The American Institute of Certified Public Accountants defines forensic accounting as “(T)he ability to identify, collect, analyze, and interpret financial and accounting data and information; apply the relevant data and information to a legal dispute or issue; and render an opinion.” (1)
CPAs are often hired by clients and attorneys to conduct forensic accounting procedures in civil matters and to issue a written report on their findings and conclusions. In addition, they are often asked to testify in court regarding their reports.
I have been doing forensic accounting work for more than 25 years and have testified on several occasions with respect to the forensic procedures I was hired to perform. I have also had the opportunity to observe other forensic CPAs who do this type of work. I have found some common aspects among them that seemed to make these professional men and women highly successful at their jobs as forensic accountants.
If you are in need of a CPA to do forensic accounting work here are some of my tips regarding what to look for in the professional you are going to hire for your case:
- Forensic Experience – Depending on the complexity of your case, the previous experience of the forensic accountant may be very important. How many forensic cases has the CPA worked on? One? Two? Twenty? What types of cases were they?
- Audit Experience – I have found that some CPAs who have been trained as auditors and have had a few years of auditing experience, make very good forensic accountants. This is mostly because of the “investigative” nature of their audit assignments and their skeptical mindset. Has your forensic accountant had any audit experience?
- Planning the Work – Does the forensic accountant appear to have a reasonable approach to doing their(2) work? If the accountant can’t easily explain their plan of action to you, they may have a difficult time in the courtroom explaining to a judge or jury the forensic procedures they performed.
- Fees – The complexity of your case and the sheer volume of information to be considered by the forensic accountant likely will dictate whether your case is something that can be completed in two weeks – or two months. Generally, the time to be expended may be a difficult estimate to make by your forensic accountant. You can, however, in most instances request that the accountant break the engagement up into segments, or phases. You then can make the call after, say Phase I, on whether to move on to Phase II. This will allow more control over the ultimate fees you will pay.
- Timeliness – Can the forensic accountant meet your necessary deadlines by themselves or with available staff?
- Honest Assessment of the Case – Does the forensic accountant tell you of any risks in achieving meaningful results in the work they are going to perform; or, do they tell you at the outset that they will find what you want them to find.
- Testifying Experience–If the forensic accountant will be required to testify before a judge or jury, how much experience have they had in testifying? Once? Twice? Twenty times? Prior experience testifying by the forensic accountant can be of great benefit to your case.
- Communication Skills – Does the forensic accountant communicate clearly, logically, and in a professionally confident and convincing manner? Does the forensic accountant exude confidence?
- Composure – Does the forensic accountant have the composure to stand up against a rigorous cross-examination? Or, do they get easily flustered?
- Appearance – Does the forensic accountant look professional in grooming and dress when meeting with you? Will they be perceived by a jury as dressing respectfully and in professionally good taste for the courtroom environment?
I write of the CPAs who do forensic accounting work. There are others who are not CPAs who can do a quality job as a forensic accountant. In addition, forensic accountants all started with their first case. You may encounter one who is fairly new to forensic accounting and testifying; however, you may find they have most of the abilities noted above and can work for you at a reasonable fee.
Don R. Bays, CPA, ABV, CVA, CFF
1 Ronald L. Durkin, CPA, CFE, CIORA, and Henry Stotsenberg, CPA; “Defining the Practice of Forensic Accounting;” CPA Expert, Special edition 1999; American Institute of Certified Public Accountants; aicpa.org.
2 Note: Throughout this article the terms of “their” and “they” will usually encompass the terms “his/her” and “she/he,” respectively.