18 Forensic Accountant Responsibilities and Duties

By Indeed Editorial Team

Published 24 October 2022

The Indeed Editorial Team comprises a diverse and talented team of writers, researchers and subject matter experts equipped with Indeed's data and insights to deliver useful tips to help guide your career journey.

A forensic accountant is a highly trained professional with a background in accounting, auditing and financial analysis who uses their skills to solve financial issues for legal purposes. Being a forensic accountant can be a satisfying career for analytical and methodical professionals who enjoy the challenge of uncovering financial inconsistencies. If you're considering this as a career, understanding what the job involves could help you decide if it's the right career path for you. In this article, we explain what a forensic accountant does, list some typical forensic accountant responsibilities and explain how the job varies by sector.

Related: What Is Forensic Accounting? (With Uses and Career Guide)

What is a forensic accountant?

Forensic accountants analyse the financial records of organisations or individuals accused of engaging in illegal activity or financial misconduct. Their job is to investigate financial crimes, present reports on their discoveries and provide testimony in court as expert witnesses. They often work closely with government or law enforcement agencies to investigate and provide evidence of fraud or other financial crimes.

Related: How to Become a Forensic Accountant (With Step-Guide)

Forensic accountant responsibilities

Forensic accountant responsibilities involve a wide variety of duties, which can include:

1. Investigating fraud

A forensic accountant examines internal documents to uncover fraudulent practices. There are many areas of a fraud investigation that you could become involved with. These include uncovering fictitious accounts, fake contracts and invoices, ghost employees, fake vendors, kickbacks, personal expenses and fraudulent expense reimbursements. You might also investigate inaccurate revenues, asset valuations, reported net income and financial statement notes or incorrectly classified cash flows.

Related: How to Become a Forensic Investigator (With Duties and Skills)

2. Completing tax returns

Another duty of a forensic accountant might be preparing tax returns for individuals or organisations. This can include corporations, partnerships, sole proprietors, estates and trusts. You can help companies or individuals identify missed deductions or erroneous classifications that could impact a business's accounts or an individual's finances.

3. Preparing for divorce proceedings

In complicated divorces, a lawyer may ask a forensic accountant to help uncover key financial facts to facilitate the divorce process. In this situation, you could audit complex financial statements and provide reports that interpret the financial matters of the case. Your aim might be complete financial transparency, and you might achieve this by uncovering hidden assets. This may involve reconstructing historical financial transactions or examining a spouse's lifestyle and personal spending habits. Throughout the process of the divorce, your investigations might assess joint fund spending or appraise the properties, businesses and assets of both parties.

4. Assessing inventories

A company might attempt to appear more profitable by understating its inventory and the cost of goods. Forensic accountants investigate a company's stated inventory by comparing the actual cost of purchased goods. You could identify discrepancies by examining the business's approach to tracking and accounting for its inventory. Using your findings, you could realign profit margins by establishing accurate inventory costs and ascertaining a true stock value.

5. Analysing bank accounts

A company's bank account often reveals important information about its funds and cash flows. For a cash-based business, such as a bar, convenience store or gardening service, you might begin your analysis by investigating missing cash. You could examine the lifestyle of the business owner to determine whether they're living above their means. This may suggest that they're hiding money in other accounts, overseas or spent at home.

6. Preparing financial evidence for child custody cases

The declaration of accurate income from both parties helps determine a fair amount of child support. If either spouse owns a business, their salary may not be easy to establish. It's a forensic accountant's job to define and verify the actual income of both parties. You could conduct some investigative work to establish an accurate figure, thereby protecting your client from paying an incorrectly calculated, and potentially inflated, amount by the court.

7. Developing applications to enhance financial analysis

Other forensic accountant responsibilities include developing applications to assist in collecting and interpreting financial data. An application can accelerate your processes. This could enable you to offer a more efficient service to clients and increase the accuracy of your work.

8. Identifying illegal activity

Forensic financial investigations can uncover illegal activity, such as high-level white-collar crimes or corporate oversight. Cases involving terrorists, mobsters and drug traffickers could all be part of your investigations and the evidence you present in court could affect legal decisions. The illegal activity you expose may include various financial crimes, such as identity theft, theft from a company and insurance or securities fraud.

