Financial fraud and embezzlement are ever-growing threats to people and businesses. Every business owner’s worst nightmare is falling victim to fraud, embezzlement, theft, or other unethical acts. While calling an attorney is the first crucial step in navigating this situation, the second is to hire a forensic accounting specialist.
Forensic accountants investigate in-depth possible fraud and other complex financial crimes. These accountants use accounting, analytical, and auditing skills and knowledge to analyze financial activities and can provide insight into businesses or between individuals.
Legal action can only be supported by evidence of financial data, so speaking with a forensic accountant is critical.
When to hire a forensic accountant
If you suspect a financial crime in your organization, hiring a forensic accountant early in the investigation is pertinent. They can dive in quickly with expert knowledge, saving you time and money.
These are some standard practices of when to hire a forensic accountant:
1. Embezzlement
Embezzlement is the intentional transfer of funds to another location by someone entrusted with the property. Forensic accountants learn the internal controls of the company and identify weaknesses.
2. Divorce
Often, forensic accountants find hidden assets and income from a partner in a divorce. They can also find the money for alimony payments and child support.
3. Bankruptcy
Forensic accountants use their expertise to analyze transactions and help companies find profitable options thoroughly. They also work closely with bankruptcy attorneys to determine fraud in the earliest stages of bankruptcy. Forensic accountants can then determine if fraud caused the bankruptcy.
4. Economic damages
Economic damages generally include lost profit or lost earnings, personal injury, wrongful death, or wrongful termination. If a business owner loses revenue, qualified employees, or discounts, for example, because of defamation or interference by another individual, it is considered lost profit. Forensic accountants determine if the individual caused the financial impacts. Forensic accountants confirm the lost value and calculate it to the present value.
Attributes to look for in a forensic accountant
When hiring a forensic accountant, you must consider several factors:
1. Experience
Determine if your forensic account has the necessary skills for your case, as each accountant can specialize in different aspects of forensic accounting.
Look for accountants that have worked cases like yours. Avoid hiring an accountant that is unfamiliar with the legalities of your case.
It is also important to note that you may need an accountant specific to your type of case.
2. Credibility
Forensic accountants must have the proper credentials to be considered an expert in court. Hiring an accountant without experience in the litigated field risks the possibility of not holding value in court.
Also, consider the training and qualifications of the accountants. Many times, forensic accountants are members of professional organizations relevant to their specialty.
3. Court appearance
Experience providing oral evidence in the courtroom is critical in relying on the accountant to do the same for your case. Some evidence, however, is argued outside of the courtroom.
4. Personal skills
Look for clear communication skills in your accountant, such as approachability and timely communication. You want to find someone you and your attorney can work with.
This collaboration is vital if you are hiring an accountant for personal disputes.
5. Cost
The final consideration is cost. Because of experience, qualifications, and the firm’s size, not all forensic accountants are the same and do not cost the same. Forensic accounting is typically an area where you get your money’s worth, so it is not advised to make your decision just by cost.
Conclusion
Knowing the different features of forensic accounting is essential, so you can recognize when you need to hire a forensic expert.
Consider hiring a forensic accountant to evaluate your current internal controls. This small step can save you or your company significant money in the future. Contact us at 417.823.7171 to discuss your business needs.
