A forensic accountant is a certified accountant whose specialty lies in analyzing business records and transactions from a criminal perspective. Though not all businesses keep forensic accountants on staff, these men and women are usually called in when there is a suspicion of fraud. However, before the forensic professionals descend on the scene to discover whether a record discrepancy is actually evidence of a crime, a red flag must set off a regular accountant.
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Difficulty:
Moderate
Instructions
1
Discover a red flag. Red flags are items that look suspicious, even to regular accountants who are maintaining and auditing records. Some of these red flags include: unusual stock performance, earnings far above the average for an industry and fluctuations in debt that are outside the norm.
2
Raise the issue. Once a red flag has been discovered, usually by a certified accountant, it will be brought to the audit department of a company. If the issue seems important enough, the auditing department will bring it up to the board of directors.
3
Hire a forensic accounting service to examine the records. Most companies don't keep forensic accountants on staff, so when the decision is reached to hire them, it's usually done on a freelance or contract basis.
4
Cooperate with the forensic accountants. If they ask to see a company's records, provide them. If they ask to interview the accountant who detected the red flags, allow them to do so. The best results will be had when the forensic accountants and the hiring company work together.
5
Finish the investigation. Once the forensic accountants have finished going through all the records and investigating the possible causes, they'll provide a report. This report is usually given to the board of directors and may be disseminated through the chain of command to those who need to see it.
Tips & Warnings
If the issue is serious enough to require forensic accountants, there's a chance a crime has been committed. The authorities may need to be informed, and recommendations to do so should be considered carefully.
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