Forensic accountants need traditional plus high-tech skills

Words that jump-start the heart of the forensic accountant: "We need you to calculate the damages." "I think my partner is stealing from me." "I'm getting a divorce and I need your help."

Forensic accountants are a rare species of a breed traditionally looked upon as dull and boring. The term "forensic ac-countant" itself seems an oxymoron, "forensic" sounding glamorous and showing up a lot in TV shows and mo-vies. Remember Hannibal Lecter?

Accounting is generally renowned for being a "snore." "Forensic accounting," however, refers to the molding together of traditional accounting skills and the high-tech world of forensic science.

Practically speaking, forensic ac-counting refers to accounting and financial analysis performed in connection with litigation. The label is applied to a wide variety of accounting.

Forensic accountants often operate in situations that resemble work performed by private investigators and sometimes the work can drift into waters that are "shark infested" and dangerous. More often, however, forensic accountants are called on to help with more traditional matters. A CPA performing forensic ac-counting or "litigation services" often provides services spanning a broad spectrum of engagements, including:

? Calculation of damages resulting from such things as the interruption of a business and its earnings as a result of a dispute, a fire, or some other circumstance; and economic loss suffered as a result of a personal injury or wrongful death.

? Calculating the value of a business for divorce, business partnership disputes, or other litigation; e.g., tracing the source or use of funds in a divorce matter in order to determine whether or not assets have been hidden or "misplaced."

? Investigating if a white-collar crime has been committed and, if so, determining the identity of the perpetrator and how much money was involved. This can involve interviewing suspects and working with law enforcement agencies.

? Serving as a court-appointed neutral party to supervise financial dispute resolutions and business dissolutions.

? Assistance with criminal or civil defense: Assisting attorneys with developing questions for depositions or trial and other discovery matters; and helping attorneys and their clients develop litigation strategy.

The forensic accountant normally provides expert witness testimony in depositions or at trial or prepares a formal report after the completion of the above services.

After recognizing the broad scope of forensic accounting, it is understandable that this area of the profession is growing. Attorneys, courts and juries are being overwhelmed with volumes of documents piled high with numbers, percentages and ratios. The increasing complexities and challenges being faced in today's litigation arena create a breeding ground for corporate sins, frauds, and business conflicts which often produce litigation opportunities.

The forensic accountant can be a real contributing member of the "judicial team" to assist in these situations.

CPAs have naturally been drawn into this litigation mix as a result of their specialized business knowledge and expertise and their ability to use modern technology to aid in complex financial investigations. Accounting is the language of business CPAs can clarify business transactions and explain records in a clear and concise manner to attorneys, judges and juries. Qualified forensic CPA's have the organizational and quantitative skills required to perform the analyses necessary to develop the technical evidence required in complex litigation cases and to interpret and summarize the results in a logical and understandable manner. The specialized ex-pertise of a qualified CPA is never more appreciated and useful than in a legal environment when the heat is on and the stakes are high.

Every litigation engagement presents distinct issues and characteristics that have to be examined and evaluated individually, That is what makes forensic accounting challenging and exciting for that especially odd species of accountant who thrives on the hectic world of expert testimony and trial pressures. The forensic accountant has to be extremely organized, must be willing to work long, tedious hours (often in a crisis situation) and must enjoy working with attorneys in the stress and pressures of the litigation world. It is not the right choice for all accountants, but it is extremely rewarding and challenging for those that enjoy it.

(Larry D. Ellison, CPA, CFE, is a shareholder specializing in the area of forensic accounting and litigation ser-vices with the Springfield-based firm of Kirkpatrick, Phillips |amp| Miller.)[[In-content Ad]]