Sometimes the numbers don’t add up. When faced with discrepancies in the financials, business owners are reluctant to entertain the idea that they’ve been defrauded, but it happens at companies of all sizes and across all industries.
Forensic accountants are specially trained to examine financial records. Using a combination of accounting, auditing, and investigative skills, forensic accountants uncover financial crimes such as fraud, embezzlement, or corruption and can provide litigation support by testifying in court as an expert witness.
To prove their expertise, some CPAs earn the Certified in Financial Forensics (CFF) credential from the American Institute of Certified Public Accountants or the Certified Fraud Examiner (CFE) credential from the Association of Certified Fraud Examiners.
Forensic accountants use a variety of techniques, including:
Bank account analysis: If the business is cash heavy, looking at the company’s bank accounts can reveal details about the company’s funds and cash flows. Do deposits accurately reflect receipts, loans, insurance proceeds, and other payments? If not, where is the missing money? Are other bank accounts being used to hide assets?
Fraud investigation: If an employee is embezzling or misappropriating business assets, a forensic accountant can examine internal documents to uncover fictitious accounts, contracts, invoices, kickbacks, ghost employees, fake vendors, personal expenses, and fraudulent expense reimbursements.
Inventory assessment: Missing inventory is a clue to misappropriation or billing schemes, and understating inventory and cost of goods can make a company appear more profitable. Forensic accountants can determine how inventory is tracked and accounted for and illuminate discrepancies.
Damage calculation: Because forensic accountants also calculate business damages, they are helpful in breach of contract, product liability, construction, and intellectual property claims.
Hopefully your forensic accountant uncovers an honest mistake or a miscalculation. Or perhaps they uncover a serious fraud. Either way, you will be glad you retained an expert to help navigate what can be a stressful time for any business owner.
Dembo Jones’ Certified Fraud Examiners have the expertise to help you uncover and recover from fraud. The sooner you engage with an expert, the sooner you’ll have the peace of mind to get back to growing your business. Contact us today.