Forensic Accounting 1

Assignment 3: Forensic Accounting in Practice
BUS 508
Professor: Edwin Quinn Jr.
Carmesha Eldridge
May 19, 2013

Forensic Accounting 2 1. Determine the most important five (5) skills that a forensic accountant needs to possess and evaluate the need for each skill. Be sure to include discussion regarding the relationship between the skill and its application to business operations. One of the most essential skills is being analytical. Forensic accountants must make sure that they are in a position to uncover financial deceptions by critically analyzing them with an understanding of fraud schemes. A forensic accountant is deductive analysis or the ability to take a shot at the financial contradictions that are not a normal pattern of the company to uncover potential financial fraud. Being analytical is essential to remaining an effective forensic accountant. They need to be able to analyze the validity of each transaction the company recorded to make sure that the transactions were reported accurately and fairly. They must possess the knowledge and expertise to interpret financial statements or work under situations where information has been either destroyed or tampered with and be analytical and put the pieces of the puzzle back together again. Forensic accountants should be detailed orientated. Being a forensic accountant means that you will be looking at large quantities of numbers from supporting documents and various financial reports. Being detail orientated you would compare the numbers and the documents and identify any inconsistences within the reports, which requires finding detailed information for each transaction and investing the time needed to compare the details. Another key characteristic that forensic accountant needs to possess is the ability to remain persistence. When dealing with cases some financial reports lack supporting documentation that is needed to formulate a solid conclusion. Being persistence will allow the
Forensic Accounting 3 forensic accounting to continue requesting the information that is needed or continue requesting the documentation for the data that is being reported. One may say that this assertive behavior is necessary for drawing accurate conclusion. If you are not persistent and lack the evidence needed to ensure that the company’s financial reporting are valid then legal actions may take place as a result of financial fraud, which is what the main objective for the forensic accounting is trying to avoid.
A forensic accountant must be inquisitive. They need to have all the information necessary to investigate the financial reports of the company. Ask questions, gain answers and understanding about the numbers that are being reported. The main questions that are asked and answered the more knowledge the forensic accountant gains about why they reported the numbers that appear on the financial reports. If the questions are not being answered than that is where their persistence needs to step into play to continue the investigation until a solid and valid conclusion has been drawn and validity is present.
Lastly, however most importantly is to maintain high ethical standards. Forensic accountants have a responsibility to focus on the facts and not try to alter or shape the evidence in any way to project a favorable outcome for them. In addition when it comes to ligation and testifying on behalf of the financial standings of a company, they need to resist temptations of any illegal actions or tampering with the evidence that has been accumulated. Sticking to their ethical obligations of honesty and preventing fraud is a key to remain effective and efficient.
2.Describe the role of a forensic accountant within a courtroom environment. Forensic Accounting 4
Within a courtroom the forensic accountants find themselves in situations that can involve investigations that can include fraud and embezzlement activity such as discerning where money when or who stole money or if money is owed to someone and why. Or false advertising, billing, bankruptcy fraud, etc. They can find themselves testifying under oath about their conclusions. Or they may have cases involving accounting information where they have to utilize financial information and identify what is important, and testify in court the financial information retrieved from their report. They have to investigate and legally return to the court with their evidence findings, documentation, records, and bank reports, or any other evidence that they can use to support their conclusion. After the forensic accountants find all the information and present it to the court they have to make sure that they put it into a format that everyone will understand including judges and juries, this is why it is also important for a forensic accountant to also understand the courtroom decorum and ethics that are involved within the legal setting. They must also stay current on local, national and even global laws and regulations.
Untimely, a forensic accountant has to present evidence of the financial investigation that would either unveil someone as guilty or innocent, or whether money is owed to someone or not based on their findings. Forensic accountants must be not only well trained with rules and regulations but also possess the communication skills needed to convince a judge and jury that they are an expert in their field and have the knowledge to properly validate their findings and the ability to present and communicate their information that is important to the case.

