation benefits, forensic accountants can calculate exactly how much money has been paid out so that both parties can ensure they are getting what they deserve.

It is also useful for businesses who are trying to determine whether another person should be held financially responsible for damages caused by their actions on behalf of that business or their employees. 

In these cases, forensic accountants will be able to gather all necessary evidence from previous court rulings related to similar cases so as not only to show how much restitution should be owed but also to provide information showing why it should be awarded against certain individuals rather than others involved with causing said damages (i.e., determining who was negligent).

What Forensic Accounting Can Do for Your Business

As we’ve discussed, forensic accounting is used to find exact dollar amounts for damages to a company. For example, if you were in charge of a business and wanted to know how much money was stolen from your company, forensic accountants would be able to tell you this information. 

This can be especially useful when it comes to civil and criminal fraud cases, such as when someone is stealing money from their company or lying on their taxes. Forensic accountants are also often called upon in any situation where there are disputes between parties (especially companies). The forensic accountant’s job is then to go through all the evidence presented by both sides and provide an objective opinion on what happened and what should be done moving forward.

Forensic accountants can help with other issues besides just financial ones too! If your computer system was hacked into by hackers who stole valuable data or if someone has been stealing sensitive information from within your organization over time without being detected until now, then these problems might require forensic accounting services before they can be resolved successfully.

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