Gathering Data in Forensic Accounting
Forensic accounting stands at the intersection of accounting and criminal
investigation. Similar to a traditional colleague, a forensic accountant works with financial
records. However, instead of noting trends and providing suggestions to the management,
this specialist searches for evidence of fraud (Jordan, 2022). As a forensic accountant, I
would analyze information from multiple sources in order to reveal discrepancies and
errors pointing to potential fraud schemes. Specifically, I would study audit results to
determine the validity of financial statements. In addition, I would study supply and
service contracts to find strange patterns and trace corporate fraud disguised as legit
business deals. Furthermore, I would interview staff members of companies involved in
suspicious activities to confirm the evidence gathered after financial records and contract
analysis. Overall, the type of data analyzed in forensic accounting is determined by the
initial source of suspicion. However, financial statement analysis is usually the first step,
whereas contract analysis and interviews act as a failsafe that helps reveal the truth or
prevent false accusations.
Since forensic accounting is a complex profession, an analyst has to rely on special
tools to ensure the quality and reliability of the gathered data. The fundamental principle
of forensic accounting lies in finding patterns, actions, relationships, and transactions
pointing to fraud schemes. For that purpose, professional accounting companies utilize
analytics repositories that identify and consolidate warning signals and conduct network
mapping to explore potential fraudster relationships (Deloitte, 2018). In addition, forensic
accountants employ algorithms that sift through massive amounts of data to identify
deviations from ordinary behaviors or compare cases to historical fraud schemes (Deloitte,
2018). Ultimately, the data gathered by a human analyst gets extensively checked by
powerful data-mining algorithms that help identify rare events and prepare the evidence
for presentation.
References
Deloitte. (2018). Forensic analytics in fraud investigations: Identifying rare events that
can bring the business down.
https://www2.deloitte.com/content/dam/Deloitte/us/Documents/finance/us-
forensic-analytics-in-fraud-investigations.pdf
Jordan, J. (2022, March 27). What is forensic accounting & how do forensic accountants
investigate? NarraSoft. https://narrasoft.com/how-to-forensic-accounting/
