An expert witness is one whose opinion a court or other tribunal is prepared to admit as evidence for the purpose of assisting in the resolution of a dispute or in arriving at the truth, and whose opinion is based on the application of particular expertise and knowledge to the relevant facts. Royal Institution of Chartered Surveyors (RICS)
Civil litigation begins when one party, referred to as the plaintiff, files a lawsuit against another party, referred to as the defendant, alleging some harmful conduct or failure to act on the defendant’s side. The defendant is accused of being the one who caused the damage or loss. The majority of cases are settled outside of court when all relevant material, including that provided by the forensic accountant and other specialists, has been discovered.
In a forensic accounting inquiry, the accountant employs auditing and other investigative skills to examine what happened, develop hypotheses about what might have happened, and explain these hypotheses in a written report that usually assesses damages to an affected party.
If the case proceeds to trial, this report may be given in the courtroom. Although auditing skills are useful in this process, it also necessitates the employment of extra investigation techniques because the process extends far beyond the testing that serves as the foundation for audit.
A normal accountant’s traditional responsibilities at a firm included ensuring that the company has strong internal controls and auditing the books of account in order to prepare financial statements.
The need to detect and prevent financial fraud became a need in firms as the rate of financial fraud increased, and this was not a part of a typical accountant’s responsibilities. As a result, a void was formed – necessitating the hiring of a forensic accountant. In addition to uncovering financial crime, a forensic accountant can also serve as an expert witness in a court of law.
An expert witness’ job is to assist the judge in discovering the truth. This is also true in the field of accounting. Most attorneys now rely on these specialists’ expert advice and services. It is due to their financial knowledge and experience that they are valuable in financial litigation.
They can be involved in cases involving valuation testimony, fraud, financial analysis, damages calculation, family law accounting, electronic data analysis and bankruptcy. More importantly, accountants are frequently called upon to testify in court as professional expert witnesses.
As a result, financial data must be translated into simple, effective and clear testimony so that a judge can understand the results quickly. A rational analysis of numerous scenarios in a particular set of circumstances is required to make the report believable and appealing.
Forensic Accounting Roles
In its current state, forensic accounting can be divided into two categories: litigation support and investigative accounting. Other support services that generally fall under the area of investigative services, such as corporate intelligence and fraud investigation services, revolve around these two key categories. It would also be imprudent not to explain what litigation support and investigative accounting entail.
Litigation support is the provision of accounting assistance in a case where there is already or will be litigation. It focuses primarily on difficulties involving the quantification of economic damages; therefore, a typical litigation support assignment might entail assessing the economic loss or harm caused by a violation of contract. However, it also includes appraisals, asset tracing, revenue recovery, accounting reconstruction and financial analysis, just to name a few.
Contract disputes, insolvency litigation, insurance claims, royalty audits, shareholder disputes and intellectual property claims are just a few of the areas where litigation support works closely with lawyers. Investigative accounting, on the other hand, is concerned with criminal investigations.
Employee fraud, securities fraud, insurance fraud, kickbacks, and advance fee frauds are all examples of regular investigative accounting assignments. Many jobs, without a doubt, necessitate both litigation assistance and investigative accounting services.
In many circumstances, the combination of these services will not be enough to solve the problem unless a comprehensive fraud risk management and control programme is in place.
If management is serious about preventing or reducing the occurrence of corporate fraud in its various forms, the only viable option is to create an ethical work environment with a strong anti-fraud culture that is implemented seriously by senior management through the promotion of a clear anti-fraud policy.
Forensic Accountants’ Expert Testimony
Forensic examiners are supposed to be objective and unbiased scientific tools that may be used to educate investigators and then lawyers. This places a responsibility on them to conduct themselves in a way that preserves scientific integrity while also adhering to strict personal standards.
The bulk of forensic examiners, on the other hand, work for law enforcement or government agencies on behalf of police and prosecution. This work structure, which stems from the unusual evolution of forensic science in tandem with law enforcement, presents competing cultural influences that have been recognised but largely ignored in professional forensic literature until recently.
The prospect of being called upon to present and explain their results under oath in a court of law distinguishes forensic examiners from other scientists. They will next be asked to describe how they arrived at their conclusions and what they mean. The expectation that forensic scientists will appear in court to testify about their results and express a judgment on the relevance of those discoveries is the one quality that differentiates them from other scientists.
Not only will or should the forensic scientist testify as to what things are, but also as to what they mean. As a result, the forensic examiner’s anticipation of sworn expert witness and presentation of sworn expert testimony are distinguishing characteristics.
Because forensic examinations involve the competence to deliver sworn expert testimony, a trustworthy character requirement is presumed. This is true for the vast majority of persons who work in the legal system. In the worst-case scenario, forensic professionals’ mistakes or a lack of professional standards might result in unjust convictions.
In conclusion, Forensic accounting is a field of accounting that uses a set of investigative tools to uncover and deal with fraudulent acts both inside and outside a corporation. This method of investigation is insufficient because the fraudsters must be prosecuted in a court of law, and their cases may not be established without the assistance of a forensic accountant’s sworn expert witness.
Management, suppliers, contractors, employees and customers can all be investigated for corporate fraud using their knowledge. Typically, these investigations result in reports that pinpoint the source of the problem and quantify the damage.
Forensic accountants are used by lawyers in a wide range of civil issues – from contract disputes to large antitrust trials. Fraud and other improper conduct are investigated by corporate forensic accountants, which may or may not result in lawsuits.
They can examine prospective damage claims and advise corporate legal departments on whether or not to pursue action. Attorneys will engage expert witnesses at some point within a civil trial. Expert witnesses such as forensic accountants can be very useful at different phases of the litigation process.
The criminal justice system has a serious problem with forensic fraud. Retesting evidence, overturned cases, dropped cases and civil proceedings for erroneous convictions all result in a considerable financial penalty. It has the potential to endanger the lives of innocent defendants, the careers of forensic examiners engaged, and the integrity of their employers and co-workers.
- American Institute of Certified Public Accountants (AIPCA). 2003. Litigation Services and Applicable Professional Standards, Consulting Services Special Report 03-1. New York: AIPCA.
- E. O’Hara, and G. L. O’Hara, Fundamentals of criminal investigation, 5th ed. (Springfield, IL: Charles C. Thomas, 1980)
- Gafford, W. W. 1996. Engagement letters for experts in valuing damages in personal injuries and wrongful deaths. Litigation Economics Digest, 2(1): 31–53.
- W. Greenwood, J. Chaiken, and J. Petersilia, The criminal investigation process (Lexington, MA: D. C. Heath and Company, 1977).
- D. Lyman, Criminal investigation: the art and the science, 3rd ed. (Upper Saddle River, N.J.: Prentice Hall, 2002).
- Cleary and J. C. Thibodeous, Applying digital analysis using benfords law to detect fraud, auditing: A Journal of practice and theory, 2005, 77-81.
The writer is a PhD candidate, Certified Forensic Investigation Professional, Researcher, and Accountant for Serviceships Ghana Ltd & Cape Logistics Ltd) – Contact: 0246390969 – Email: [email protected]