7 Investigative Techniques of Forensic Accounting in 2019
05

Apr 2019

In recent years, there has been much turmoil in the business landscape. The increasing globalisation, free movement of people, easy communication and the technological advancements have helped change the business environment for the better. These factors have led to the rapid growth of established businesses and the sprouting of new ones. However, this growth of companies has also increased in financial crimes and frauds.

Many businesses keep a separate department of in-house accountants who keep an eye on all the business activities and strive to minimise any irregularities in the businesses recordings, but still, there are cases of new and innovative fraudulent activities which can only be uncovered after a an in-depth analysis of all the records and books of the business.

This situation has led to the growth of a very niche field known as forensic accounting which can be explained as the integration of accounting and investigative skills. To understand more about forensic accounting and the various techniques which help in uncovering of any financial fraud, keep reading.

What is Forensic Accounting?

Forensic accounting is a type of accounting which cross-checks the various financial records of a business to find any indication of fraud being committed and also provides an in-depth analysis of the financial books which could be presented in the court of law as evidence. Forensic accountants can be considered as financial detectives who go through every transaction that is recorded and try to find any fraudulent or illegal activity. To be a respectable forensic accountant you are required to have certain qualities.

Qualities a Forensic Accountant Should Have

  • Have a Logical Mind
  • Give attention to detail
  • Give value to Moral Principles
  • Question Everything
  • Be Spontaneous

Having these qualities will provide forensic accountants with an urge to dig deeper and will make them a very successful forensic accountant. With proper investigative techniques added to the mix, the accountants would be capable of digging out even the most-minute discrepancy. Let’s have a look at some of the investigative techniques for forensic accounting.

Forensic Accounting Techniques

1.Reviewing Public Documents and Doing Background Checks

The documents made available to the public are scrutinised as they are the easiest to obtain. Also, thorough background checks of a particular company are done to see the past dealings of the business. Public Documents would include any information in the public database, the corporate records and any information which is legally available on the internet.

2.Conducting Interviews

Conducting an interview is an essential technique which can transform an unwilling person into a source of valuable information. It helps in fully understanding all the facts. An interview should be conducted by accurately assessing the gravity of the situation and preparing the questions according to it. Discussions should take every little detail into account and look at the greater picture to figure out the magnitude of the illegal activity and the culprit responsible.

3.Gathering Information from Trustworthy Sources

Information provided by a confidential and trustworthy source can be precious to any case. When a piece of information is gained from a confidential source or a confidential informant, all the necessary precautions should be taken to hide the identity of the so-called cause. A forensic accountant should try to have as many confidential sources possible because such sources can virtually guarantee a correct result.

4.Analysing Evidence

Proper analysis of the obtained evidence can point to the guilty party and can also assist to understand the extent of the fraud committed in the business. This analysis would also help in understanding how secure the company is against financial scams and installing various austerity measures to prevent any such future situation.

5.Surveillance

This can be done physically or electronically and is one of the conventional measures conducted to uncover any fraud. It can be done by monitoring and tracking all the official emails and messages.               

6.Going Undercover

This is an extreme measure and should be used only as a last resort. It is best left to the professionals as they have the proper knowledge of how and where to conduct the investigations. Even a small mistake while being undercover can signal the offender that something is wrong and the person might vanish.

7.Analysing the Financial Statements

This is a precious tool for finding out the fraud committed. All the necessary details are summarised in the financial statement, and the analysis of these statements can help a forensic accountant to figure out the scam.

Nowadays the economic conditions are getting stricter, and each country’s government is now implementing tighter laws in terms of the governance of the businesses. As the companies are increasing the level of sophistication, so is fraud. This has led to a higher sensitivity to fraud which can be interpreted as a massive demand for the services of forensic accountants by all the businesses.

Thus it can be clearly understood that if forensic accounting is best left to the professionals, they can provide you with solutions to the business problems which would be tailored to your needs. If you are in search of the services of forensic accountants in the UAE, then look no further. JAXA will take care of all your financial and business related problems. We not only provide forensic accounting services but also offer a range of various other facilities such as Audit and Assurance services, Tax services, etc. In case of any questions or to inquire about the various services we provide, please contact us - we’d be glad to assist you.