Detective Work: Forensic accounting is mainly used to identify malpractices in a company’s accounts

Forensic accounting involves looking beyond the numbers and grasping the substance of situations. It?s more than accounting?more than detective work?it?s a combination that will be in demand for as long as human nature exists! Forensic accountants are trained to look beyond the numbers and deal with the business reality of fraud. Thus it is mainly used to identify malpractices in a company?s accounts. Enron is a good example. In fact, since 9/11, forensic accountants have been playing a major role in tracing terrorists around the world.

What do I have to do?

Forensic accounting is the practice of utilising accounting, auditing, and investigative skills to assist in legal matters. It encompasses two main areas ? litigation support, investigation and dispute resolution.

Litigation support represents the factual presentation of financial issues related to existing or pending litigation. In this capacity, the forensic accountant quantifies damages sustained by parties involved in legal disputes and can assist in resolving disputes, even before they reach the courtroom. If a dispute reaches the courtroom, the forensic accountant may testify as an expert witness.

Investigation is the act of determining whether criminal matters such as employee theft, security fraud (including falsification of financial statements), identity theft, and insurance fraud have occurred. As part of the forensic accountant?s work, you may recommend specific action that can be taken to minimise future risk of loss. Investigation for civil matters may also be necessary.

An important criterion is the ability to respond immediately and to communicate financial information clearly and concisely in a courtroom setting. A forensic accountant must be open to examining all alternatives, scrutinising the fine details and at the same time seeing the big picture.

What should I study?

Commerce graduates can easily take up forensic accounting as a career. You have to become a chartered accountant and then specialise in forensic accounting. The forensic accountant?s prior audit and accounting experience will be of tremendous assistance. But ultimately, it is only through working with experienced forensic accountants on various cases that one can learn the skills necessary to become a capable forensic accountant.

What next?

With the growing complexity of the business environment and the increasing number of business related investigations, forensic accountants are increasingly being asked to assist in the investigation of financial and business related issues. Forensic accountants work in most major accounting firms and are needed for investigating mergers and acquisitions, and in tax investigations, economic crime investigations, all kinds of civil litigation support, specialised audits, and even in terrorist investigations. Forensic accountants work throughout the business world, in public accounting, corporations, and in all branches of government.

Lancers Network Ltd, based in Delhi, is India?s leading corporate investigators engaged in corporate intelligence, risk mitigation, fraud detection, and litigation support. KPMG in India is one of the leading providers of risk, financial and business advisory, internal audit, corporate governance, and tax and regulatory services. It saw an opportunity in forensic accounting, which is a niche area. KPMG prepared itself for this new field by learning from small practitioners and creating its own methodologies. Now KPMG is much ahead of its competitors in this area and it makes constant efforts to stay so. PricewaterhouseCoopers is another multinational and has a global network of audit and assurance firms. It helps companies improve their corporate reporting and provides assurance that their systems are operating effectively within a well-controlled environment.

Where to study

• Institute of Chartered Accountants of India, New Delhi
• George Washington University, Washington DC, USA
• Indiana University, Bloomington, USA
• British Columbia Institute of Technology, Canada
• Charles Stuart University, New South Wales, Australia