Definition of forensic accounting

Forensic accounting is performed for a variety of clients but in all cases it is to discover the hidden story behind a presentation of a set of accounts. Forensic accountants can end up discovering fraud or, even if not illegal, a misrepresentation of a financial situation. Forensic accounting skills are used to settle shareholder and partnership disputes, matrimonial disputes, insurance claims. Forensic accountants are also used in fraud investigations.

 

forensic accounting in the news

Maryam Kennedy, interviewed for the FT in June 2012, was reported to have clocked up more than 14 years experience in complex global investigations and since 2010 had been a partner with the Fraud Investigation and Dispute Services practice at Ernst & Young, a global forensic team of 1,700 people. 

In June 2013, an FT columnist reported on a new exchange traded fund – the Flag ETF, which excludes the 100 companies in the S&P 500 that take the worst grades for aggressive accounting. The model the ETF uses looks for things such as discrepancies between revenue recognised and flows recorded on the cash flow statement, which would imply that a company is effectively borrowing sales from the future in order to make quarterly targets.

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