The forensic accountant’s concern is with the detailed development of factual information – derived from both documentary evidence and testimonial evidence – about the “who, what, when, where, how, and why” of a suspected or known impropriety. All relevant evidence is sought and examined. Based on the investigative findings, the forensic accountant assesses and measures losses or other forms of damage to the organization and recommends and implements corrective actions, often including changes in accounting processes and policies or personnel actions or both. The forensic accountant also takes preventive actions to eliminate recurrence of the problem. The forensic accountant’s findings and recommendations may form the basis of testimony in litigation proceedings or criminal actions against the perpetrators. They may also be used in testimony to government agencies such as the Securities and Exchange Commission in the United States or the Serious Fraud Office in the United Kingdom.
Accordingly, the scope of the investigation and the evidence gathered and documented must be capable of withstanding challenges that may be brought by adversely affected parties or skeptical regulators.
Clearly, there are many commonalities between auditing and forensic accounting. Both rely on: