Forensic Accounting Services

What is Forensic Accounting Services?

Forensic accounting services by definition generally involve the application of specialized knowledge and investigative skills possessed by a CPA or Certified Fraud Examiner to collect, analyze and evaluate evidential matter and to interpret and communicate findings to the party of interest.

What is a Forensic Investigation?

A forensic investigation is one component of forensic accounting in which a client (company, shareholder, attorney, private individual) has a suspicion or receives a tip of potential wrong doing (legally defined as “predication”) related to financial transactions involving an employee, an accountant, accounting books and records or transactions with a counterparty to a contract and retains a forensic accountant to investigate to determine (1) whether fact patterns indicate there could have been wrongdoing (2) to what extent the client may have suffered financial harm (3) quantify the questionable amounts involved (4) the party likely responsible for the harm.

Why conduct a Fraud Examination?

The are many reasons why organizations choose to conduct fraud examinations. In particular, a properly executed fraud examination can address a number of organizational objectives, including:

• Identifying improper conduct
• Identifying the persons responsible for improper conduct
• Stopping fraud
• Sending a message throughout the organization that fraud will not be tolerated
• Determine the extent of potential liabilities or losses that might exist
• Stopping future losses
• Strengthening internal control weaknesses

Generally, when predication exist, the next question is whether a fraud has been committed. Understanding the circumstances which set the stage for potential fraud when an individual is involved entails an assessment of the key elements that influence perpetration of a fraudulent act which includes financial pressures, opportunity and rationalization, commonly referred to as the “Fraud Triangle”. This fraud theory was first described by Donald Cressy in his study entitled “Other People’s Money: A Study in Social Psychology of Embezzlement. Mr Cressy hypothesized that otherwise trustworthy people can become trust violators when the combination of the Fraud Triangle elements exist.

When a company is involved, the focus also involves an evaluation of the system of internal controls and whether the policies and procedures (i.e. internal controls) were properly designed and operated as intended to prevent and detect irregularities or whether the proper controls even existed. A key component of a robust system of internal controls is proper segregation of duties. Segregation of duties involves separating the tasks of handling assets (cash, inventory, receivables, etc.), recording transactions in books and records and reconciliation, review and approval of transactions. The premise in achieving proper segregation of duties is to ensure that an individual should not be in a position that would allow that individual to both perpetrate and conceal a misappropriation of funds or assets.

Have you stumbled upon suspicious financial transactions and not sure what to do next? We encourage you to give us a call. As experienced forensic accountants, auditors and fraud examiners, CAWIGGAN CPA LLC can assist you through the process of analyzing the situation and determining the appropriate course of action.

To learn more about our forensic accounting services call (410) 972-4583 today for a free initial consultation.

Listed below are a few of the areas in which we offer services:

• Investigation of accounting and financial reporting irregularities
• Financial statement fraud

• Fraud and Forensic investigations
• Payroll fraud
• Billing fraud
• Check tampering
• Employee expense fraud

• Examination of financial records
• Bank reconciliation analysis
• Tracing illicit funds