Forensic Accounting Student’s name

Lecturer’s name:
Forensic Accountant Qualities
Forensic accounting is a finance activity that involves financial
sharpness and detective skills of locating accounting errors (Singleton
& Singleton, 2010). It is involved in discovering financial misreporting
and accounting fraud using advanced accounting tracking methods for a
private or public organization. This helps in detecting how the persons
responsible of making financial entries have manipulated the real
financial results for their own financial gains. This is done by
investigating the financial reports and locating the transactions to
figure out the transactions that have been undertaken by various
entities. Forensic accounting is an important financial accounting
process due to it capability in helping business organizations to
prevent financial frauds that are likely to cause the entity to become
insolvent.
A number of big corporations have in the past years collapsed due to
financial siphoning by the senior management through false accounting
entries that misrepresent actual business transactions that have been
undertaken. This has led to the establishment of forensic accounting to
help investors against losing their capital investment through unethical
managers. In order to discover manipulation of financial figures
entries, it will require an accountant of high qualities due to the huge
and complex figures that one has to go through in detecting accounting
errors. Thus, forensic accountants employed by organizations should be
effective and efficient in discovering financial frauds when they occur.
A successful forensic accountant is expected to develop a number of
qualities that help in executing the practice efficiently and
effectively.
One of the critical qualities for a forensic accountant is being
analytical. An effective forensic accountant is supposed to be
analytical in reviewing the source documents and financial reports of
the concerned entity (Gilbertson, 2009). This implies that the forensic
accountant should be able to analyze the soundness of every transaction
indicated and determine if the transaction was fairy recorded by the
company. Thus, each entry made in the financial reports and supporting
documents should be explicit in reflecting the actual business
transaction that led to such an entry (Russell & Cohn, 2012). This helps
the accountant in tracking the accuracy of the figures reflected in the
financial results released to the end users in the market.
Documentation may on some cases fail to support the reported numbers
reflected in the financial reports. Consequently, an effective forensic
accountant should be able to analyze the origin of the numbers indicated
in the financial reports of the company to determine if the financial
reports are accurately reported (Gilbertson, 2009). This quality is very
critical due to it direct relationship with business activities since
each of the transaction conducted by a business enterprise can be traced
by analyzing the flow of the transactions. An entity has the tendency of
documenting it transactions to enable the management in accounting for
the costs incurred and the revenue received. Furthermore, every
transaction reflected in the financial report can be analyzed since
business transactions are normally reflected in the journal entries,
receipts, and invoices.
Thus, analytical quality for a forensic accountant is directly related
with the activities of a business organization since it calls for the
forensic accountant to fall the activities of the entity to discover the
truth (Pasco, 2010). Another critical quality that a forensic accountant
should develop is being detail oriented. In reviewing financial reports
and supporting the source documents, the forensic accountant should be
detail oriented in his practice due to the large quantity of numbers he
will go through (Rezaee & Riley, 2011). In every step, the forensic
accountant should ensure that numbers in the financial reports reflects
every number indicated in the supporting documents. Thus, an effective
forensic accountant should compare the amounts in the supporting
documents and financial reports to investigate if they are inconsistent
(Singleton & Singleton, 2010). Consequently, it will require the
forensic accountant to seek for detailed information for every
transaction and spend adequate time to contrast the details against the
ending totals. Detail oriented quality is relatively related to the
activities of a business entity since transactions of a business are
recorded to enable the management in following the activities of the
business. Thus, it will be in line with the practice of traditional
practice of the business activities to seek for detailed information
from the management that explains how a transaction recorded in the
supporting documents and financial reports was conceived (Gilbertson,
2009).
This will help the owners of the business to understand how a
transaction they are suspicious of was entered for their own interest.
Similarly, a forensic accountant should possess the quality of
persistence. Persistence is an important aspect of the forensic
accounting due to it capability in discovering the erroneous transaction
reported in the fundamental financial reports. Consequently, a forensic
accountant should persist on requesting for the documentation and the
finding the originality of the date presented. This helps the forensic
accountants on making auditing conclusions that that validates the
numbers reflected in the financial reports of a given organization.
Accountable forensic accountant should continue asking for
documentations and assertive in making a solid conclusion. Business
activities are documented in the decision making process to guide the
management in passing transactions that are geared at achieving the
objective of the business owners. Similarly, transactions of a business
are reflected by balancing entries throughout the supply chain of an
enterprise. Thus, being assertive is related to activities of a business
organization since it seeks at reviewing all the usual documents and
entries that are experienced in a normal business operation (Russell &
Cohn, 2012).
Even though a small business enterprise may not document every
transaction it undertakes, it is normal for the owners of the business
to keep a record of the transactions they have encountered.
Consequently, the quality of being assertive in reviewing every
transaction that is reported in the financial entries and supporting
documents is part of the business organizations activities.
Inquisitiveness is another quality that a forensic accountant needs to
develop. This involves gaining necessary information that is critical in
investigating the financial reports by asking questions. This helps the
forensic accountants in getting the necessary answers that need to
confirm the validity of the information reflected in the financial
results (Russell & Cohn, 2012). Consequently, a forensic accountant
should always ask questions to the staffs of the organization when
reviewing the financial reports numbers reflected. This allows the
accountant to understand why the staffs of the organization reported the
reflected numbers in the financial reports.
