1. What is Forensic Accounting ?
The integration of accounting, auditing and investigative skills yields the speciality known as Forensic Accounting.
"Forensic", according to the Webster's Dictionary means, "Belonging to, used in or suitable to courts of judicature or to public discussion and debate."
"Forensic Accounting", provides an accounting analysis that is suitable to the court which will form the basis for discussion, debate and ultimately dispute resolution.
Forensic Accounting encompasses both Litigation Support and Investigative Accounting.
As Forensic Accountants, we utilize accounting, auditing and investigative skills when conducting an investigation. Equally critical is our ability to respond immediately and to communicate financial information clearly and concisely in a courtroom setting.
Forensic Accountants are trained to look beyond the numbers and deal with the business reality of the situation.
Other Terminology
Forensic Investigation
The utilization of specialized investigative skills in carrying out an inquiry conducted in such a manner that the outcome will have application to a court of law. A Forensic Investigation may be grounded in accounting, medicine, engineering or some other discipline.
Forensic Audit
An examination of evidence regarding an assertion to determine its correspondence to established criteria carried out in a manner suitable to the court. An example would be a Forensic Audit of sales records to determine the quantum of rent owing under a lease agreement, which is the subject of litigation.
Internal Audit
An audit performed by an employee who examines operational evidence to determine whether prescribed operating procedures have been followed.
External Audit
An audit performed by an auditor engaged in public practice leading to the expression of a professional opinion which lends credibility to the assertion under examination.
2. What is Litigation Support ?
"Litigation Support", provides assistance of an accounting nature in a matter involving existing or pending litigation. It deals primarily with issues related to the quantification of economic damages. A typical litigation support assignment would be calculating the economic loss resulting from a breach of contract.
SURYA PRAKASH SHUKLA
CAclubindia
