Forensic accountants dissect white-collar crime

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The word "forensic" brings to mind TV medical examiners who perform autopsies and follow the clues to solve the crime. But "forensic" refers to more than pathology. It is defined as "pertaining to or employed in legal proceedings or argumentation," as in the case of a forensic accountant.|ret||ret||tab|

Certified Fraud Examiner Larry Ellison, of Kirkpatrick, Phillips & Miller, CPAs, PC, is a forensic accountant. He describes the specialty as "an investigative type of accounting that is done as a result of at least the allegation of improper procedures or transactions having been performed. It is any accounting done with relation to a potential litigation matter."|ret||ret||tab|

Ellison said the forensic accountant first analyzes a company's internal controls to find areas where it is susceptible to embezzlement, as in the case of a bookkeeper who also signs all the checks. Then the accountant looks at the employees who are in positions where they could defraud the company of cash and/or inventory. |ret||ret||tab|

Patterns in the employee's life are examined new cars and other changes in lifestyle can be indicators of wrongdoing. |ret||ret||tab|

The accountant focuses on transactions during certain time periods and in parts of the company that are most susceptible to theft and then applies tests. Finally he or she quantifies the amount of wrongdoing and finds out who is responsible. It is then up to the business to take action, which may mean going to the authorities, Ellison said.|ret||ret||tab|

For the attorney, the forensic accountant can help prepare for a case by providing understanding of "what the numbers mean in terms of the big picture, said Tom Millington, an attorney with Millington Glass & Waters. Also, he said, "it can be important to have an expert trained in that field to present the testimony of what the various transactions and numbers mean to assist the court and jury."|ret||ret||tab|

Forensic accountants, he said, "are much more qualified to be able to form those conclusions and to know where to look." |ret||ret||tab|

"It's often better for the client and lawyer to leave the accounting work to a professional, not unlike lawyers who get involved in medical legal work. Whether suing or defending, it's better to get a medical expert."|ret||ret||tab|

"A forensic accountant helps us a great deal because he or she is able to follow up where money comes into play," said Ron Cleek, first assistant in charge of property crimes at the Greene County Prosecutor's Office. "They are able to help me find out what took place. We sometimes have victims in their 80s and 90s, and a forensic accountant can look to find out what that person did or didn't do with their finances."|ret||ret||tab|

A strong auditing background is one requirement Ellison believes a good forensic accountant needs. And the person has to be able to look at the numbers from the other side. |ret||ret||tab|

"It really involves being able to take off the typical accountant's hat and look at transactions from a more skeptical approach: If I were wanting to embezzle, how would I do this with the procedures that are in place here?' You need to turn off the trusting mindset and look at it from a criminal point of view instead," Ellison said.|ret||ret||tab|

At a time when the Association of Certified Fraud Examiners, lists fraud and abuse as costing U.S. organizations more than $400 billion a year (more than $9 a day per employee), it shouldn't be a surprise that the need for forensic accountants is expanding.|ret||ret||tab|

"It's a field that is growing, just like the field of more complex business litigation. It's been around for a long time, but with the growth of the economy, it's not unusual for people to be involved in business suits dealing with millions of dollars. Whenever those suits deal with a time frame of months or years, it is helpful to have a forensic accountant," Millington said.[[In-content Ad]]