Forensic auditing.

Forensic auditing could be defined as the application of auditing skills to situations that have legal consequences.

Case study.

A fortune 500 company suspected a new subsidiary was misappropriating funds. The kessler international team approached this investigation in stages and began by conducting a surveillance of the plant. Investigators immediately observed employees stealing large amounts of raw materials. The next step was to conduct a forensic audits of the plants business records. We discovered that 75 of the plants employees were illegal aliens. Other inconsistencies included three employees who were currently serving prison sentences. Our accountant also noticed thousands of dollas in cheques that were cashed by cheques cashing services. After receiving this information, the forune 500 company took appropriate legal action and requested we conduct investigations into their other subsidiaries.

Kessler international case study.

After years of marital bliss a couple decides to divorce due to several irreconcilable differences. One spouse was uncooperative and made the divorce process extremely difficult. The forensic accountants at kessler international were called in to determine the value of the couple business, It had become extremely difficult to obtain the proper documentation that would determine her share because every possible legal maneuver to stall the procedure was used. The kessle team worked quickly and efficiently and obtained a court order that allowed them to gather evidence through an on site visit. They obtained all the evidence necssary and produced a report that would serve their client well in court.

Forensic accounting case studies.

At the request of a consumer product manufacturer, the team at Kessle international was asked to determine if their products were diverted to in appropriate markets. After a careful and thorough investigation, our researchers and investigators uncovered that only some of the goods left the united state, the shipping company used by the customer was assisting diversion. The manufacturer was informed and immediately stopped relations with the customer and sought legal action.

Micheal .G. kessle was the first forensic accountant.

1. An investment bank was considering providing finance plastic manufacturer overseas. The bank rumors of faulty operations and overestimated profits and thought accurate business intelligence could help them make a decision. The kessle international forensic accounting team was called in to conduct a general investigation of the plastic manufacturer and determine if the information they provided to the investment bank was truthful. Our researchers and investigator scrutinized the company's revenues, their books, and projections to assure they were fair and accurate. They also assessed the potential risks involved in the deal and provided the investment bank with valuable information to help them make the right decision before it was too late.

Forensic accounting.

Forensic accounting is accounting that is suitable for legal review, offering the highest level of assurance, and including the now generally accepted connotation of having been arrived at in a scientific fashion. That is, forensic accounting is sufficiently thorough and complete so that an accountant,in his /her considered independent professional judgement, can deliver in a finding as to account, inventories, or the presentation thereof that is of such quality that it would be sustainable in some adversarial legal proceeding, or within some judicial or administrative review.

Typical forensic accounting services.

Typical forensic accounting services include.
1. Tracing missing money and investigating frauds, corporate failures and insurance claims (usually at pre-litigation stage)
2. Providing expert opinions on financial transactions in the court of law.
3. Assessing damage calculations.
4. Valuing company in litigation and arbitration.
5. Investigating partners disputes and auditor negligence.
6. Case assessment.
7. Identification, examination and organization of documentation required to support the case, both additional and currently available.
8. Evaluation of the scope of the investigation and subsequent work.
9. Preparation of initial financial analysis to determine the cost/benefit of litigation.
10.Preparation of reports and accounting schedules.

Forensic accounting services.

The extent of an expert accountants role will depend on the stage which he is engaged to assist.

Liability evidence.

This involves the forensic accountant providing evidence on the professional services of other professional services of other professional accountants with a view of determining whether there has been a professional negligence or not. It requires the forensic accountant to analyze the professional duties and assesses whether there has been a breach of such duties. This may involve giving evidence in cases in which the professional conduct of colleagues is being questioned. The aspect of forensic accounting role that sometimes may find, be found unpleasant is in the area of professional negligence against accountants, particularly when an expert accountant is asked to act against another professional firm.

Technical accounting evidence.

This includes the provision of evidence on the accounting technical issues which fall outsides the scope of the court own expertise. These may include share valuation, interpretation of financial records and accounting aspects of income tax.

