Question

1) summarize in your own word

2) give your comments and opinions

Forensic Accounting

Accountants, especially those in public accounting, normally strive for attainment of the coveted Certified Public Accountant (CPA) designation. After four to five years of study, followed by a regimen of preparation for the CPA exam, candidates may become fatigued by the process. After joining a firm, however, accountants are eager to get hands-on experience in their new profession. Therefore, this is the best time to strive for, and pass, the CPA exam. Astute new accountants can quickly identify teachers and mentors within the organization to help them achieve and define their career goals.

Unfortunately, many accountants, even those with years of experience, lose interest in reading professional journals or furthering their knowledge through the study of a new specialty area. Those who do stay academically motivated, however, will come across numerous articles on the topic of forensic accounting. This topic, and several connected to it, is well worth keeping abreast of; for example, fraud is in the news on a daily basis, as whistle-blowing and class action lawsuits leading to large fines, and even criminal charges, levied on those responsible. CPA firms are sometimes brought into the mix, since the public wants to know what the accountants knew and what is in their workpaper files. If the CPA firm has culpability, it can be charged, with the same financial consequences. Developing a curiosity about such cases provides professionals with valuable insight in terms of what happened, why it happened, and how could it have been prevented—questions frequently posed by fraud victims.

There are many career paths in forensics for accounting graduates, whether they work for a nonprofit organization, private company, university, hospital, or government. Forensic knowledge is most helpful for those employed in the nonpublic sector, with higher value and compensation awarded to highly credentialed forensic specialists. Controllers and internal auditors should have a working knowledge of forensic accounting as well. A CPA who attains forensic skills and then moves to a private accounting position can expect higher rewards, as there is a growing need for these skills across the spectrum.

Forensic Accounting Concepts and the Need for Skills

Forensic accounting is not a complicated concept; it is essentially litigation support involving accounting. The application of forensic accounting techniques is also fairly straightforward. Forensic accountants apply their skills to legal cases to answer questions regarding damages, generally with an economic bearing, or where there is a concern expressed by a company potentially experiencing fraud or suffering from deficient internal controls. Forensic accounting skills are also useful in assisting the audit team with fraud-risk assessments, where it is vital to know how to ask probative questions in a non-threatening manner.

In litigation support services, the use of forensic accounting techniques helps a professional address certain questions. One example is the calculation of lost net profits, where the objective is to analyze the company’s historic financial performance and evaluate its economic future. Such evaluation includes analysis of the industry at present and in the future in order to determine a reasonable basis for computing the lost future net sales as saved costs. Using general accounting skills, forensic accountants dive deeper into the details to consider multiple factors, such as whether or not the injured party has, or could have, mitigated its own damages in part or in full. Being aware of the many variables encountered in a damages case, the model selected should be one that will withstand challenges by the defense. Thus, the pressures shouldered by forensic accountants are great, but the benefits are commensurately rewarding. Ultimately, becoming a qualified expert witness able to testify in court, arbitration, or mediation can lead to career advancement. This is especially true when a forensic specialist becomes highly knowledgeable in one or more specific industries.

Career Planning

Having some knowledge and skill in forensics aids CPAs in serving their clients. For example, consider a company that needs an overview of its internal control system. In such a case, being aware of fraud risk empowers a CPA with forensic knowledge to detect and help improve deficient internal controls.

CPAs who gain knowledge of forensic accounting through reading, specialized continuing professional education, and hopefully hands-on client experience, will be more prepared to market their skills and add value to their client engagement teams. Earning the CPA designation is a fine start, but the road to success is paved with other achievements—forensic knowledge being one of them.

Answer 1

Responsibilities of CPA in forensic accounting department and in the internal control:

1. Perform forensic research to track down funds and catch the assets for recovery.

2. Perform financial data anaysis for maximizing things like profits, performance of the firm/company.

3. Identifying the GAAP or GAAS violations.

4. Preparing analytical report of the available data for litigation and testifies as needed.

5. Investigating financial frauds by the clients, employees etc.

6. Helping in price fixations.

7. Manipulating some accounting figures from the stakeholders and the public, from some funds which are misused by the upper management personnel.

8. Helping in disputes arising with the shareholders, Insurance personnel, etc.

9. Preparation of financial analysis evidence for court if any incident occurred and will be helpful there against any criminal activities.

10. Strictly adhering to tax reports and the appropriate Acts.