Accounting is one of the core fundamentals and the basic way to determine what a business thinks and acts. The action of any business can be measured by looking into its book of accounts. Today, the branch of accounting is not limited to solving balance sheet or profit and loss account. Along with the simultaneous increase of technological development, the illegal proceedings that take place in a company can be traced. The accounting services domain has extended its reach into the deeper analysis that gave birth to various accounting forms, and one such form is ‘Forensic Accounting’. Business entities, be it a small or large organization, are slowly adopting these forms as it provides multiple benefits to a business entity. If you own a business entity, it becomes essential for you to know regarding the different developments that can benefit your company to a great extent. This article will take you through the entire domain of Forensic Accounting. Let’s proceed by understanding the basics…
What Is Forensic Accounting?
In general, the term ‘forensic’ deals with the application of scientific methods to initiate an investigation dealing with any crime. The same techniques and processes are adopted by the accounting department to resolve the accounting issues that a company goes through. This branch of accounting helps business entities to look into core matters, figure out any reasons for mismatch, and fix them. The need for forensic accounting has been reaching widely due to the benefits that it provides to corporations, which you will read later in this article.
Forensic audit is a process conducted by a forensic investigator. A certified fraud examiner handles the disputes and takes necessary steps to sort them wherein he combines the accounting knowledge along with the investigating skills while supervising the company accounts. Certain functions that are carried during the investigating process involves:
- Forensic research to trace funds and recovery of assets
- An in-depth analysis of financial data
- Prepares reports based on the analysis conducted
- Generate analytical data for litigation purpose
Apart from the introductory process, certain core procedures are involved in a forensic audit.
Procedures Involved in Forensic Audit
- Federal Regulations Procedure
- Litigation Support Procedures
- Investor Protection Procedures
- Fraud Detection and Prevention Procedures
- Report Creation Procedures
- Re-calculation and Re-Performance
The procedures are to be applied accordingly at each step so as to clear the conflicts that arise in the accounting books. By opting for forensic accounting, you will be able to obtain the benefits stated below.
Benefits of Forensic Accounting
Once you have opted for forensic accounting, it directly minimizes unwanted losses for your company as the entire documents gets detailed scrutiny, leveraging the chances of achieving the organization goal.
The forensic accounting procedures reduces the crucial error, which ultimately reflects on the efficiency of the employees. The loopholes or reasons of inefficiency gets clearly highlighted, paving out a path for improvement.
Reduces Exploitation Risk
In this competitive world, it is possible that the chances of exploitation risk increase if it is not traced. The concept of forensic accounting helps you in dealing with the same, which will highlight the risks and makes sure that it gets reduce.
Averts Legal Problems
As the business grows, the legal issues tend to increase at a faster pace. By availing for forensic accounting, you will be able to have a closer look at the legal issues. This helps to streamline the business processes and activities accordingly.
Solves Contractual Disputes
If you are facing continuous issues regarding the contracts while dealing with your business clients, then it's high time that you infuse forensic accounting in your business premises, which will ultimately help you to solve the disputes and converts more customers to enhance business profits.
Helps in Criminal Investigations and Defense
The forensic accounting service is used by various entities with the aim of catching hold of any illegal activities or malpractices being followed in the company by gathering evidence of suchillicit activities so that the management can take action.
Aids in the Formulation of Economic Policies
With the help of forensic accounting, a company can determine the flaws in the working of the business and formulate their economic policies according to the budget they have in their hands and what goals does the company want to reach.
Improves Brand Reputation
If a fraudulent activity is being conducted in the company, not only will it face losses but the goodwill of the company will also go down. Forensic accounting will help identify such unprofessional conduct and allow the management to take remedial measures so that the goodwill of the company improves.
Leads to Sounder Investment Decisions
Forensic accounting allows us to compare the accounting information of the previous duration with the accounting information of the present times. This allows us to make the necessary changes in our decision regarding the allocation of resources in the company.
Simplifies Litigation and Business Valuation
In case of business valuation and litigations, forensic accounting helps in investigating a particular company with regarding the accurate price and the potential profitability of the company, and also presents the company’s net worth. Forensic accountants are also required if there is any lawsuit filed against a company.
JAXA Forensic Accounting Services
At JAXA, we aim at designing the best financial structure to deliver a high cash-flow framework system. We provide a wide range of services that include:
- Financial data analysis
- Evidence Analysis
- Compiling information
- Tracing illicit funds
- Damage Assessment
- Due Diligence Reviews
- Business Valuation
- Report Generation
We are a financial consulting firm based in Dubai, and assure our clients in providing reputation building, maximizing the credibility, and standing out from their competitors. We hold ISO 9001-2015 certification, and follow the International Financial Reporting Standards (IFRS) to main the professionalism in our deliverables that made us one of the top audit firms in Dubai. Currently, we hold more than 750+ clients at a global count that includes multinationals, limited liability, offshore companies etc. At Jaxa, our forensic experts provide you the forensic accounting related services, cash flow forecasts and projection reports satisfying your requirements and that will help your business to grow further. If you are looking forward to initiating the process, do contact us. We’d be happy to assist you.