“Forensic Accounting” is a term that you do not hear every day so let’s examine its definition. The Strayer University BUS508 textbook defines accounting as, “The process of measuring, interpreting, and communicating financial information to enable people inside and outside the firm to make informed decisions.” Merriam-Webster defines forensic as, “suitable for a court of law.” Our textbook defines forensic accounting as, “Forensic accounting is accounting performed in preparation for legal review.” The textbook also describes it as, "focus on uncovering potential fraud in a variety of organizations.” The Business Dictionary defines it as a, “Criminal investigation practice whereby investigators analyze financial documents and activities to determine if and how a crime, such as fraud, has been committed by an organization. Tactics include tax analysis, financial reporting review and banking activity oversight.” This also includes white collar crimes such as embezzlement, stock market manipulation and price fixing schemes. This can include the financial impact of marketplace events, such as intellectual property infringement, anti-trust actions, financial reporting fraud, asset impairment and business valuation (Neumann, O'Connor, 2008). It also includes matters of family law, such as matrimonial disputes. In short, "Forensic accounting is the use of accounting, auditing, and investigative skills to assist in legal matters.” They use accounting skills following the GAAP (generally accepted accounting principles) guidelines to investigate financial crimes for lawyers, businesses and law enforcement agencies. There are five very important skills that a Forensic Accountant must possess. The first one is the ability to think analytically or have an analytical personality. According to the American Institute of CPAs, the analytical skill is the most important skill for an individual to have in the field. The characteristic helps the accountant analyze financial documents to find errors and evidence in a legal case. The need to be analytical in forensic accounting may be the initial and most important overall skill. Without it, other skills and abilities would be difficult to develop. This can be also interpreted as being proficient with numbers. Being proficient with numbers is more of a natural skill than a learned skill. I myself am proof of that. On the other side of the coin, I think analytical skills can be learned, but more so out in the field rather than in a classroom. I define analytical skills as the ability to analyze a situation using logic and reasoning to determine logical outcomes. This involves deductive analysis and critical thinking. Deductive analysis is the ability to take aim at financial contradictions that do not fit in the normal pattern of an assignment. Critical thinking is the ability to decipher between opinion and fact. An expert witness must be able to discern fact from fiction to maintain credible testimony (DiGabriele, 2008). Accounting is a perfect example of this skill because numbers just make sense. They can be manipulated, but they do not lie. A forensic accountant may be thinking of this statement while he is providing his/her service. I use it every day in my occupation as a Budget Analyst. Although we use both, most of us are predominately either left brained (analytical) or right brained (creative, emotion) (Davis, 2012). Can an accountant play the guitar? Sure they can. Very well I might add. But I believe their brain function is predominately on the side that logic and analytical functions come from. This skill is relevant in business operations in the sense it takes logic and analytical skill to gather, record, report and analyze financial information for any given company. The second skill that is important to a Forensic Accountant is to be detail oriented. They must exude strong attention to detail when untangling financial information during an investigation. “Forensic accountants untangle events and details that are tangled by design,” says Barry Mukamal, partner of the forensic accounting practice at Rachlin Cohen & Holtz. The investigator must look through every detail of the financial documents to discover the evidence law enforcement requires for a case. “You're trying to piece together a puzzle where you don't have the picture on the box to know what it's going to look like. The facts are not settled, and actually, it's the facts that are in dispute,” says Andrew Bernstein, director of forensic and valuation services with Miami-based Berkowitz Dick Pollack & Brant (Stimpson, 2007). This is very important to all parties involved. If you can provide proof of financial fraud, embezzlement, etc., then you have done your job well. If you cannot provide proof and paid extreme attention to detail, you also have done your job and the allegations were incorrect. If you cannot provide proof and did not pay extreme attention to detail by overlooking something or could not piece together the puzzle, you may have let a guilty person walk free. It is imperative that you pay extreme attention to detail! The relationship between this skill and business operations is to provide the most accurate financial information for leaders to make sound decisions about the company. In forensic accounting, it can mean the difference between going to prison and walking free. Thirdly, forensic accountants must have accounting skills & education to work as a forensic accountant. This also includes being able to gather, analyze and interpret financial statements and information from various sources and provide the findings. The accounting skills and education are through a degree program at a college or university. Additional skills are obtained through internships and permanent on the job knowledge. You will need a Bachelors degree in Accounting or Financial Management to be a professional accountant. According to the Forensic CPA Society, “An individual MUST be a licensed CPA (Certified Public Accountant), CA (Chartered Accountant) or another country's CPA equivalent to be eligible to take our 5-part certification test and receive the FCPA (Forensic Certified Public Accountant) designation. If an individual is a licensed CPA and a CFF (Certified in Financial Forensics), he or she is exempt from taking the certification exam and can automatically receive their FCPA. If a person is a licensed CPA and also a CFE (Certified Fraud Examiner), he or she is exempt from 2 of the 5 exams.” Although you must have a degree in Accounting and be a CPA to be a Forensic Accountant, I have not come across anything that states you must be a FCPA (Forensic Certified Public Accountant) to partake in Forensic Accounting. Being an FCPA will let the public and the business community know that this person has met certain testing and experience guidelines and is not only a CPA, but has been certified as a Forensic Accountant by the Forensic CPA Society. This designation will provide you with instant credibility and your expert testimony will carry more weight in court (“Basic,” n.d.). Having accounting skills as