Forensic accounting
Professional accounting services and innovative online bookkeeping.
What is forensic accounting?
Forensic accounting is one of the fields of accounting that aims to successfully combat fraud and criminal activities As such, it involves examination and interpretation of evidence and facts. Forensic accounting requires an interdisciplinary approach to complex problems through the application of all accounting, auditing, analytical, investigative and other skills and knowledge in clarifying relationships, facts and economic transactions.
Forensic accountants aim to review and clarify complex financial transactions, process complex documents, analyze cash flows and electronic transactions, and recognize fraudulent activities on that basis. Also, one of the important tasks of forensic accounting is its orientation to fraud prevention.
A forensic audit can detect: Financial frauds Bankruptcy frauds Tax evasion frauds valuation frauds; customer and supplier frauds; procurement frauds; inventory and storage frauds; wage payment frauds; capital acquisition and refund frauds.
What makes a good forensic accountant?
A good forensic accountant must have basic accounting knowledge; in addition, they must have multidisciplinary knowledge, which means having at least basic legal and IT knowledge; they need to know how capital markets work, as well as the risks of corrupt actions, etc. They must pay attention to details, thoroughly analyze data, have excellent communication skills, and possess professional skepticism during work. A quality forensic accountant must possess credibility and integrity, which, among other things, means having adopted high ethical standards of conduct. Forensic accountants need to know more than those committing frauds.
Why has forensic accounting become necessary in modern business?
Statistics show that one out of three businesses is a victim of fraud. The minimum cost of fraud amounts to 5% of revenues, while the average fraud value is USD 1.78 million. Of course, the longer the fraud lasts, the greater the losses are. About 58% of companies never recover their losses caused by fraud. On average, fraud is only detected after 18 months, and a large number of fraudsters are never discovered.
Also, if we know that fraud can be AGAINST an organization – which can include vendors, customers, suppliers, contractors and competitors bribing employees, and WITHIN an organization – committed by senior managers employed in the organization, it is clear that everyone can attempt fraud.
Who can be a user of forensic accounting?
Forensic accounting is used by owners of capital, i.e. founders of companies, directors of companies, courts, various state agencies, administrations and organizations, public enterprises, lawyers, insurance companies, banks, tax administration and others.
What can forensic accounting services be used for?
You can use forensic audit services for:
- Detecting various types of fraud, such as false financial reporting, misappropriation of funds or corruption
- Frauds in financial statements related to certain cycles such as: sales and receivables; procurement and payment; supplies; payment of wages; capital raising and refunds
- Due diligence of your business partners and potential cooperation, and giving recommendations
- Support during the procurement process to avoid fraud and achieve savings
- Support during negotiations with partners and prospective clients.