We live in a world where business finances are often tight. We also live in a world where the growth of technology has made financial fraud a popular activity. This means that many businesses can be left struggling to survive if they become a victim of fraud. It's not just a problem that affects small or medium businesses either; even large government agencies or well-known companies can fall prey to fraudulent activities.
The growth in financial fraud had led to a need for experts who can help beat the fraudsters; this is where forensic accountants come in. Forensic accounting is a cross between accounting and detective work. We are going to take a closer look at what is involved and why it's so important.What is involved in forensic accounting?
Forensic accounting is one of many criminal forensic services. One of the roles of a forensic accountant is to investigate financial irregularities and provide expert testimony in court. Forensic accountants need to have excellent accounting and auditing abilities as well as highly developed investigative skills.
Criminal activity is not the only concern which can be addressed by using forensic accounting. It can also be utilised where the work of individuals is under scrutiny and where there may have been negligence.
The basis of forensic accounting is to analyse accounting systems and determine whether what is supposedly the situation is correct or not. Forensic accountants can be called to help during litigation; they are often able to assist with the resolution of issues before they reach court.Why is forensic accounting important?
So, now you know the basic premise behind forensic accounting; but why is it so important? The answer is simple; there is not a business, company or organisation in the world that can afford to lose substantial amounts of cash due to fraud or negligence.
Ever since the financial crisis occurred in 2008, businesses have become a lot more wary financially. This has led to a noticeable increase in the use of forensic accountants. They can investigate the financial position of a business and determine if there are any irregularities. This work helps to stem the activities of fraudsters. It also helps to curtail financially inadvisable activities which may be carried out by employees of the business.Both of these activities are important. Let's face it, we have all seen the results of renegade financial activity in the past.
As long as technology continues to develop, there will be people who want to make the most of the opportunity to carry out fraudulent financial activity. This is why the need for forensic accountants will continue apace. Businesses need to be able to identify if there is a problem with their accounts before the issue potentially ends up putting them out of business altogether. Forensic accounting is a growing area of accountancy that is helping to beat the fraudsters and reduce the massive amounts of money that are lost to fraud each year.