Litigation + Valuation Perspectives

Demystifying Valuation, Economic Damages + Forensic Accounting

You’re A Forensic Accountant? What’s That?

Like most people, I am often asked what I do.  My typical answer is “I’m a forensic accountant.”  This gets me some puzzled looks and usually prompts a few questions.  “What does that mean?” “Do you do accounting on dead bodies?”  (One of my favorite questions ever?) “OK… what is that?”

So what is Forensic Accounting?  Forensic does not mean dealing with dead bodies.  It means suitable for use in a court of law.  Forensic accountants prepare analysis, calculations and reports with the intention that they will be used in a court of law either as stand-alone evidence or in connection with expert witness testimony.  Not every report ends up in court but all are prepared so that a judge or jury will be able to understand a complex set of financial transactions and be able to draw a conclusion from the analysis.

Forensic accountants are engaged by attorneys, business owners, individuals or local governments for a variety of engagements.  Types of engagements may include:
• Lost Profits Analysis
• Employment and Lost Earnings Analysis
• Fraud Examination
• Shareholder Disputes
• Personal Injury Claims
• Commercial Damages
• Divorce
• Bankruptcy

A forensic accountant may be asked to analyze lifestyle during a marriage to help determine support payments.  Or they may be asked to determine lost wages due to an injury which occurred at a place of business or as a result of an automobile accident. 

These types of engagements can involve thousands of pages of documents which the forensic accountant must patiently go through with an open mind and focused eye.  They must be detail-oriented, analytical and ethical.  It is a case of investigating the numbers.

Melissa Loughlin-Sines, CPA, CVA, CFE

Comments

  1. Alexis says:

    In the complex world we live in forensic accountants are important. Both for business and personal use, they can help make sense of otherwise hard to understand financial documents.