Oral Forensic Accounting
Forensic accountants need to be comfortable speaking in front of an audience because they will
communicate with clients regularly throughout an engagement. If the customer insists on hearing the
forensic data presented verbally, they will get that. This may be necessary for confidentiality,
improved clarity, or anything else. Ineffective customer engagement and a shaky presentation due to a
lack of preparation are potential pitfalls of an oral presentation (Özcan, 2019). Very skilled workers
are required to deal with this threat. The information presenter should have adequate preparation. So,
the forensic accountant must have excellent public speaking skills and be able to explain complex
financial concerns to a board of directors, legal counsel, and financial regulators at any time at the
client's request.
Clients may want oral reports for various reasons, including privacy, competitive advantage, or even
cost savings. Forensic accountants benefit greatly from knowing their client’s goals and expectations
before beginning a partnership (Ozili, 2020). It will also help the forensic accountant avoid trouble
with the law, the bank, and elsewhere in the business world. It is recommended that the forensic
accountant sufficiently produces a written outline and memo-to-file to support the material given
during the oral report in order to mitigate these potential future dangers (Afriyie et al., 2022). In
addition, the client engagement's assumptions, constraints, and outcomes should all be spelled out in
writing.
A deposition is one type of oral report in which a forensic accountant may be called either a fact
witness or an expert witness. The court reporter will record all the testimony during the deposition
(Özcan, 2019). A lawyer who intends to hire a forensic accountant can, for instance, ask the
accountant for a rough valuation estimate of the company.
In order for an investigation to be a proper one and meet all requirements, it is always necessary for
the forensic accountant to provide proper, honest, and accurate written reports to the management of
the company. On the other hand, the accountant can also provide oral reports to the people who are
responsible for monitoring and supervising the investigation or the people who are associated with the
company and the investigation. One of the most important and most frequent times when an
accountant has to make an oral report is when the accountant is summoned to testify in court based on
their investigation. When this has to happen, the accountant is called upon to be an expert witness and
they may be cross-examined by the opposite party. Any statements, findings, and testimony that are
communicated orally are recorded as part of the court documents. Oral reports can be prepared quickly
and only at the client’s discretion. “If the client either intends to seek reimbursement for the costs of
the fraud and investigation for its insurance carrier or wishes to refer the matter to a law enforcement
agency for prosecution, the analyst should prepare a written report. If these issues are not important to
the client, but there are concerns about confidentiality or legal privilege, an oral presentation may
suffice” (Driskell III, 2019). Whether or not an oral or written report will be conducted will be at the
discretion of the client, however: the accountant needs to always prepare a written statement just to
backup the oral report. Accountants do give oral advice to clients sometimes whenever they have
questions. Accountants have to learn how to protect themselves by always keeping a backup plan by
recording these transactions or still keeping a written log of the conversation.
During an engagement, a forensic accountant may be asked to convey their findings through an oral
report. An oral report is a report that is verbal without written documentation. Clients may request an
oral report because of cost, secrecy, confidentiality, or a competitive advantage (Rufus, et al, 2015).
There are a few reasons why you should not give an oral report. Some of those reasons are that the
information may be misunderstood and there is no way to confirm what was or wasn’t said. Clients
will prefer oral reports when they are concerned with legal privilege and discovery issues. z If there is
no report, evidence will not be available.
One example of a situation is if a forensic accountant is engaged to find if fraud occurred inside of a
company. z The client may ask for an update to find out what the forensic accountant has found. z If the
accountant gives the client an oral report, the client may deny that the forensic accountant informed
them of the indication of fraud. This could lead to legal ramifications for the forensic accountant. The
client may bring a lawsuit against the accountant alleging that the accountant did not tell them the
extent of the fraud. Since the report was not written, there will not be any evidence to the contrary.
The best thing for a forensic accountant to do is to provide a written report. If the client is set on an
oral report, the forensic accountant should prepare a written outline, including a memo-to-file. This
will document the information provided in the oral report. Both reports should be consistent with the
information because they are subject to discovery.
z z Very often, clients request oral reports from a forensic accountant instead of written reports. An oral
report is “verbal in form with no written documentation. While this may be desirable from the
engaging attorney’s perspective (given the discovery issues previously noted), it creates several
potential pitfalls for the forensic accountant. For example, the information relayed in the oral report
may be misunderstood by the recipient and later misrepresented to others, either intentionally or
unintentionally. Without documentation, there is no way to confirm the essence of the
communication—what was (or was not) actually said” (Rufus, 2015, pg. 378). Conversely, a written
report “is more consistent with the common perception of what a “report” should be. Although
documentation avoids many of the pitfalls previously noted for oral reports, written reports introduce
their own challenges. Most notably, any representation that is put in writing can be reviewed, parsed,
and analyzed in any number of ways to challenge the credibility of its source. Thus, the threshold for
quality and accuracy is much higher. Although written reports share the same basic form, they differ in
other aspects of structure, such as content, organization, and level of detail. In the following sections,
we describe three types of written reports—summary, detailed, and calculation” (Rufus, 2015, pg.
