Tax Article - Stop Fraud in Its Tracks

Internal Controls, Forensic Accounting Can Help

Feeley & Driscoll forensic accounting services

Do you suspect your employees are defrauding your company? Maybe you’ve never considered the possibility. If you suspect serious malfeasance has already taken place and the matter may end up in court, we’ll look at what a specialized forensic accountant can do to help.

To head off fraud before it can happen, make your company a positive place to work. Compensate employees fairly, reward outstanding performances and try to help those in financial trouble. In addition, train management and key employees on fraud awareness and detection, making sure they know the fraud warning signs and the factors causing fraud and theft.

Send Forensic Accountants to Bat

What if the horse is out of the barn -- serious fraud has already happened? You may want to call in an independent forensic accountant to go over your books, particularly if you think the matter could end up in court.

Forensic accountants are generally CPAs whom attorneys hire in cases of legal dispute or fraud allegations that a court must resolve. They dissect financial documents, reconstruct records, interview witnesses, and interpret and explain complicated financial information. They also testify in court as expert witnesses.

Let’s see what forensic accountants do in a case that’s going to court. In the pretrial phase, they’ll often perform a cost-benefit analysis to find out whether the matter is worth pursuing or defending. They can explain the economic substance of a particular transaction, scheme or course of conduct, or the industry rules and regulations that govern it. What’s more, they can clarify the accounting (or auditing) standards that apply to the issue.

Contact our forensic accounting services by email or call us at 1 (888) 875-9770 to look at some ways you can tighten your internal controls to prevent fraud.

In the discovery stage, the forensic accountant helps counsel identify, gather and interpret pertinent financial, economic and statistical information. For instance, forensic accounting firms can formulate comprehensive and specific requests for documents. They also detect evidence of fraud, embezzlement or fund misappropriation. When necessary, they can reconstruct financial records to unearth hidden or undervalued assets, diverted or unreported income, and inappropriate expense allocations. Attorneys call in forensic accountants to identify abuses by corporate officers or employees, and also to develop pro forma financial statements.

If both sides agree to settle the matter out of court, forensic accountants can assist in settlement negotiations by analyzing the opposition’s proposals and suggesting counterproposals. Studying the proposed settlement, they can assess short- and long-term business implications as well as tax ramifications. In addition, they can offer advice about the structured-settlement option.

If a trial is on the horizon, forensic accountants can do more than offer expert witness testimony. For instance, they may evaluate and analyze the opposition’s financial evidence, suggest effective lines of cross-examination, and prepare and analyze trial exhibits.

Fighting fraud on two fronts

Fighting fraud on two fronts -- prevention and, if needed, legal action -- makes good sense. With strong internal controls and access to a fraud examiner, you’ll be in top fighting form. Please call us with any questions. We can help you create an effective antifraud plan for your company.

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