Forensic Accounting in Practice

Forensic Accounting in Practice

Introduction

This paper focuses on the importance of forensic accountants. These accountants have some skills that are essential for business operations. The greatest responsibility of such accountants is their role at courtrooms. In order to better understand the importance of forensic accountants, two cases would be assessed that would provide significant evidence associated with the tasks to be performed.

Important Skills

Forensic accountants are specially trained to detect white collar financial frauds. This is a rapidly developing field of finance and accounting and has been around since several years. Due to the ever increasing number of corporate scandals, the importance of forensic accountant is increasing. The public is also getting more aware of the number of financial frauds around the world and even the most reputed companies are being fully scrutinized because white collar frauds have also been determined in these companies (Idowu, 2011).

Forensic accountants mainly possess at least a bachelors degree in accounting. However, many of them are a Certified Public Accountant (CPA) and may even possess other degrees such as Certified Forensic Accounting Professional (CFAP) and Certified Forensic Accountant (CrFA). They should also possess certain skills such as sound ethical behavior, professionalism, communication and interpersonal skills, leadership, problem solving and decision making, and strategic critical thinking (Apostolou & Crumbley, 2005).

Forensic accountants should be ethical in their profession and should report every fact ethically. The omission of even a single data can result in errors in the investigation. They should know the methods of delivering financial inconsistencies in a manner that makes financial sense. While in the courtroom, excellent communication skills are required. Hence, a forensic accountant should not only have good financial interpretation skills but should also be good communicators so that they may communicate the results of their investigation. Forensic accountants are also required to be able to make good decisions, judgments, and be able to solve problems effectively through critical thinking. This is done by preparing strategic information such as product innovation, competitor actions, customer satisfaction, and market share. They must also be able to analyze and transfer knowledge between situations.

Forensic accountants should also be able to identify threats, opportunities, weaknesses, strengths, and articulate principles strategically. Strategic critical thinking is perhaps the most important skill that forensic accountant should possess. This skill is needed to link insight, knowledge, and data together and communicate the culture, goals, strategy, and vision of the company (Bolgna & Linquist, 1995).

Role of Forensic Accountant

The role of forensic accountants are crucial for organizations and they should be ethical and knowledgeable because they are the ones who give expert witness regarding the financial position of the company. Judges are usually unable to interpret complex financial data and hence they need to explain the calculations to the jury members, lawyers, and the judges. According to Curtis (2005), lawyers are mainly concerned about the application of the accounting tasks for evidentiary purposes. The evidence that forensic accountants submit in court should be such that it does not have any negative impact ...