Forensic Accounting - Results As Evidence
Numbers are viewed as absolute; the sum of one and one is definitely two. No matter the development of technology or mathematical concepts, putting those numbers together will invariably result physically in the number 2. And whenever things do not tally up according to the very nature of numbers, questions arise and further investigation is conducted.
Forensic accounting, as defined by experts, is the usage of accounting and business methods to collect and investigate informative numerical data as proof in court cases. It is a discipline that "encompasses financial expertise, fraud knowledge, and a strong familiarity with business reality and the working the system. Recently, this sort of accounting was witnessed all over the world since it was implemented in a much publicised impeachment case against a Supreme Court Justice in a Southeast Asian country.
As an effective process, it includes reviews of factual situation and relevant documentation to form a solid primary assessment of the case and to identify sections of loss and the opposing expert's damages report. Furthermore, it involves reporting on both the strong and weak spots with the positions taken. Likewise, it offers assistance in procuring required documentation to assist or repudiate a claim or testimony, examination to advance the formulation of issues to go over with regards to the presented financial evidence, attendance at trial while hearing the testimony of the opposing expert, and even providing advice about the cross-examination.
Among the list of important documents for this type of accounting will be the balance sheet, income statement, statement of owner's equity and statement of money flows. The balance sheet lists the company's properties and investments, plus the owner's equity; the income statement displays business profits with deducted revenues of a specified time. The statement of owner's equity is the retained earnings which combine the retained earnings from the start towards the end on the given period; this statement uses information in the other financial statements. Lastly, the statement of cash flows lists the sources and uses of money separated into operations, investments and various other financial activity. These four will be the most commonly put to use for forensic accounting, but besides these, accountants are also able to inspect business plans and disclosures in footnotes.
More and more companies are utilizing forensic accounting to secure their operations and protect their assets. It is usually used in disagreements over property values (as was the ground for the impeachment case versus the Supreme Court Justice mentioned earlier), prevention of fraudulent activities within the company, injury claims, royalty audits and much more. As numbers really don't lie, they're enough solid evidence necessary to make any case stand.
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