Accordingly, the forensic accountant is able to continue asking
investigative questions to the upper management staffs in discovering
unmatched numbers originality. Another quality that a forensic
accountant should develop to be effective and efficient in undertaking
his duties is being efficient (Russell & Cohn, 2012). This involves
being able to create case scenarios that are able to reflect on the
conduct of the accounting body of a given organization in reporting
their accounting results. This helps the forensic accountant in
connecting with the accounting process a given entity uses in
discovering the origin of the numbers reflected in the financial
reports. Owing to the ability of the forensic accountants in
interrogating the financial transaction of an entity, forensic
accounting has become on of the modern part of the court process (Pasco,
2010). This implies that forensic accounting is been used to present
viable evidence in the court of law. It is possible to measure the
economic damage that has been caused through fraudulent financial
transactions using the skills of a forensic accountant.
This helps the prosecutor or the claimant in discovering a motive when
presenting a case in court. Forensic accountants are increasing becoming
the expert witness in fraud criminal cases. This has helped in curbing
corruption and embezzlement of public funds cases significantly in
various communities. Consequently, one of the key roles of a forensic
accountant in a courtroom is to be the main witness in a financial fraud
case. Owing to the ability of a forensic accountant in identifying
accounting misconducts entered by a person or a company, they help the
court in testifying on the methods applied in identifying the fraudulent
entries and relevant information on the outcome of the investigation.
Similarly, forensic accountant help the court by offering a breakdown of
the financial information presented in a court for the prosecutor to
understand (Singleton & Singleton, 2010). This helps the courts in
making unbiased opinion to both the accused and prosecutor due to the
reliability and integrity of the fraud auditing findings. In addition, a
forensic accountant plays a significant role in a civil court proceeding
during a personal damage claim (Pasco, 2010).
A forensic accountant helps a firm in court to defend the financial
claims against by an employee or a business partner by investigating the
claims. This is done by undertaking a proximate cause investigation for
the claimant in demonstrating to the court how the accused business or
person caused economic loss to him. This helps a court in determining
how the claimant fits in the compensation criterion of the entity
(Pasco, 2010). Similarly, forensic accountants help the court in
determining the validity of the shareholders’ claim for financial
compensation from the management. This is done by tracing, indentifying
and quantifying the financial claims of the shareholders for the court.
Thus, the court is able to make unbiased ruling on the validity of the
financial fraud case presented due to the expertise evidence presented
by a forensic accountant. A number of criminal legal cases involving
financial malpractice have been executed using forensic accounting
skills. One of the major financial malpractice legal cases that have
been successful through forensic accounting is the Enron financial
criminal case. Enron Corporation was accused of misreporting their
financial reports in misleading shareholders and financial analysts in
valuing the stocks value of the entity (Gilbertson, 2009). This was done
by investigating the revenue recognition employed and matching of the
revenues to discover how the firm was realizing the net income it was
registering. The forensic auditing of the financial reports of the
organization helped the regulators and criminal investigators to
identify financial frauds by the senior management of the firm. This
helped the court in convicting the senior management of the corporation
for engaging in financial malpractice. Similarly, a forensic audit in
ICAP brokerage firm has been conducted in discovering the malpractice of
the firm’s director in manipulating the interest rates of LIBOR.
The forensic auditing that was carried by Deloite auditing firm
identified that the brokerage firm influenced the LIBOR interest rates
by presenting misleading financial information to investors and banks.
This contributed to a compromised market that was threatened the
survival of the financial market. The forensic accounting investigation
has helped the prosecutor in presenting a viable case in the criminal
court to prevent the banks and investors in the global market against
suffering huge financial losses due misleading financial reporting by
the brokerage firm (Singleton & Singleton, 2010). The Arthur Andersen
auditing firm was also, discovered to have engaged in financial
malpractice through forensic auditing. The firm was a leading auditing
firm that was accused of helping management of publicly registered
corporations in certifying misleading financial reports.
The forensic accounting that was conducted in the firm discovered that
the firm deliberately failed to identify on behalf of the shareholders
the misleading financial figures reported in the financial reports from
the supporting documents. This lead to the prosecution of the senior
management directors of the firm due to the strong that was build by the
prosecution through the help of the forensic accountants. Accordingly,
forensic accounting is an important financial practice due to it
capability in helping the society in detecting and preventing financial
frauds by scrupulous individuals for their own interest.
Reference
Gilbertson, C. B. (2009). Fundamentals of Accounting. New York: Cengage
Learning.
Pasco, G. A. (2010). Criminal Financial Investigations: The Use of
Forensic Accounting Techniques. Chicago: CRC Press.
Rezaee, Z., & Riley, R. (2011). Financial Statement Fraud Defined.
Hoboken: John Wiley & Sons, Inc.
Russell, J., & Cohn, R. (2012). Forensic Accounting. London: Oxford
press.
Singleton, T., & Singleton, A. J. (2010). Fraud auditing and forensic
accounting. Hoboken, N.J: Wiley.
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