Forensic Accounting and Fraud Examination
Helping you when you need it most.
Discovery or suspecting employee theft is one of the most devastating things a company owner can experience. Besides financial loss, the news of such a betrayal can elicit emotional toll and stress. It’s times like these when forensic accounting firms are vital for your peace of mind as well as financial well being. And when it comes to forensic accounting in Chicago, Porte Brown is a reliable partner you can count on for support.
Porte Brown conducts confidential and thorough fraud detection and forensic accounting investigations. These investigations conclude with an expert witness report suitable for law enforcement or civil damage lawsuits.
Porte Brown also has significant experience working with attorneys in matters regarding shareholder disputes and family law issues. These matters may involve the hiding of assets, misappropriating corporate assets or dissipating marital funds. Our job is to get answers, communicate our findings with your attorney, and have an accountant testify the facts in a litigation. We also perform fraud risk assessments.
With Porte Brown, you’re guaranteed to work with the best forensic accountant that you can trust. Our highly trained team, including Certified Fraud Examiners (CFE), will review your business operations and spotlight the areas where you are at risk. Once these areas are identified, we then recommend appropriate safeguards. The goal is to create systems that minimize employee opportunity.
Forensic Accounting Services for Chicago, Illinois & the Surrounding Communities
Our Suite of Services Include:
- Employee Theft Schemes
- Hidden Assets
- Misappropriation of Assets
- Dissipation of Marital Funds in a Divorce Setlement
- Shareholder Disputes
- Family Law
- Expert Witness Testimony
- Fraud Risk Assessments
- Investigative Accounting
- Forensic Accounting and Fraud Examination
- Fraud Detection and Fraud Investigation
Knowing the Facts: An Introduction to Forensic Accounting
Today, forensic accounting is a term that is widely discussed in business and popular media. Since the early 2000s, scandals like the infamous Enron case have brought down accounting powerhouses including Arthur Andersen. As litigation is now a fact of life in many industries, knowledge of how investigative accounting works is essential to running a business of any scale.
With that in mind, this article will detail what forensic accounting is, why it’s important, and what it means for your business.
What is Forensic Accounting? Why is it Important?
Forensic accounting is defined by Wikipedia as “…the specialty practice area of accounting that describes engagements that result from actual or anticipated disputes or litigation.” Forensic accounting and fraud investigation seeks to use interviews, modern investigative practices, deep examination of accounting records, and other methods to determine where financial loss for a firm may have occurred.
Forensic accounting services are important because during the discovery phase of litigation, facts must be gathered and affirmed to be true to the satisfaction of a court of law. This can involve sworn depositions, evidence gathered under subpoena and complicated trails of evidence that rival any criminal investigation. Expert testimony can also be vital in a legal case.
Forensic Accounting Firms: Do I Need One?
If you, as a business owner, find yourself in a situation where sworn testimony involving financial transactions or agreements must be given before a judge, then hiring a forensic accountant individually or as a team is a wise investment.
Why You Should Hire a Forensic Accounting Team
In order for evidence to be entered under sworn oath in a court of law, the chain of facts must be able to withstand a court’s scrutiny. Factually incorrect statements entered into testimony in a legal setting can at best result in the loss of a case, and at worst result in contempt of court charges.
Forensic accounting and fraud examination are not only for legal cases – a forensic accounting review can reveal loss in the enterprise and act as a terrific supplement to traditional internal accounting. If a bad faith employee or partner is somehow “cooking the books,” knowing earlier rather than later can help save the business. As a result, hiring a forensic accountant is money well spent.
Forensic accountants are essential when overseeing long term contract negotiations, during the mergers and acquisitions process, when investigating irregularities with vendors, or when dealing with the courts in any accounting capacity.
Considerations for Hiring a Forensic Accountant
Forensic accountants have their own professional association – The Association of Certified Fraud Examiners. The Certified Fraud Examiner certification is the standard for forensic accounting professionals. Hiring an experienced accountant with the CFE certification is a good first step in retaining an excellent forensic accounting team or specialist.
Further questions to answer are:
– What cases have the fraud forensic accounting team been involved in?
– What recommendations do the team have from law enforcement and corporate clients?
– What is the team’s specialty? These can include:
- Internal fraud
- Money laundering
- Securities fraud
- Contract violations
- Financial records manipulation
Be sure their specialty relates directly to your specific forensic accounting needs.
Well Known Accounting Cases and Investigations
The history of fraud detection and forensic accounting is replete with investigations that are as gripping as those in any police drama. Two cases are included here to give an example of the work forensic accountants do.
Al Capone, the FBI, and the IRS
The tax evasion case of Al Capone is arguably the most famous forensic accounting case. When the FBI found it impossible to make criminal charges stick, the bureau instead used existing income tax laws to show that Capone did not pay income tax on his stated income. This resulted in successful contempt of court and income tax evasion convictions which landed Capone 11 years in prison.
The Enron Scandal
Enron was an energy trading company, headquartered in Houston, that existed between 1985 and 2001. Led by Jeffrey Skilling, Enron committed fraud by moving its liabilities onto the books of offshore special purpose entities with the assistance of its accounting firm of record, Arthur Andersen. The fallout of this scandal resulted in the creation of the Sarbanes-Oxley act in 2002 and, after being found guilty of fraud, the closure of the storied accounting firm Arthur Anderson in the same year. The SEC made heavy use of forensic accounting techniques in untangling the complicated web of Enron’s transactions.
When Forensic Accounting is the Right Choice
Is your firm facing an unexplained loss or about to enter financial litigation? Then engaging with a forensic accounting specialist may be the right choice for you. If you need help with finding a forensic accountant in Chicago, speak to us, and let one of the top accounting firms in Chicago help with your questions. We offer forensic accounting Chicago businesses can rely on.
For more information, please contact Porte Brown’s Forensic Accounting and Fraud Investigation partner, Gary Kemnitz, CPA, CFE, CVA, at 847-956-1040.