Business operations have expanded globally in many industries and while growth is good, it does increase susceptibility to fraud and embezzlement.
Forensic accounting, a subset of accounting and financial advisory, can help in situations where these things may have occurred.
Beyond that, a forensic accountant can be fundamental in conducting business valuations for the purpose of acquisition, resolving stakeholder disagreements and detecting fraudulent activities within an organisation.
Understanding forensic accounting
Forensic accounting is at the intersection of investigative skills and financial expertise.
Forensic accountants assist with business appraisals, insolvency, fraud and any other circumstances that need investigation that goes deeper than what would be considered standard. Expert forensic accountants can go through mountains of financial records, looking for signs of fraud or other anomalies. They are the financial world’s detectives and they require a keen eye for detail, data extrapolation, calculation, and the ability to comb through information.
Professionals in forensic accounting often collaborate with law enforcement, legal teams, and other experts to investigate cases, draw conclusions, and provide expert testimony or written findings in court. In addition, they offer advisory services to businesses to strengthen their accounting procedures.
Role of forensic accounting
Forensic accounting is a specialised field that integrates accounting, auditing, and investigative expertise to examine and evaluate financial data. This analysis not only aids in preventing, detecting, and mitigating fraudulent activities but also fulfils various other business requirements.
Below is a comprehensive examination of how forensic accounting can help Australian businesses:
Recognising fraud techniques
Forensic accounting is a methodical approach to proving issues when things are not as they should be. Forensic accountants use advanced tools and techniques to show patterns and anomalies.
Conducting risk analysis
Forensic accounting experts are skilled at identifying and reducing risks that can harm the finances and reputation of a company. As part of their comprehensive risk assessments, they investigate operations, finances, and compliance risks. Understanding this information is very important for developing and using risk management strategies. These strategies help businesses to prevent or reduce the negative impacts of potential risks, promoting financial security and growth.
These accountants are helpful in legal cases related to financial disputes or fraud charges. They understand complex financial information, create detailed reports, or provide expert testimony for legal proceedings. Forensic accountants have a crucial role in the legal process. They help judges and jurors understand the financial aspects of a case by presenting information in a clear and understandable manner.
Conducting business valuations
Forensic accounting services can also conduct business, equity and goodwill valuations. Regardless of why you’re getting a business valuation, a forensic accountant can dig deeper to get you valuable information that will help with decision making.
Disagreements about money can arise among business partners, workers, or external stakeholders. Forensic accountants are very helpful in these situations because they can provide unbiased, evidence-based analyses of the financial situation. Facts are facts and even when emotions are running high, they cannot be disputed.
Ensuring stakeholder confidence
Investors and creditors can feel reassured when a company’s financial data is verified by forensic accounting. As a result, individuals are more inclined to trust the company.
Providing expert witness testimony
If required, a forensic accountant can provide support at mediation and trial proceedings, act as an expert witness during court trials and is required to produce information to a standard that can be used in a court of law. A forensic accountant may also assist with pre-trial investigations, including interpreting claims.
Rodgers Reidy: Promising transparency
It is important to be proactive with financial wrongdoing and anomalies. The way forward needs to be supported by facts so that informed decisions can be made. Rodgers Reidy specialises in forensic accounting and financial advisory, as well as corporate restructuring in Australia. As industry leaders we are well positioned to help you with your accounting needs so reach out to us today.