well as an education in accounting is relative to the business operation because leaders of companies have to be informed of their financial status at any given time. They need to have very accurate financial statements in order to make sound judgments about the company and where to steer it next. These accurate financial statements originate from the accountants. The relationship nearly mimics the attention to detail skill. The fourth skill that a Forensic Accountants must have is very good communication skills. This includes both orally to testify in court as well as written. The accountant must have the ability to explain the findings of complex financial transactions to a judge, jury and prosecutor in a clear and simple manner while maintaining composure in pressurized situations. Forensic accountants must use written communication skills for preparing reports, charts, graphs and schedules for an employer or client when conducting an investigation. The relationship between this skill and its application to business operations is you must communicate both orally and written in order for the business to run not only successfully, but run at all. Without communication, nobody would know anything about anything else other than what they are doing themselves. Lost productivity and chaos would follow due to no communication. Therefore, there would be no successful operations without communication. Lastly, a forensic accountant needs to be able to simplify the information through clear and concise presentations to assist the judges and juries in comprehending the financial issues that are being disputed. They have to do it in such a way to convince the judge and jury. This is done through a skill known as “unstructured problem solving.” This skill is the ability to approach each situation (inherently unique) prepared to solve problems with an unstructured approach for presentation (DiGabriele, 2008). The relationship between this skill and business operations is to provide simplified presentations from complex financial data and statements to all parties involved during expert witness testimony. Every business case is different and you must be able to solve these problems uniquely compared to a general accountant. There is no “answer key.” You must think “outside the box” to solve these problems. The next problem may have you thinking outside of the previous box and so on. The role of a forensic accountant in a courtroom environment just may be the single most important testimony in the case. A forensic accountant has two roles. The first is to provide expert witness testimony by oral means and by written means. As stated above, oral communication was determined to be one of the most important skills to a forensic accountant. They need to be able to explain what the discoveries are. They need to explain these discoveries in a clear and concise manner, yet keeping them in layman's terms. This skill can be done by using metaphors, analogies or a memory hook. The second role for a forensic accountant is written communication, also a needed skill. The need for this type of skill within a courtroom environment is to provide the judge, jury, prosecutor and all other parties involved with reports, charts, and graphs to accompany the oral testimony. This can be done using Excel sheets, PowerPoint, demonstrations or activities. This skill combined with oral communication can help people understand the findings better during testimony. The combination of the two skills covers the visual, print and auditory learners in the courtroom. The forensic accountant has the legal responsibility to a business by uncovering any and all types of fraud. This is done by obtaining a thorough knowledge of a company’s governance policies and the laws that regulate these policies. When forensic accounting services are provided by a practitioner (accountant in this case), CPA firms and their employees, they require, at a minimum, adherence to Statement on Standards for Consulting Services (SSCS) No. 1. Consulting Services: Definitions and Standards (AICPA, Professional Standards, vol. 2, CS sec. 100). The CPA engaged in forensic accounting services also must comply with the general standards of the accounting profession contained in the AICPA Code of Professional Conduct and Bylaws, as well as relevant standards established by the state boards of accountancy or other licensing agencies and other professional organizations to which the accountant may belong (“AICPA,” 2013). The accountant's responsibility to communicate with a client extends only to the client, which is the one who hires you. Another legal responsibility calls for the accountant to communicate significant findings and events to the client. You want to be careful here as to not interfere with the attorney-client relationship. Therefore, the expert witness’s communications with the litigant, unless otherwise required by the terms of the engagement, should be with the attorney. Another legal responsibility is the Private Securities Litigation Reform act of 1995. This act states that the company’s accountants are required to audit the financial statements to include standards designed to provide reasonable assurance of detecting illegal acts that have a direct and material effect on financial statement amounts. If the investigator detects or becomes aware of illegal acts, they are required to notify the audit committee. It requires notification to the corporate board if the audit committee does not act. Notification is sent to the SEC if the board does not notify SEC within one business day of receiving a copy of the report stating the illegal acts (Coppolo, 2002). Another responsibility is the “Duty of Inquiry.” If the investigator becomes aware of suspicious circumstances, they have a duty to inquire because you cannot rely on Management’s representations. The accountant must comply with “Sarbanes-Oxley Act of 2002.” Section 201: Services Outside the Scope of Practice of Auditors; Prohibited Activities states: “It shall be "unlawful" for a registered public accounting firm to provide any non-audit service to an issuer contemporaneously with the audit, including: (1) bookkeeping or other services related to the accounting records or financial statements of the audit client; (2) financial information systems design and implementation; (3) appraisal or valuation services, fairness opinions, or contribution-in-kind reports; (4) actuarial services; (5) internal audit outsourcing services; (6) management functions or human resources; (7) broker or dealer, investment adviser, or investment banking services; (8) legal services and expert services unrelated to the audit.” Section 204: Auditor Reports to Audit Committees states, “The accounting firm must report to the audit committee all critical accounting policies and practices to be used all alternative treatments of financial information within [GAAP] that have been discussed with management ramifications of the use of such alternative disclosures and treatments, and the treatment preferred by the firm,” (“Summary of the,” 2006).
