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Unit 14: Professional Ethics and Current Issues

evidence. Engagements are wide-ranging, and include transaction reconstruction and Notes
measurement; bankruptcy, matrimonial divorce, and probate asset identification and valuation;
falsifications and manipulations of accounts or inventories or in the presentation thereof; and
accountability within the statutory audit and other environments; among many others.
Increasingly, as various parties perceive the value of such evidence, grounded as it is in
“accounting facts,” forensic accountants are called upon to play important pre-emptive roles (as
of right, without cause), offering independent assurance in such diverse areas as audit committee
advisory services, merger and underwriting due diligence, investment analyst research, and
enterprise risk management.

Did u know? The validation and enhancement of the body of knowledge (the models and
methodologies) relating to the evidentiary value of accounting data, within a strict legal
framework, is the raison d’être of the Journal of Forensic Accounting.
Forensic accountants detect and interpret the evidences of both normal (non-fraudulent) and
abnormal (fraudulent) phenomena introduced into the books and records of an accounting
system (expansively defined) and the resultant effect upon the accounts, inventories, and the
presentation thereof. It is imperative; therefore, that forensic accountants first understand what
is normal, since even extremely high value abnormalities are introduced by such simple
mechanisms as improper account classification or the presentation policy of routine transactions.
Therefore, just as forensic dentists and forensic anthropologists are dentists or anthropologists
first (that is, they are foremost professionals in the underlying discipline and are specialists in
its forensic aspects), so too forensic accountants are accountants first.

On a day-to-day basis, this can mean that you are using your skills in a variety of situations. ‘One
of the areas that we are highly involved in is confiscation orders. ‘If someone has been charged
and convicted, for example, if they’ve been money laundering then the court has to find out
what was actually the receipts of this crime and distinguish that from what was actually legitimate
business.
‘We have to go through everything to discover and establish what comes from a legitimate
source of income. In that situation, we are often challenging the prosecution’s case and saying it
is less or more, so we’ll work with the individuals in that type of case. Another area is if an
accountant has missed something in relation to a corporation tax return, we analyse the accounts
to see if what they did was correct.

The Role of Forensic Accountants

The main role of forensic accountants is to assist the courts, solicitors and clients understand the
complex financial and accounting issues and presenting that information in a manner that all
users can understand. An important addition to that is that the opinions or results are supported
by evidence that will hold up under cross examination or scrutiny.
As forensic accountants, we help at a number of different levels in the litigation process including:
 Assisting in Initial Discovery: Helping solicitors ask for the right information the first
time that will provide them with the greatest level of information. As a note, ask for top
level information first and then, work down to source material. The level of information
available will depend on the complexity of the business and the nature of the claim.

 Applying our Commercial Knowledge and Expertise: Financial statements and income tax
returns tell a story of a business. As forensic accountants, we can translate that story and
apply it to the other information in the business. When the stories do not match, finding

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