It seems that wherever there is money, there is bound to be complications. Ask any experienced entrepreneur and they will tell you that running a business is no walk in the park especially when it comes to economic crime prevention. Business financials can quickly become extremely complex and understanding them thoroughly is essential to protecting yourself and your business from financial crime.
According to the Global Economic Crime and Fraud Survey, economic crime in South Africa has reached pandemic levels. Unfortunately, to most of us this is not news. The 2018 survey found that 77% of SA businesses have experienced some form of economic crime in the past 2 years. Making South Africa the country that reports the highest rate of economic crimes in the world. Forensic accountants play a pivotal role in making sure that these cases are prosecuted and that these criminals are brought to justice.
Forensic accounting is a specialised type of accounting where financial analysis, investigation and auditing come together. Forensic accountants analyse financial data in order to produce a thorough examination of a business or individuals’ financials. These accountants are specially trained to carefully comb through financial data in order to prevent, detect, investigate and report inconsistencies related to criminal activity.
Forensic accountants need to be analytical, patient, persistent, curious and extremely attentive to detail. The analyses and reports that they produce are often used as evidence in legal proceedings to explain the nature of a financial crime.
There are two main types of forensic reports that a forensic accountant can produce:
A pre-report assessment
Which is an assessment that highlights the outstanding information that is needed for a in depth forensic accounting report. It is a high-level review of the available financials and serves to identify any irregularities and matters that require clarification. This report informs the next steps to be taken in order to have a full forensic accounting report compiled.
A Forensic accounting report
These reports can be presented to an actuary for final calculations to be made, as evidence in court or used in conjunction with a charted accountant’s testimony. From this analysis instances of fraud, corruption, bribery and extortion can be identified. In the case of fraud, it becomes the forensic accountant’s duty to find out exactly what happened, how the incident played out, who is responsible for the crime and what could possibly be done to fix the damage.
Forensic accountants do more than criminal investigations. They also make projections about the future performance of a business. They do this by looking at the historical profitability of a business and the expansion that took place within that business to extrapolate the growth potential that that business has.
Technology is playing an increasingly large role in the world of forensic accounting. Advanced software programs mean that accountants are now able to examine far larger amounts of data and produce more accurate results than would have ever been possible by manpower alone. As an additional bonus, thanks to the efficiency of these programs accountants are able to produce results quicker and for less money than ever before.
There is no doubt that navigating the complex world of business is tricky and full of pitfalls. Hiring an experience, ethical and credible forensic accountant can ensure that you are protected against fraud. The use of computer technology has made the processes involved in data analysis quicker than ever before.