There are four main categories that trigger forensic financial investigations. They are: Regulatory Inquiries, Shareholder Actions, Internal Audits, and Independent Audits (Hochberg, 2006). One case that forensic accountants have provided vital evidence to is the Waste Management (WM) scandal of 1998. According to the complaint, the defendants violated, and aided and abetted violations of, antifraud, reporting, and record-keeping provisions of the federal securities laws (“Waste,” 2002). The defendants inflated profits by $1.7 billion to meet earnings targets. They also garnered millions in “ill-gotten” gains while defrauding investors. The investors lost more than $6 billion. The defendants were WM’s most senior former officers. The first one is Dean L. Buntrock, Waste Management's founder, chairman of the board of directors, and chief executive officer. He set earnings targets, made fraudulent accounting a daily occurrence, personally directed the accounting changes to make the targeted earnings, and was the representative who announced the company's phony numbers. He garnered more than $16.9 million in illegal gains from performance-based bonuses, retirement benefits, charitable giving, and selling company stock while the fraud investigation was ongoing. The next is Phillip B. Rooney, president and chief operating officer, director, and CEO for a portion of the relevant period. He ensured that required write-offs were not recorded and overruled accounting decisions that would have a negative impact on operations. He garnered more than $9.2 million in illegal gains from performance-based bonuses, retirement benefits, and selling company stock while the fraud was ongoing. Next is James E. Koenig, executive vice president and chief financial officer. He ordered the destruction of damaging evidence, misled the company's audit committee and internal accountants, and withheld information from the outside auditors. He profited by more than $900,000 from his fraudulent acts. The next defendent is Thomas C. Hau, vice president, corporate controller, and chief accounting officer. He devised many “one-off” accounting manipulations to deliver the targeted earnings and carefully crafted the deceptive disclosures. He profited by more than $600,000 from his fraudulent acts. Next is Herbert Getz, senior vice president, general counsel, and secretary. He blessed the company's fraudulent disclosures and profited by more than $450,000 from his fraudulent acts. Lastly is Bruce D. Tobecksen, vice president of finance. He handled Hau's overflow. He profited by more than $400,000 from his fraudulent acts (“Waste,” 2002).
The defendants fraudulently manipulated the company's financial results to meet the predetermined earnings targets. The company's revenues were not growing fast enough to meet these targets, so the defendants resorted to improperly eliminating and deferring current period expenses to inflate earnings. In July of 1997, a new CEO ordered a review of the company’s accounting practices.
The forensic accountant’s role in this investigation uncovered several improper accounting practices that were used to achieve the inflated earnings. They were: avoiding depreciation expenses on their garbage trucks by both assigning unsupported and inflated salvage values and extending their useful lives, assigning arbitrary salvage values to other assets that previously had no salvage value, failed to record expenses for decreases in the value of landfills as they were filled with waste, refused to record expenses necessary to write off the costs of unsuccessful and abandoned landfill development projects, established inflated environmental reserves (liabilities) in connection with acquisitions so that the excess reserves could be used to avoid recording unrelated operating expenses, improperly capitalized a variety of expenses, and failed to establish sufficient reserves (liabilities) to pay for income taxes and other expenses. Not only did WM’s executives partake in the fraud but they were aided in it by their long time auditor Arthur Andersen LLP. Although Andersen identified the company's improper accounting practices and made those practices known on the company's financial statements, they repeatedly issued false and misleading annual financial statements. The forensic accountants uncovering of vital documentation pertaining to fraud led to WM settling a class-action suit for $457 million and Arthur Andersen was fined $7 million by the SEC. It also prompted the new CEO to set up an anonymous company hotline for employees to report dishonest behavior.
