Chapter 17
Forensic Accounting and the Due Diligence Process
In This Chapter
Seeing what forensic accountants do
Recognizing the unique qualities of forensic accounting
Knowing when to use a forensic accountant
Conducting a forensic test
Examining forensic accounting case studies
Thanks to the growing number of police shows on TV that focus on the science of blood and guts, the word forensic has worked its way into the mainstream. It’s worked its way into mainstream accounting, too. But unlike the fictional character Gil Grissom of CSI, though, forensic accountants tend to work in clean surroundings. Only the numbers are dirty.
Wait, though — aren’t forensic accountants hired only for big-company situations? Not anymore. Where numbers are withheld, incomplete, questionable, or possibly fabricated, professionals with backgrounds in forensic accounting can be useful to businesses of all sizes. Even law enforcement officials involved in counterterrorism measures use forensic accounting techniques to detect the tiny amounts of money funneled through cash-based shell businesses, such as convenience stores and tobacco shops.
This chapter focuses on what forensic accounting means, what practitioners do, and what benefits accrue to buyers and sellers who engage forensic accountants in the due diligence process of a business purchase or sale.
Understanding Forensic Accountants
Thanks to prime-time TV, most people know what the forensic part of forensic accounting means — an examination ...
