Forensic Accounting

Forensic accounting is a specialized field of accounting that involves the investigation and analysis of financial information for legal purposes. Forensic accountants look for irregularities, inconsistencies, or suspicious activities in financial records that may indicate fraudulent behavior. They may be called upon to provide expert testimony about any findings.

Forensic accountants differ from regular accountants primarily in their focus and specialized skills. Forensic accountants have specialized training in searching for, identifying, and analyzing financial irregularities. They use advanced data analysis techniques to uncover hidden patterns or relationships within financial data. Many forensic accountants have special credentials, such as the Certified Fraud Examiner (CFE) designation from  the Association of Certified Fraud Examiners. The CFE is widely recognized as a leading credential in the field of fraud detection and prevention.

Forensic accounting can be expensive. High-net-worth and ultra-high-net-worth individuals often have complex financial situations involving numerous assets, accounts, businesses, and investments. Forensic accountants need to meticulously analyze all available records. A comprehensive forensic accounting investigation may involve “tracing,” which is identifying and locating assets that may have been hidden or transferred, reconciling financial records, and testifying at depositions, hearings, and trial.

Whether to ask for a forensic accounting in your situation is highly fact-sensitive. The case budget matters. While forensic accounting can provide valuable insights and evidence, it can also be expensive. The costs of forensic accounting may outweigh the benefits, especially if there was no underlying misconduct. However, if records are complex and accounting expertise is necessary, it is important to use the best expert available.