9. Overseeing teams

When working on extensive investigations, a forensic accountant may oversee a team of experts to complete the investigation within a set time. As the team leader, you may assign tasks and ensure each team member is working efficiently. Project management skills are beneficial when overseeing a team, as you can ensure the completion of tasks by specified deadlines.

Related: 5 Roles and Responsibilities of a Team Leader

10. Ensuring regulatory compliance

Many companies are subject to laws and regulations, which are guidelines created by professional regulatory bodies or the government. Compliance with these laws can affect the collecting, storing and presenting of information. To ensure it's compliant, a business may work with a forensic accountant who understands the relevant regulations and who can offer advice on how to comply with applicable guidelines.

Related: What Is a Regulatory Requirement and Its Impact on the Workplace?

11. Developing a criminal hypothesis from your findings

A criminal hypothesis is an understanding of the primary reason or intent for a committed crime. Experience and training might enable you to draw meaningful conclusions from the financial data you uncover. You could present your criminal hypothesis as a professional conclusion to your findings, supporting your statements with data as evidence.

12. Reporting on evidence

Forensic accountants report on the discrepancies they find in a clear, concise manner that meets the standards of a court of law. You could use your analytical ability to write a conclusion to your investigation, reporting on your findings clearly and using language that's easy to understand. Disclosing your investigative procedures and methods would typically be a part of your presentation.

Related: What Is Financial Reporting and What Are Its Uses?

13. Conducting interviews

In forensic accounting, you might interview suspects and witnesses to obtain critical information. As your experience as a forensic accountant grows, you could develop interviewing skills that enable you to gather supporting evidence for your findings. You may even learn how to elicit a confession. A forensic interview is usually more casual than an investigative interview conducted by law enforcement officers.

14. Testifying in legal proceedings

As a practising forensic accountant, the court may call on you to testify to your findings. For this purpose, excellent communication skills may be necessary. To enable the court to process the information you provide easily and accurately, you could communicate complex financial concepts to your audience in a simplified way.

Related: 19 Forensic Careers to Consider (With Salary and Job Info)

15. Identifying weaknesses in internal controls

A forensic accountant can help a business to identify weaknesses in its internal controls that could leave it vulnerable to financial exploitation. Based on your investigative findings, you might provide advice to prevent a reoccurrence of fraud or theft. Your recommendations may enable management to improve controls and strengthen their accounting processes.

16. Preparing reports and projections for bankruptcies

If a company files for bankruptcy, a forensic accountant can determine whether the petition is legitimate or fraudulent, providing evidence to prove or disprove the claim. You could use your knowledge of bankruptcy-related litigation to analyse complex situations and assess compliance with financing agreements. To look for signs of bankruptcy fraud, you could trace the flow of assets, which may be a transfer to a family member, funds deposited offshore or money moved through a series of management fees.

17. Solving problems

In the role of a forensic accountant, problem-solving applies to the analysis of evidence and the identification of patterns that indicate financial mismanagement. As you review financial records, you might detect anomalies that suggest unusual activity. Finding connections between the data presented to you, the evidence you collect and your instincts requires analytical problem-solving skills.

Related: Data Analysis Tools: Definition and How to Choose One

18. Being organised

Organising data for a financial investigation involves the logical storing of documents, files and other data. Creating a clear, ordered and meticulous filing system for all findings and evidence can aid an investigation, as you could find information quickly or as needed. Storing and labelling data in a methodical, predictable way is one of the key forensic accountant responsibilities.

Forensic accountant duties by type of employer

The specialised skill of a forensic accountant can lead to several career paths and may even present employment opportunities in various sectors, such as:

  • Accounting firms: Large accounting firms may hire forensic accountants to track corporate theft or fraud.

  • Law enforcement and government agencies: Criminal investigative agencies may hire forensic accountants to perform financial crime investigations.

  • Financial consulting companies: Consulting companies provide the services of forensic accountants to companies that don't need a forensic accountant on a full-time basis.

  • Risk management firms and security providers: Crime prevention businesses often offer financial forensics as part of their fraud prevention strategies.

  • Forensic accounting firms: Forensic accounting firms offer the services of their specialist employees to both companies and individuals.

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