The discipline of forensic accounting is a specialism within the wider realm of general accounting.
Most forensic accountants come from a certified public accountant or certified fraud examiner background.
Forensics is all about collecting and collating data, often for use in criminal cases that are, or are likely to be, subject to court action. Therefore, forensic accountants have to be experts within their fields, as their work is often scrutinised and cross-examined in court, and they are often called as expert witnesses.
Most large accountancy firms employ one or more forensic accountants, as do many individual businesses. The main functions of a forensic accountant can be further broken down into more specialised roles, such as insurance claims, fraud, personal injury claims and many others.
More often than not, forensic accountants are involved in civil cases, where it is their role to calculate financial losses, both actual and potential, business values, disagreements surrounding company takeovers, etc.
When called upon to work in criminal cases the cause is generally fraud. In such cases they will, in effect, audit other accountants’ work, comparing the reported figures to financial reality.
Here in the UK we have the Proceeds of Crime Act 2002 – basically this states that any monies deemed to have come from crime can be confiscated from the convicted criminals. In these cases forensic accountants are called upon to determine the actual or probable proceeds that need to be recouped.
Recently it has become more commonplace for forensic accountants to be used in a pro-active way, by businesses looking to install procedures designed to reduce the risk of fraud and other financially damaging eventualities.