Forensic accounting services.

Identifies two broad areas of forensic accounting services.
1.Technical accounting evidence.
2. Liability evidence.

Scope of forensic accounting.

Identifies three broad areas of forensic accounting services. They include investigative accounting/auditing alleged frauds, litigation support consulting and expert opinion/expert witness.

Expert opinion/expert witness.

An Accountant is most often engaged as an expert witness in providing litigation support. The function of an expert witness is to assist the court reaching a conclusion on matters on which the court itself may not have the necessary knowledge to decied. Accountant need to have the requisite forensic expertise in order to support complex litigation involving finding, anlysis, interpreting and presenting of accounting, statistical, financial and economic data.

Issues in forensic accounting.

Investigation accounting.
This involves the forensic accounting reporting in a wide range of matters, such as the reasons for the collapse of a company,alleged fraud by an employer, insurance claims and equity matter such as insider trading.
Litigation support consulting.
This is an aspect of forensic accounting where financial information is subject to critical analysis for possible wrongful actions in legal proceedings. It may involve the forensic accountant being engaged by a lawyer to make an assessment of financial loss for damages claim arising out. for example,a breach of contract, negligence, personal injury, expropriation,loss of profit and matrimonial disputes.

Issues in forensic accounting.

Forensic accounting refers to that aspect of accounting profession, which seek to provide litigation support services in relation to the court of law or court proceedings. Forensic accounting is concerned with the use of the accounting discipline to help determine issues of fact in business litigation. It involves the application of accounting,business,legal and financial skills to assist in resolving existing or potential commercial or legal disputes.
Forensic accounting services cover any dispute, conflict or investigation which requires expert financial analysis,where the evidence so obtained could be presented in the court of law. However,it should be noted that not every forensic accounting process ends up in the court.
Demand for forensic accounting.
Increase of fraud in the world is been alarming in the past few decades. Increase in fraud has been attributed to a number of factors, namely.
1. Economic pressure.
2. The weakening of moral values.
3. The increased sophistication of criminals.
4. Government corruption.
5. Inadequate training of authorities in fraud prevention and detection.
6. Uncertainty and fears about the future.
7. Impacts globalization of economics and information technology, such as Electronic Money Transfer(EMT)
All these factors have complicated the task of investigation into fraudulent activities.
Meaning and attributes of a forensic accountant.
A forensic accountant is qualified accountant or the auditor employed to provide evidence in the litigation process which will be admissible in the court of law. An auditor who serves as a forensic accountant is required to have requisites skill, education and experience and adopt a professional approach in his work. Enumerated diverse skill which a forensic accountant would be expected to possess in order to achieve his goals. These qualities include;
1. Comfortable in adversarial environments.
2. Creative in dealing with incomplete or disorganized records.
3. Used to subordinating their role to lawyer in a litigation process.
4. Comfortable and familiar with the broad range of business records and record keeping practice beyond those used to satisfy financial requirements.
5. Being capable of serving as investigators as well as accountants.
6. Abilities to identify financial issues.
7. Knowledge of investigation techniques.
8. Knowledge of evidence requirements (what constitute evidence,the meaning of best and primary evidence and the various accenting summaries can take to consolidate the financial evidence in an admissible way the court.
9. Ability to interpret financial information.
10. Ability to clearly communicate the finding results from the investigation in an understandable fashion to the lay person, both in speech and writing.
11. The ability to think creatively and laterally
12. An investigative mentality(intuition)
13. A suspicious mind.
14. Curiosity.
15. Persistence.
16. Common business sense and a sound understanding of business method.
17. An ability to appear objective and professional.
18. An ability to operate in unstructured situations.
19. Team spirit.
20. Lateral thinking ability.
21. Courtroom experience.
22. Ability to react quickly.
23. Good track record and relevant experience.
24. Integrity.
25. Independent, impartiality.
26. Thoroughness.
Scope of forensic accounting.
Identifies three broad areas of forensic accounting services to include investigative accounting/auditing