Another case that forensic accountants have provided vital evidence to is the Tyco scandal of 2002. During 2002, the Securities and Exchange Commission (SEC) began an investigation of Tyco's top executives. Inquiries into the accuracy of the company's books began in January .The SEC and Tyco International indicted the former executives on charges of civil fraud and theft. They were accused of giving themselves interest-free or low interest loans for personal purchases of property, jewelry, and other senseless items. These charges arose primarily out of abuse of the key employee loan program (KELP) and the relocation loan program. According to the SEC, these loans were never approved or repaid, ultimately allowing for the forgiveness of tens of millions of dollars to executives to keep their loyalty (“Tyco,” 2006). The three accused managers are former CEO L. Dennis Kozlowski, former Chief Financial Officer Mark Swartz, and former general counsel Mark Belnick. Kozlowski borrowed a total of $61.7 million. He used company “loans” for his purchases, allowing him to avoid paying income tax. He also transported valuable art across state line to avoid paying sales tax. He also forgave $95.9 million in loans to executives that he approved in the first place. Kozlowski himself had $33 million forgiven. He called them “bonuses.” These bonus payments were buried in corporate transactions like the TyCom spinoff and the sale of Tyco's ADT Automotive unit in 2000 (“Ex-Tyco,” 2003). The next high-level Tyco executive is the company’s chief financial officer, Mark Swartz, who had close ties to Kozlowski and was a key force in engineering the company’s acquisitions. Swartz reaped in over $33 million in loans between the years of 1999-2001. Belnick used $4.4 million borrowed under the relocation program to buy a New York City apartment, which the company said he should not have been authorized to do since his existing home was less than 50 miles away. Kozlowski cooked up another bonus program through the sale of the company's ADT Automotive division. He told executives in a letter that it was approved by the board. The cash and stock benefits totaled $56 million, of which $25.6 million went to Kozlowski and $12.8 million to Swartz. All in all, Kozlowski, Swartz, and Belnick were indicted on charges of stealing more than $600 million from Tyco through stock fraud and theft (Nelson, 2002). PricewaterhouseCoopers, the former accounting firm that audited Tyco International, has agreed to pay $225 million to settle claims of Tyco investors (“Price,” 2007).
The role of the forensic accountants, a multidisciplinary team of outside experts, was enormous due to the amount of fraud and the ingenious ways the executives stole from the company and yet made it look legal. The accountants certainly had to be detailed and diligent in order to bring the type of allegations let alone the dollar amount. They had a role of putting together a timeline of events from 1999 through the time the SEC started to investigate Tyco in January of 2002 (Although the SEC did make an inquiry in 1999 that caused the company to restate its earnings). It is possible that they had to go back to 1993 when Tyco started its aggressive acquisitions spending $64 billion on 200 acquisitions from 1993-2001 (Caplan, 2002). Most companies utilize an Accounting Information System (AIS) for financial information processing and reporting. The forensic investigators utilized spreadsheet software and the use of statistical and database analysis. The investigators needed to understand the AIS system in addition to conducting a detailed analysis of the fraud and loan payments. With these skills, the auditors looked for links between cash flows and several analytical performance measures. Not only did the forensic investigator need to identify links between transactions, but they also convinced the judge and jury of the validity of their findings. The two former top executives, Kozlowski and Swartz, were found guilty in June of 2005 (Ackman, 2005). They were sentenced in September, 2005 to 8.33 – 25 years in prison for the theft and fraud of Tyco International.
Neither of the two cases that I discussed had evidence of the defense counsel submitting a “Wells Submission.” This is a document that explains to the SEC why an enforcement action should not be pursued against them or that they fully complied with GAAP (“Roles,” 2008). From this, we can infer that what the forensic accounting team discovered and presented to the judge and jury was accurate and complete in both cases. After all, the prosecutors did get a conviction from both juries.
White collar crime is a growth industry and there has never been a shortage of bad people doing bad things. White collar criminals are very smart and they have to think of a way to get away with it as the window of opportunity of "never been done before" closes for them.

