When it comes to corporate investigations, one of the most commonly enlisted services that we provide is forensic accounting.
If you aren’t familiar with the world of forensic accounting, our detailed post ‘Forensic accounting – efficacy and positive action in response to financial fraud’ is a great place to start.
In simple terms, forensic accounting is the process by which specialist accountants go about uncovering fraud with respect to the financial sphere. Often this involves identifying, uncovering and preparing data and information to be used as evidence in court, in circumstances where fraud has been found.
There are several circumstances where enlisting the services of a forensic accountant might be helpful, particularly due to the fact that financial fraud does not discriminate with respect to industry or business size. As accounting fraud is a ubiquitous problem in the financial world, the need for forensic accounting mirrors this trajectory.
At Blackhawk Intelligence, we are a trusted Corporate Investigation company that boasts a specialist forensic accountancy team designed to assist in matters where organisations’ books and transactions need to be examined in great detail. From reactionary measures that include accounting audits and asset tracing in some instances to preventative measures such as complex due diligence and risk management strategy – Blackhawk’s team has a proven track record of achieving best possible outcomes and results for our clients.
When should I hire a forensic accountant?
There are various instances that call for the services of forensic accountants, but the primary cause for enlisting one is upon suspicion (or awareness) of accounting fraud within an organisation which requires a forensic accountant to follow a rigorous process by which they will detect and identify any atypical practices from the ordinary. During the process, they will also collect, analyse and preserve the accounting materials (data and evidence) of the company in question to mount litigation and prepare the evidence for submission to court.
With extensive experience in legal concepts and procedure, our forensic accountants also possess skill sets that extend beyond looking at numbers in order to uncover any intent. Here’s a snapshot of their thought process:
- Is the crime committed by a lone wolf or does it involves several people?
- How long have they been committing this crime?
- What’s the motivation behind it?
- Who has attempted to destroy any evidence or what has been done to cover-up the wrongdoings?
- What evidence can be used in court?
Types of accounting fraud requiring a forensic accountant
Our accounting fraud page covers many types of accounting fraud and how to prevent them in great detail. For the purposes of this post, we aim to give a summary of common types of accounting fraud.
Asset misappropriation: whereby a company insider, most commonly a direct employee of the organisation, steals company assets – be it through cheque or receipt forgery, cheque tampering or physical theft of cash or assets.
Payroll fraud: accounting for almost a third of business-related frauds, this entails the theft of company assets through the payroll system – usually done through avenues such as ‘ghost employees’ where the fraudster siphons money to a fake employee account that is actually linked to them.
Accounting manipulation: usually a more large-scale operation reserved for those higher up in a company with an intention to deceive interested parties by overstating revenues/assets or understating expenses/liabilities in the pursuit of making the financial statements appear healthier than they really are. The motivations behind this include but not limited to:
- Secure further funding from banks or venture capitalists
- Justify increased salaries and bigger bonuses
- Meet the expectations of shareholders
It must be patently clear that if you suspect you’ve been a victim of fraud, it’s imperative that you act as swiftly as possible in order to mitigate the damage and increase the likelihood of regaining any money or assets. Enlisting the services of a qualified, specialist forensic accountant represents the best practice in this case, and will ensure that you receive the best possible outcome.
Often in a criminal investigation, we also encounter fraudsters who hide assets in a myriad of trusts and companies overseas. This is when we conduct asset tracing across multiple jurisdictions to help with the investigation.
Other scenarios that require a forensic accountant
There are also a number of other scenarios where forensic accountants can be of assistance:
Mergers and acquisitions
Before conducting a merger and acquisition, all parties involved need their companies to be valued. This is traditionally approached by having a team of accountants and estimators looking at the P&L, growth trends and market condition before assigning a theoretical value to the company’s worth. For a more comprehensive valuation, forensic accounting takes an investigation approach, in other words:
- Forensic accountants dig deeper into data to ensure liabilities, assets, budgets, forecasts, sales and expenses are true and accurate.
- We investigate processes in order to uncover any inefficiencies and exposures that might affect the profitability and success of the merger.
- We may even conduct background checks on key employees in circumstances where their credentials and suitability may be in question.
Divorces can be messy, particularly when tens of millions are at stake in a high-profile divorce. When it comes to the division of assets, one party is often likely to undervalue the asset while the other is likely to overvalue it – both doing so in order to protect their interests.
In such circumstances, our team of forensic accountants can assist and will use both accounting and investigation skills to determine one’s net worth. By presenting a clear picture, both parties can settle the case quickly, sensitively and professionally, and receive the best possible outcome.
Our team of forensic accountants also handle insurance fraud and business disputes.
Contact Blackhawk Intelligence for forensic accounting services
With a team of forensic accountants trained to conduct investigations that don’t undermine the legal processes available to our clients, from multinational corporations to local law firms, Blackhawk Intelligence has a proven track record of delivering quality forensic accounting services that ensure the best possible return on your investment. If your organisation is going through an M&A, or you suspect a fraudster is at work, contact us on +44 (0)20 8108 9317 today and we’d be happy to discuss this further with you.
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