Fraud is a harsh reality that impacts many businesses sooner or later. Sadly, it comes in many forms, including employee and vendor fraud and even embezzlement. It doesn’t matter how many times it has occurred at a company, even a single incident can cost the company hundreds of thousands of dollars and more. Although most companies make an earnest attempt to prevent fraud through a robust internal controls structure, it’s sometimes not enough. When this situation happens it’s important to take the proper steps necessary to uncover and clearly identify the loss. During these times, attorneys and business owners turn to forensic accountants to investigate the situation, analyze the data and provide expert witness testimony about their findings. To help clients understand situations where a forensic accountant is needed, JLK Rosenberger has provided a summary below.
Selecting a Forensic Account
Due to the complex nature of forensic accounting it’s important to work with a provider that not only has the technical accounting experience, but one who has successfully served as an expert witness. A good forensic account is an attorney’s best friend because they are the expert that explains how the fraud, embezzlement or other financial misdealing’s were perpetrated and for how long (often in great detail). The bottom line is whether in the boardroom or courtroom you must have faith in your forensic accountant’s skills and abilities.
When is a Forensic Accountant Needed?
- Employee Fraud – Not everyone is honest. While most people can be trusted, there are always exceptions or situations where employees are suspected of or caught conducting fraudulent activities. Regardless of how the fraud is uncovered, it’s essential to have a qualified forensic accountant investigate the situation to determine the full extent of damages.
- Divorce Proceedings – Unfortunately many divorces do not end in an amicable way. In many cases, one spouse will attempt to hide or dilute financial and other assets (such as collectibles, cars, houses, jewelry and even businesses) to reduce the total amount that is divided in proceedings. Clever people are adept at “covering their tracks,” and this is when a forensic accountant can help. They serve as the primary financial investigator, analyzing all the data to identify trends and inconsistencies that point to possible concealment of funds or assets.
- Shareholder Disputes – As with all relationships in life, there are times when partners or shareholders have a dispute over a financial issue. These disagreements can be very tense, resulting in heated exchange after heated exchange. In these situations, it’s important to work with a forensic accountant to review the financial details, conduct a fair and balanced investigation and produce a detailed report of the compensation owed each shareholder or partner. An impartial analysis from a forensic accountant also serves to pacify the emotions often present in shareholder disputes and can lead to a less complicated resolution.
If you have questions about forensic accounting or would like to learn about our experience assisting companies and attorneys in California and throughout Orange County, JLK Rosenberger can help. For additional information call us at 949-860-9902 or click here to contact us. We look forward to speaking with you soon.