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The growing number of cyber crimes, failure of regulators to track the security scams, successive busting of co-operative banks etc. lead to a rise in the need of Forensic accounting. Forensic accounting is the practice of utilizing accounting, auditing and investigative skills to assist in legal matters. Forensic accounting involves legal investigation and analysis of financial documents of any firm or client, who is involved in a legal dispute. It encompasses 3 main areas – litigation (law suit) support, investigation and dispute resolution. Litigation support represents the factual presentation of economic issues related to existing or pending litigation. In this capacity, the forensic accounting professional quantifies damages sustained by parties involved in legal disputes and can assist in resolving disputes, even before they reach the courtroom. If a dispute reaches the courtroom, the forensic accountant may testify as an expert witness. Investigation is the act of determining whether criminal matters such as employee theft, securities fraud (including falsification of financial statements), identity theft, and insurance fraud have occurred. Forensic accountant may recommend actions that can be taken to minimize future risk of loss. Investigation may also occur in civil matters. For example, the forensic accountant may search for hidden assets in divorce cases. This is a field wherein a professional estimates the damages and assists in settling various financial disputes before the cases step into the courtroom.
People who are professionals in this field are known as 'forensic accountants' or 'investigative accountants'. Forensic Accountant is a person who is one part accountant, one part detective and one part legal expert. Forensic accountants combine their knowledge of accounting and finance with law and investigative techniques to determine whether an activity is illegal. Many forensic accountants work closely with law enforcement personnel and lawyers during investigations and often appear as expert witnesses during trials. A forensic accountant is an experienced auditor, who acts as a watch-dog of accounts of a company, in order to keep a check on the frauds. These experts are responsible for using technology and implementing investigative techniques to disclose fraudulence and illegal practices in the fields of accounting, banking, financial laundering, etc. They carry out elaborated audits, verify records, gather proof of financial malpractice, and question people related to the misconduct.
The base layer of forensic accounting is Accounting knowledge. Other layer of it is a dispersed knowledge of auditing, internal controls, risk assessment and fraud detection. It’s more than simple accounting, and more than basic detective work. Because of its unique elements, it is a combination that will be in demand for as long as human nature exists. Those in a forensic accounting career combine their accounting, auditing and investigative skills to analyze and interpret business and financial evidence, and can participate in trials as expert witnesses. Working on anything from bankruptcy and divorce cases to major fraud and capital crime cases it is the forensic accountant who is involved in all the squad.
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