What does a forensic accountant do in practice?

Forensic account and accredited expert witness Fiona Hotston Moore of FRP Advisory provides an overview of the type of cases on which she is instructed as an expert.

[FORENSIC ACCOUNTANTS are typically engaged to undertake financial investigations and to provide input in litigation.

A forensic accountant is usually an experienced qualified accountant or auditor who has chosen to undertake further formal training to specialise in forensic accounting. The key skills of a qualified accountant that are required in forensic accountancy are strong written and verbal communication skills, an attention to detail, initiative, business acumen and a good knowledge of financial reporting and tax legislation. Forensic accounting is not for every accountant.

What is the difference between auditing and forensic accounting?

The key difference between auditing and forensic accounting is that in audits there will be a clear framework to the work and audit process to be followed, whereas in forensic accounting there is no such framework.

Every forensic assignment is different. The forensic accountant must, at the outset, agree with the instructing party the objectives of the assignment, plan an approach and be prepared to change tack depending on the availability of evidence and their findings.

Can forensic accountants do expert witness work?

Forensic accountants can also do expert witness work. Expert witness work is where the forensic accountant is required to prepare a report for court purposes and may be required to attend court to give evidence on his report. Facing cross examination can be daunting even for experienced professionals. Ideally the individual should have undertaken formal training in expert witness work and be accredited.

What extra skills does the forensic accountant need?

Key additional skills for the forensic accountant include professional credibility, robustness, the ability to negotiate, flexibility and composure.

What areas of work do I get involved in?

The work is extremely varied and can include an investigation into almost any area of complex finance or tax where the instructing party seeks an independent view on an issue. I have been instructed on over 400 cases and no two projects are the same. Typical areas include:

Matrimonial (divorce) and family matters: I receive a considerable number of instructions from family lawyers in relation to matrimonial matters. Typically, these include valuing a business, assessing maintainable earnings and tax calculations. I can act as the Single Joint Expert or as a Party Expert or Adviser.

Shareholder disputes: In disputes between business owners I may be engaged to value the business or to give an opinion on the misappropriation of funds.

False accounting and suspected fraud: Forensic accountants can be engaged to review the internal accounting where it is suspected that there has been manipulation of the reported results or to investigate and assess suspected fraud.

Professional negligence: In matters where it is claimed there were failings in the work of a finance professional, the forensic accountant may be asked to give an opinion on the standard of the work and the loss arising from the poor advice. I have assisted on a number of cases involving alleged tax professional negligence – including in relation to firm schemes, remuneration trusts, employee benefit trusts and entrepreneurs’ relief.

Commercial disputes: Business disputes arise in all sorts of situations including termination or breaches of contractual arrangements. Typically, in commercial disputes I will consider the business valuation and possibly the impact of the alleged breach on the loss to the contracting party.

Tax disputes: In disputes with, or investigations by, HMRC or the NCA (National Crime Agency) I can be engaged to assess the financial information, to give independent advice to the taxpayer and potentially to act as expert witness in a tax tribunal or at court.

Insurance claims: In insurance matters, a forensic accountant may be engaged by the claimant or insurer to assess the loss.

Criminal cases: In criminal matters, a forensic accountant may act for the prosecution or defence to give an expert opinion on financial matters. I have assisted on cases including money laundering, Proceeds of Crime Act and tax fraud.

In conclusion

Typically, forensic accountants originally trained in practice as accountants or auditors. However, the role of a forensic accountant is distinct from that of an auditor and requires additional training and experience. If undertaking expert witness work, appropriate training and accreditation is advisable. The work is always varied, often challenging and certainly not for the faint hearted. q www.yourexpertwitness.co.uk 25 25