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3. Analyze the legal responsibility a forensic accountant has while providing service to a business. While providing a service to a company or business a forensic accountant hand various responsibilities such as disagreements between different companies which can involve breaching of warranties and earn outs. The forensic accounting can calculate and determine economic losses and damages that are a direct resolve of the breaching between contract or business valuations. It is their duty and responsibility to evaluate and offers their professional opinions about the conclusion of their findings. Some forensic accountants have different responsibility depending on who they are employed by. If they are employed by governmental agencies that they also provide litigation support and forensic accounting services and their duties and responsibilities include 1. Designing systems to help aid in their presentation and evaluation of evidence.
2. Investigating the financial evidence.
3. Relaying the conclusion through reports, document collections and exhibits.
4. Aiding in legal proceeding by providing expert testimony through court hearings and providing their evidence in a way that is comprehendible within the court system. Forensic accountants are also involved with risk reduction. They implement long term statutory audit methods, and communicate with committees members that are on the auditing committee. They conduct investment analyst research, and develop fraud prevention activities.
Some other duties that care investigated by forensic accountants according to ("Forensic accounting," 2011), may include business revenue loss, property and inventory loss, wrongful
Forensic Accounting 6 death and personal injury cases, employee misconduct, truth in leasing and lending, post judgment calculations, income loss, providing expert testimony in court, fraud, and business and company valuations. As stated previously the duties and responsibility of a forensic accountant primary duty is to analyze, interpret, summarize date and communicate their complex financial and business related concerns and issues in a way that is understandable by the layman and supported by their evidence.
4. Research two (2) cases where forensics accountants have provided vital evidence in a case. Summarize the cases and the importance of the forensic accountants’ role during each case
One famous case is the O.J Simpson’s wrongful death litigation. O.J. Simpson was order to pay 8.5 million compensatory judgments for the connection with the deaths of his former wife, Nicole Simpson and Ronald Goldman, her friend. O.J’s attorneys said that the former football player poor and unable to pay that money to the family.
It was then that the parents of the victims hired a forensic accountant to determine O.J Simpson’s net worth. The investigator carried out a search all Simpson’s assets and found that almost all of his money was tied up in real estate cars, and businesses. However they unveiled that since the killing Simpson earned about 2.8 million which included money from his book “ I Want To Tell you”, he earned money from the sale of his video of the interview, and money from the sale of autographs and memorabilia. After the detailed investigation performed by the forensic accountant it showed that Simpson’s net worth was about 15 -7million.
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If it were not for the financial accountant O.J. Simpson would have gotten away with paying for the compensatory judgment to the families of the victims, by claiming that he had no money left after court and lawyer fees. Due to the investigation the families of the victims were able to start seizing Simpson’s assets. Another case that required a forensic accounting was a case that took place in California’s Contra Costa County in 1996. A disposal Service Company, Orinda –Moraga Disposal service, asked for help with keeping itself in good financial standings, they needed the Contra Costa Sanitation Districts approval to raise rates on customers. However the city manager became suspicious when the same company recently stated their desire to lower rates. The City manager hired a forensic accountant by the name of Dan Ray to investigate the financial standings of the local disposal service company. Through the investigation the forensic accounting found startling evidence to convince the local disposal service company. Ray discovered that the company had been sending checks to people that were nonexistent, and sent then to several companies with fake addresses. The companies’ manager was behind the scandal and deposited the checks into an account. He had created the companies to siphon money from Orinda-Moraga and inflated the business cost to justify the rate increase, as a result Orinda-Moraga’s owner and partner were found guilty in civil and criminal suits. If it were not for the forensic accountant the customers using the local disposal service would have been paying more money only for Orinda –Moraga company to be stealing their money, and continue running an unethical business. Forensic Accounting 8

References

Levanti, T. (2009). What to look for in a forensic accountant. Retrieved from http://www.nysscpa.org/sound_advice/forensic_acc.htm
Mcintosh, K. (2013). Important qualities of a forensic accountant. Retrieved from http://work.chron.com/important-qualities-forensic-accountant-13591.html
Bressler, L. (2011). The role of a forensic accountant in fraud investigations. Retrieved from http://www.aabri.com/manuscripts/111027.pdf
Forensic accounting. (2011). Retrieved from http://www.careersearchdatabase.com/forensic-accountant.html
Freeman, S. (2013). How forensic accounting works. Retrieved from http://science.howstuffworks.com/forensic-accounting2.htm
Haynes, D. (1997, February 07). The $25 million question: What is simpson worth?. Chicago Tribune. Retrieved from http://articles.chicagotribune.com/1997-02-07/news/9702070269_1_nicole-brown-simpson-los-angeles-civil-lawyer-legal-fees