379). Typically speaking, a client will ask for an oral report over a written report for a number of
reasons. It can be cost effective, good for confidentiality, and can even provide some sort of
competitive gain. Perhaps the most important is that it leaves no room for misunderstanding the
intentions. Yes, it could lead to misunderstanding, but if there is a general message that is to be
conveyed with regards to a financial audit, an oral report can summarize the most important aspects to
take away from. Auditors should still provide things such as a written outline of the oral report and
memo-to-file that documents the substance of the report.
A good example of a situation where an oral report would be more beneficial is in a court of
law, more specifically, a deposition. When a forensic accountant serves as an expert witness, it is
important for them to provide their findings in an oral manner, followed by supporting documentation.
Having a full report may not be as beneficial as providing an explanation orally as time is limited.
Towards the end of a forensic accounting engagement, it is the forensic accountant’s responsibility to
prepare a report, either written or oral. Most clients will request written reports, but certain situations
promote oral reports, such as legal privileges or discovery issues (Driskell III, 2019). Oral reports are
advantageous because they can be prepared quickly, but are only able to provide a summary of
information (Driskell III, 2019). While a client may request an oral report, it is best practice to
document any oral advice given to clients to protect all parties (Wolfe & Ferenc, 2013). When
preparing to document this information, it is vital to include the date, facts and advice provided,
pertinent disclaimers, note that no legal advice has been or is being provided, and any follow-up
information (Wolfe et. al., 2013). It is important for the forensic accountant to have a full
understanding of the client’s motivation for the oral report, whether fraud is suspected or it is cost
related (Rufus, Miller, & Hahn, p. 379, 2015).
When an oral report is requested, it is important to consider possible reasons why, such as cost,
secrecy, confidentiality, or competitive advantage (Rufus, i.e.).
A client may choose to receive an oral report instead of a written report in a situation where secrecy is
most important. z A lack of a written report would not allow the other party, to see and eventually cross-
reference the forensic accountant while he was on the stand testifying. This action would theoretically
put the other party at a disadvantage. As a side note: according to a news article, 43% of respondents
identified Effective oral communication as the second most identified core skill trait in forensic
accounting (Accounting today). Based on this information, oral reports are not a skill that can be
disregarded.
References
Driskell III, D. (2019, August). Conducting forensic accounting and internal investigations. Retrieved
March 30, 2023, from https://willamette.com/insights_journal/19/autumn_2019_1.pdf
Rufus, R., Miller, L., Hahn, W. z (December 18, 2015). Forensic Accounting. [[VitalSource Bookshelf
version]]. z Retrieved from vbk://9780133867534
Wolfe, J., & Ferenc, S. B., CPA. (2013, October 1). Write it down: The importance of documenting
oral advice. Journal of Accountancy. Retrieved March 30, 2023, from
https://journalofaccountancy.com/issues/2013/oct/20138366.html
https://eds-p-ebscohost-com.ezproxy.snhu.edu/eds/pdfviewer/pdfviewer?vid=2&sid=15140a69-db92-
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Rufus, R., Miller, L., & Hahn, W. (2014). Forensic Accounting. Pearson Education (US).
Rufus, R. J., Miller, L. S., & Hahn, W. (2015). Forensic accounting. Pearson.
Driskell, F. (nd). Conducting Forensic Accounting and Internal Investigations.
https://www.willamette.com
Rufus, R., Miller, L., Hahn, W. (2015) Forensic Accounting. Pearson Education
Wolfe, J., Ference, S. (2013, October 1). Write it down: The importance of documenting oral
advice.https://www.journalofaccountancy.com
Driskell III, F. Dean. (2019). Conducting Forensic Accounting and Internal Investigations. pg. 10.
Retrieved from: https://willamette.com/insights_journal/19/autumn_2019_1.pdf
Afriyie, S. O., Akomeah, M. O., Amoakohene, G., Ampimah, B. C., Ocloo, C. E., & Kyei, M. O.
(2022). Forensic accounting is a novel paradigm and relevant knowledge in fraud detection and
prevention. International Journal of Public Administration, 1-10.
https://doi.org/10.1080/01900692.2021.2009855
Özcan, A. (2019). Analyzing the impact of forensic accounting on the detection of financial
information manipulation. Manas Sosyal Araştırmalar Dergisi, 8(2), 1744-1760.
https://doi.org/10.33206/mjss.486662
