Introduction
So, what exactly is forensic accounting? If you’re signed up to take a course on the subject or are considering where you’d like your accounting career to take you, you may be reading this page because you’re looking for clarity about what the field of forensic accounting entails.
The word forensic usually inspires visions of Law and Order or CSI scenarios: a crime was committed, and detectives are gathering forensic evidence to try and figure out the cause and manner of death. But accounting inspires visions of debits, credits, and financial statements. How could these two words possibly fit together?
When you realize that forensic means applying scientific knowledge to legal issues, the phrase becomes easier to figure out. Forensic accounting is the study and interpretation of accounting evidence for presentation in a legal forum.
Most of the time, forensic accounting is used when someone commits fraud. For this reason, forensic accountants are often referred to as fraud investigators or fraud examiners. Fraud takes many forms, but at its heart, fraud is theft. Fraud is profiting by deceit or trickery; it involves the theft of funds or information or the use of someone’s assets without permission. Many fraud cases are small, but some are downright catastrophic, which is why names such as Enron and Bernie Madoff are now part of our cultural literacy. The latest statistics show that $2.9 trillion (trillion with a t) is lost every year due to fraud, so as a forensic ...
