You’ve probably heard of a “forensic accountant” or “certified fraud examiner” before, but what exactly do these titles mean? More importantly, how do you know if you or your company could use one?

A forensic accountant is a professional who assists individuals or companies in expected or actual litigation matters, whether those matters be the prosecution of a known or suspected fraud, a shareholder dispute, or divorce proceedings. More broadly, a certified fraud examiner is a professional (not necessarily an accountant) that specializes in the prevention, detection, and deterrence of fraud.

With that in mind, when should you or your company seek the assistance of a forensic account or certified fraud examiner? Here are a few common examples:

  • Suspicion or evidence of fraud – Unfortunately, no company is immune to some variation of fraud. In fact, the Association of Certified Fraud Examiners estimates that companies lose 5% of revenues to fraud each year. If you or your company suspects fraud, it is important to hire a professional to thoroughly examine the situation at hand in an effort to uncover the fraud. If an actual fraud is discovered, the professional can assist the company in remedying the situation, through either providing a report to assist in filing an insurance claim, or assisting the attorney through testimony and expert reports during litigation.
  • Shareholder dispute – Business partners don’t always agree, and at times, these disagreements can become contentious. Shareholder disputes surrounding financial issues warrant the assistance of a forensic accountant, as the expert can provide an unbiased analysis of the financial situation at hand. This analysis not only produces a detailed report stating the amount owed to each shareholder, but more importantly serves to placate the shareholders, allowing them to operate their business as intended.
  • Divorce proceedings – Not surprisingly, divorces aren’t always the most cordial of circumstances. A forensic accountant can assist in divorce proceedings by ensuring that the total assets owned by each spouse is fairly reported.  Forensic accountants help spot irregularities in a spouse’s reporting of assets that may result from the concealment of liquid or illiquid funds.
  • Fraud risk assessment or internal controls review – Best in class companies are consistently challenging the status quo and seeking opportunities to improve. An example many companies employ, is the fraud risk assessment or internal control review. During this engagement, the forensic accountant or certified fraud expert will review the processes and procedures utilized by the company for various transaction cycles, such as cash disbursements, cash receipts, vendor selections, procurement, etc. A detailed report follows the engagement, informing the company of significant gaps in their internal control structure that could lead to fraud. The forensic accountant will provide ideas to close the gaps and reduce the company’s vulnerability to fraud.

At Barnes Dennig, we have the experience and expertise necessary to assist you and your company in the aforementioned and other matters requiring a forensic accountant or certified fraud examiner.  If you have any questions, or believe you or your company could use our assistance, please call us at (513) 241-8313 or e-mail Chad Kolde here.