References
Ackman, D. (2005, June 17). Tyco Trial II: Verdict First, Law Second. Forbes. Retrieved from http://www.forbes.com/2005/06/17/kozlowski-tyco-verdict-cx_da_0617tycoverdict.html
AICPA Code of Professional Conduct. (2013, January 31). Retrieved February 7, 2013, from http://www.aicpa.org/Research/Standards/CodeofConduct/Pages/default.aspx
Basic Requirements to Become an FCPA. (n.d.). Retrieved from https://shopsite.fcpas.org/basic_requirements.html
Caplan, J. (2002, April 1). Deconstructing Tyco. Retrieved from http://www.cfo.com/article.cfm/3004088
Coppolo, G. (2002, August 16). Private Securities Litigation Reform Act. OLR Research Report. Retrieved from http://www.cga.ct.gov/2002/rpt/2002-R-0695.htm
Davis, C., Farrell, R., & Ogilby, S. (2010, August 2). Characteristics and Skills of the Forensic Accountant. American Institute of CPA’s. Retrieved from http://www.aicpa.org/interestareas/forensicandvaluation/resources/practaidsguidance/downloadabledocuments/forensicaccountingresearchwhitepaper.pd
Davis, J. (2012, March 23). Myths of Right-Brained Creativity. Psychology Today. Retrieved from http://www.psychologytoday.com/blog/tracking-wonder/201203/myths-right-brained-creativity
DiGabriele, J. (2008). An Empirical Investigation of the Relevant Skills of Forensic
Accountants. Journal of Education for Business, July/August, 336-338. Retrieved from http://dmcpa.com/pdf/relevantskills.pdf

References Continued
Ex-Tyco Executive Describes Plan to Hide Bonus Payments. (2003, December 11). The New York Times. Retrieved on February 11, 2013, from http://www.nytimes.com/2003/12/11/business/ex-tyco-executive-describes-plan-to-hide-bonus-payments.html
Forensic Accounting definition. (n.d.). Retrieved from http://www.businessdictionary.com/definition/forensic-accounting.html
Forensic definition. (n.d.). Retrieved from http://www.merriam-webster.com/dictionary/forensic
Hochberg, N. (2006, January 1). When Accounting Practices Go Under The Microscope. Financial Executive. Retrieved from http://connection.ebscohost.com/c/articles/19364061/when-accounting-practices-go-under-microscope
Kurtz, D., & Boone, G. (2012). Contemporary Buisness (14th ed.). (p.500, 502-503). Danvers, MA: John Wiley & Sons.
Nelson, S. (2002, September 18). Tyco Filing Details Alleged Fraud, Ex-CEO's Extravagance $17,100 Toilette Box, $2,900 Coat Hanger Included in List. Boston Globe. Retrieved from http://www.eacfaculty.org/pchidester/Eng%20102f/Plagiarism/TYCO%20FILING%20DETAILS%20ALLEGED%20FRAUD.pdf
Neumann, K., O'Connor, M. (2008, June 23). The Forensic Accountant's Evolving Role. AICPA. Retrieved from http://www.rgl.com/ pubs/xprPubDetail.aspx?xpST=PubDetail&pub=28
PricewaterhouseCoopers to Pay Tyco Investors $225 Million. (2007, July 7). The New York Times. Retrieved February 11, 2013, from http://www.nytimes.com/2007/07/07/business/07tyco.html?_r=0
References Continued
Quick Answers – References, Websites. (n.d.). American Psychological Association. Retrieved from http://www.apastyle.org/learn/quick-guide-on-references.aspx#Website
Roles of CPAs and Forensic Accountants in Corporate Investigations. (2008, January 24). Retrieved February 6, 2013, from http://www.accountingweb.com/topic/watchdog/roles-cpas-and-forensic-accountants-corporate-investigations
Stimpson, J. (2007, February 1). Forensic Accounting: Exponential Growth. Accounting Today. Retrieved from http://www.accountingtoday.com/prc_issues/2007_2/23165-1.html
Summary of the Provisions of the Sarbanes-Oxley Act of 2002 . (2006, June 22). Retrieved February 11, 2013, from http://www.aicpa.org/InterestAreas/ForensicAndValuation/Resources/FraudPreventionDetectionResponse/Pages/Summary%20of%20the%20Provisions%20of%20the%20Sarbanes-Oxley%20Act%20of%202002.asp
Tyco Fraud Information. (2006, December 31). Retrieved February 11, 2013, from http://www.tycofraudinfocenter.com/information.php
Waste Management Founder, Five Other Former Top Officers Sued for Massive Fraud. (2002, March 26). Retrieved February 11, 2013, from http://www.sec.gov/news/headlines/wastemgmt6.htm