Nabendu Maji IMED, Pune

MBA (G) B Roll No. 73

What is Forensic Accounting? Other Terminology. What does a Forensic Accountant do? Types of assignments a Forensic Accountant perform. Typical approach to a Forensic Accounting. Stage to Forensic Accounting. Applications and Consequences.

The integration of accounting, auditing and investigative skills yields the speciality known as Forensic Accounting. In other words: The identification, interpretation, and communication of the evidence of economic transaction and reporting events. Forensic accounting is the specialty practice area of accountancy that describes engagements that result from actual or anticipated disputes or litigation. "Forensic" means "suitable for use in a court of law"

Forensic Investigation
The utilization of specialized investigative skills in carrying out an inquiry conducted in such a manner that the outcome will have application to a court of law. A Forensic Investigation may be grounded in accounting, medicine, engineering or some other discipline.

Forensic Audit
An examination of evidence regarding an assertion to determine its correspondence to establish criteria carried out in a manner suitable to the court. An example would be a Forensic Audit of sales records to determine the quantum of rent owing under a lease agreement, which is the subject of litigation.

A Forensic Accountant is often retained to analyse, interpret, summarize and present complex financial and business related issues in a manner which is both understandable and properly supported. Forensic Accountants can be engaged in public practice or employed by insurance companies, banks, police forces, government agencies and other organizations.

A Forensic Accountant can be of assistance in various ways, including:

Investigative Accounting Investigating and analysing financial evidence. Review of the factual situation and provision of suggestions regarding possible courses of action. Assistance with the protection and recovery of assets. Co-ordination of other experts, including: Private investigators; Forensic document examiners; Consulting engineers. Assistance with the recovery of assets by way of civil action or criminal prosecution.

Litigation Support
Assistance in obtaining documentation necessary to support or refute a claim. Review of the relevant documentation to form an initial assessment of the case and identify areas of loss. Assistance with Examination for Discovery including the formulation of questions to be asked regarding the financial evidence. Attendance at the Examination for Discovery to review the testimony, assist with understanding the financial issues and to formulate additional questions to be asked. Review of the opposing expert's damages report and reporting on both the strengths and weaknesses of the positions taken. Assistance with settlement discussions and negotiations. Attendance at trial to hear the testimony of the opposing expert and to provide assistance with cross-examination.

Criminal Investigations Shareholders' and Partnership Disputes Business Interruption / Other Types of Insurance Claims Business/Employee Fraud Investigations Business Economic Losses Professional Negligence

Meet with the client Perform a conflict check Perform an initial investigation Develop an Action Plan Obtain the relevant evidence Perform the analysis Prepare the report Attendance at Court

Planning Stage
Meet with the Client

Obtain an understanding of issues at hand Perform preliminary assessment of work to be done and prepare tentative schedule
Perform a Conflict Check

Ensure that the firm does not have conflicts of interest

Perform an Initial Investigation Preliminary investigations examination of available information Allows auditors to identify likely trouble areas and assess the work to be done Plan the Audit It Should identify objectives to be achieved and plan audit methodology to be used

Execution Stage

Collect the Relevant Information

In depth interviews with clients staff Examination of hard-copy & electronic info

Electronic info is often best source for forensic auditors Specialized computer forensic auditors are sometimes called in, depending on the audit
Off-site computers & servers, hard-copy info, etc. are also examined

Perform the Analysis

Highly dependent on specifics of the engagement Often involves: calculating economic damages and sensitivity analysis, tracing of assets

Prepare the report

It contains the details of the engagement, the scope, any limitations and a detailed summary of the findings Reports are generally confidential and often used in court proceedings Review Process & report to the client. Identify those involved and quantify amount of fraud. Present findings to the client and court

Satyam Fraud Case