Introduction:

Forensic accounting is a new generation tool that has adopted modern technology to detect financial fraud. The implementation of virtual analysis and record-keeping has created a new genre in accounting by reducing the chances of error and fraud. Applicants with excellent numerical skills are generally employed as forensic accountants. They combine their auditing and accounting knowledge and abilities with specific investigative skills. This helps them to identify the fraudulent activities if there are any, and to determine the reasons behind the suspicious financial activity. The organization authorities of businesses can use this information as convincing evidence in trials. Forensic accountants represent reports of financial findings as evidence during hearings and stand out as expert witnesses. As they have expertise in the field, their testimonies often lead to the recovery of lost money in a scam. The precise application of specific software tools makes a forensic accountant different from an ordinary chartered accountant. Various tools and methods help the forensic accountant to check all the reports and store the records of the transactions and billing reports. Forensic accounting is the inevitable future of accountancy as the embodiment of technology has been proven to be quite successful in detecting and preventing fraud. Evaluating the success rate of forensic accountants, the youth tend to lean forward in this field to build their careers. The literature delves deeply into the role of forensic accountants while investigating claims and fraud. The scope and purpose of a forensic accountant are broad and highly significant in the present-day scenario. Forensic accountants are highly skilled, knowledgeable, and professional and have a shortage and expertise to analyze malpractices and initiate necessary steps for the growth and development of the business.

Furthermore, small-scale businesses or companies do not have the resources to employ forensic accountants; therefore, financial scandals, scams, and fraudulent activities are more. The present role of forensic accounts focuses on controlling organizational policies and procedures misguided by unauthorized or illegal sources. Hence stringent measures in this aspect are highly beneficial because it prevents loss and enhances operational efficiencies significantly. The major function of forensic accountants is to detect fraud in financial statements so that, in the future, the business can overcome the potential risks quickly. Early detection of fraud is also cost savings for the company as they do not have to invest a hefty amount in the future to mitigate the risks of fraud.

Available at:  https://ssrn.com/abstract=4870537 

Commentary: This is a good primer for attorneys on how forensic accounting can assist in their cases. While this article, unfortunately but also predictably, focuses on how forensic accounting can be used in bankruptcy cases to detect debtor fraud, consumer bankruptcy attorneys (particularly those graduates of Max Gardner’s Bankruptcy Boot Camp) know that forensic mortgage accounting is actually used more and more to detect fraud by creditors of all stripes, but especially mortgage servicers. Preeminent among those consumer forensic mortgage auditors is Jay Patterson at Full Disclosure L.L.C.. These professionals should be used more regularly in Chapter 13 cases, with their fees for auditing mortgage claims being paid either through the plan or, when instances of mortgage servicer fraud or incompetence is invariably found, by the mortgage servicer through any of a number of fee-shifting statutes.