Forensic Accounting

By Inkster, Norman | CMA - the Management Accounting Magazine, April 1996 | Go to article overview

Forensic Accounting


Inkster, Norman, CMA - the Management Accounting Magazine


With burgeoning economic pressures and society's weakening values, the forensic accountant, acting like a bloodhound rather than a watchdog, has become the private eye of corporate culture.

In many cases, when you hear the word "forensic," visions of dead bodies spring to mind. But the word actually means, "of a standard acceptable to a court of law;" or rather that the completed work must follow acceptable professional standards and procedures, and must, if necessary, stand up in court under the scrutiny of cross-examination regardless of the branch of knowledge to which it is applied: forensic science, forensic psychiatry, forensic climatology or forensic accounting.

Forensic accounting, a discipline that deals with the relation and application of financial facts to legal problems, has been an incredible growth industry in the 1990s. Many of the large accounting firms have forensic accounting services and there are many individuals who devote their practices exclusively to this type of accounting. The role of the forensic accountant continues to expand as international white-collar crime increases in scope and complexity. The trend began in the mid-1970s when financial experts were needed to assist police in the escalating growth of white-collar criminal cases. In those days, police had neither the manpower nor the financial resources to deal with their increasing crime loads and company auditors usually had neither the background nor the training to recognize fraud. Even today, the unrelenting pressures on police budgets have resulted in the reduction in the number of police officers available to carry out investigations and the amount of time they can devote to investigating the incidence of crime, particularly those which do not involve violence or drugs. Police advise businesses and corporations to hire forensic accountants to put together a detailed case and a near-complete investigation before bringing it to authorities; this practice has become known as investigative cost-sharing.

The private eyes of corporate culture

Bob Chambers, chairman of KPMG's Investigations and Security Inc. based in Toronto, maintains that "an accountant acts like a watchdog but a forensic accountant is trained to act like a bloodhound."(1) Forensic accountants have become the private eyes of corporate culture and deal with a variety of specialized functions in addition to investigating fraud, including acting as expert witnesses, investigating patent infringement, breach of trust and fiduciary duty, due diligence analysis, security evaluations, fidelity and other insurance investigations, litigation support (which has recently become a major service area within forensic accounting), asset tracing and recovery, and other matters that require a combination of financial and investigative expertise. Many forensic practices have employed former law enforcement experts and investigative journalists in order to benefit from different types of skills and experiences, and to increase their number of contacts and sources.

To successfully carry out an engagement, forensic accountants must have an investigative mentality; in other words, they must have an unrestricted scope and look for what others have not seen. Right brain skills such as intuition, creativity, curiosity, ingenuity, common sense and the ability to synthesize elements into a whole are assets to any investigation. In addition, the ability to think laterally or solve problems by indirect or seemingly illogical methods may sometimes aid an investigator in determining the actions of a person who has committed fraud. Logical and analytical left brain skills provide a forensic accountant with the ability to identify the issues central to the problem, identify a full range of possibilities, and examine the probability of each.

Forensic accountants must be able to effectively question suspected white-collar criminals; this style of interviewing is very different from the usual question and answer session with a client. …

The rest of this article is only available to active members of Questia

Sign up now for a free, 1-day trial and receive full access to:

  • Questia's entire collection
  • Automatic bibliography creation
  • More helpful research tools like notes, citations, and highlights
  • A full archive of books and articles related to this one
  • Ad-free environment

Already a member? Log in now.

Notes for this article

Add a new note
If you are trying to select text to create highlights or citations, remember that you must now click or tap on the first word, and then click or tap on the last word.
One moment ...
Default project is now your active project.
Project items

Items saved from this article

This article has been saved
Highlights (0)
Some of your highlights are legacy items.

Highlights saved before July 30, 2012 will not be displayed on their respective source pages.

You can easily re-create the highlights by opening the book page or article, selecting the text, and clicking “Highlight.”

Citations (0)
Some of your citations are legacy items.

Any citation created before July 30, 2012 will labeled as a “Cited page.” New citations will be saved as cited passages, pages or articles.

We also added the ability to view new citations from your projects or the book or article where you created them.

Notes (0)
Bookmarks (0)

You have no saved items from this article

Project items include:
  • Saved book/article
  • Highlights
  • Quotes/citations
  • Notes
  • Bookmarks
Notes
Cite this article

Cited article

Style
Citations are available only to our active members.
Sign up now to cite pages or passages in MLA, APA and Chicago citation styles.

(Einhorn, 1992, p. 25)

(Einhorn 25)

1

1. Lois J. Einhorn, Abraham Lincoln, the Orator: Penetrating the Lincoln Legend (Westport, CT: Greenwood Press, 1992), 25, http://www.questia.com/read/27419298.

Cited article

Forensic Accounting
Settings

Settings

Typeface
Text size Smaller Larger Reset View mode
Search within

Search within this article

Look up

Look up a word

  • Dictionary
  • Thesaurus
Please submit a word or phrase above.
Print this page

Print this page

Why can't I print more than one page at a time?

Help
Full screen

matching results for page

    Questia reader help

    How to highlight and cite specific passages

    1. Click or tap the first word you want to select.
    2. Click or tap the last word you want to select, and you’ll see everything in between get selected.
    3. You’ll then get a menu of options like creating a highlight or a citation from that passage of text.

    OK, got it!

    Cited passage

    Style
    Citations are available only to our active members.
    Sign up now to cite pages or passages in MLA, APA and Chicago citation styles.

    "Portraying himself as an honest, ordinary person helped Lincoln identify with his audiences." (Einhorn, 1992, p. 25).

    "Portraying himself as an honest, ordinary person helped Lincoln identify with his audiences." (Einhorn 25)

    "Portraying himself as an honest, ordinary person helped Lincoln identify with his audiences."1

    1. Lois J. Einhorn, Abraham Lincoln, the Orator: Penetrating the Lincoln Legend (Westport, CT: Greenwood Press, 1992), 25, http://www.questia.com/read/27419298.

    Cited passage

    Thanks for trying Questia!

    Please continue trying out our research tools, but please note, full functionality is available only to our active members.

    Your work will be lost once you leave this Web page.

    For full access in an ad-free environment, sign up now for a FREE, 1-day trial.

    Already a member? Log in now.