An Introduction to Forensic Accounting

Forensic accounting is the working together of accountants and lawyers and the courts to achieve a fuller understanding of financial matters to provide expert evidence that can prove particular legal principles or statutory prescriptions in a case involving crime or civil law impropriety.

Accountants are accustomed to working with numbers as data while lawyers are concerned with legal principles and prescriptions to establish certain legal arguments using evidence from all sources including financial information. However, financial information is critical as evidence in matters involving fraud and other corrupt practices in organisations and entities where financial information is used. The forensic accountant can use mechanisms and measures to examine financial information to identify “red flags” that can be investigated more fully to establish the presence of wrongful practices and activities. This is critical to restore confidence of investors and other affected persons where criminal acts and wrongdoing have occurred and identified.

Forensic accounting is a relatively new discipline crossing over from accounting into the legal field as expert witnesses. However, forensic accountants can do more than providing an expert report and give oral evidence as an expert witness. They can assist legal practitioners develop a case and to target sources of financial information to identify wrongdoing that can identify physical sources for further investigation. This is most vivid in criminal law cases but it is equally valid for civil matters such as family law matters where finding the money is critical for the courts to deliver satisfactory judgment.

On the successful completion and award of the degree of Master of Forensic Accounting from the University of Wollongong, Ian Tunstall is qualified to study and research more about forensic accounting and its relationships with law. While forensic accountants are expert witnesses in a court case they need to understand their role as expert witness and the preparation of an expert’s report. Also, they need to understand the role of the lawyer presenting or defending a case. Lawyers need to establish certain legal principles or statutory prescriptions using evidence including financial evidence to prove or defend the case. Lawyers need to understand the effective role of the forensic accountant to guide the preparation of the case and the delivery of evidence at trial. Lawyers are guided by court rules and practice notes to ensure forensic accountants understand their roles and boundaries to avoid their evidence being minimised as evidence or dismissed. This approach is the thesis of these articles in addition to the practice of forensic accounting and law and the courts.

The expert’s report is critical for the presentation of evidence involving financial information identifying wrongdoing and other criminal acts. This topic will be explored in these articles together with other aspects of litigation. Ian received the Jirsch Sutherland Annual Prize for Independent Accounting Experts Report as part of the Faculty of Business Students Awards 2014.