The Role of Forensic Accountants Essay Example for Free

The Role of Forensic Accountants Essay PROBLEM STATEMENT In recent times, the world has witnessed the failure of large corporate organizations which has been attributed to large scale fraud by Directors in connivance with auditors. There is the case of Enro in the U.S, Parmalat in Italy and many cases in the U.K such as Polly Peek, Maxwell communications and BCCI. This development brought about in its wake the lack of public confidence in audit reports and auditing. By this many stakeholders seek redress in the court of law. In the court of law, the service of an expert witness is required in order to ascertain the true state of affair of the troubled enterprise. PURPOSE OF STUDY To examine a forensic Accountant as an expert witness in litigation and to effectively determine his role in judicial process BACKGROUND STUDY Forensic accounting is hardly a new field, but in recent years, banks, insurance companies and even police agencies have increased the use of these experts. A nationwide study conducted by Kessler International (a forensic accounting and investigative firm) showed that 39% of organizations have considered the need for a forensic accountant. The study intends to find out  how the knowledge of forensic accounting can reduce corporate fraud, mismanagement and seeking redress in the court of law. INTRODUCTION What is forensic Accounting? Forensic accounting is the practice of utilizing accounting, auditing and investigative skill to assist in legal matter and the application of specialized body of knowledge to the evidence of economic transaction and reporting suitable for the purpose of establishing accountability or valuation of administrative proceeding. In wide sense, it can be said as the integrity of accounting, auditing and investigative skill to abstain a particular result. Journal of college Teaching and Learning (2007). Vol 4, Number 9; states Forensic accounting as accounting analysis that can uncover possible fraud that is suitable for presentation in court. Such analysis will form the basis for discussion, debate and dispute resolution In my view, forensic accounting is that aspect of accounting that provides an accounting analysis that is suitable to the organization in resolving disputes that arises in the organization. Forensic accountants utilize accounting, auditing and investigative skills while conducting an investigation. These accountants are trained to look into the dispute in a number of ways. They often retain to analyze, interpret, summarize and present a complex manner which is understandable and probably supported. Also, they are often involved in various activities such as investigating and analyzing financial evidence, developing computerized application, exhibiting documents and presenting the evidence obtained. This new and ground – breaking accounting has two main areas which are: a. Litigation support and investigation b. Dispute resolution. Role of Forensic Accountants in Judicial Process A Forensic accountant is involved in the collection of document, investigating, analyzing and development of computerized application to assist in the analysis and presentation of financial evidence, communicating their findings in the form of reports, exhibits, including testifying in court as expert witness and preparing visual aids to support trial evidence. Thus, the role a forensic accountant can be said to include the following: a. Giving preliminary advice as an initial appraisal of the pleading and evidence available at the start of proceedings b. Identifying the key documents which should be made available as evidence, this is important when the forensic accountant is acting for the defense and lawyers are preparing lists of document to tender in court. c. Preparing a detailed balanced report on quantum of evidence, writing in a language readily understood by a non-accountant and dealing with all issue, irrespective of whether or not they are favourable to the client d. Briefing legal counsels on the financial and accounting aspects of the case during pre-trial preparation e. Initiate measure for introduction of environment accounting to highlight the damage done to the environment by the possible recoupment of such damages or replenishment of lost properties through environmental management continually. CONCLUSION The expert witness testimony of the forensic accountant has forced businesses to restructure, and millions of naira, dollars to be paid in damages; people have on occasions even gone to jail. The practical and in-depth analysis that a forensic accountant brings to a case helps to uncover underlying problems in business. Forensic accountants are currently in great demand, with the public quest for honesty, fairness and transparency in reporting increasing exponentially. Whatever the reasoning may be more and more forensic accountants are being called upon to use their investigative skills to seek out irregularities in their companies’ financial statements. References 1. Aderibigbe, P. (2000): The Role of forensic chartered Accountant in Nigeria. July, 2000. 2. Crumbley H. (2003): Forensic and Investigative Accounting; CCH Publishing 3. Financial Restatements, General Accounting Office Report, 2002 4. Kessler International study; (2002) Forensic accountants needed as economy worsens. Press release 5. Oremade, T. (1988): Auditing and Investigations, Lagos; West Africa Books Publishers Limited.