What Forensic Accountants do
In certain situations, an institution’s board, or even a state institution, may employ the services of a forensic accountant in order to establish wrongdoing or otherwise.
In that case, the forensic accountant will have to examine both financial and non-financial records and conduct a forensic financial analysis even when the traditional auditing has already been done.
• Forensic financial analysis entails an intense study of an institution’s financial statements, whether audited or unaudited, to provide an affirmation of the accuracy of the reported financial performance and financial position, as well as non-financial metrics, as contained in the financial statements.
• The forensic accountant utilises auditing, accounting and investigative skills acquired through rigorous training and experience to be able to carry out this task, mostly for use as evidence in legal proceedings.
The forensic accountant tries to obtain evidence of bias in certain decisions taken by management, and sometimes by the board, when they are preparing and authorising financial statements.
Who then are Forensic Accountants?
The Association of Certified Fraud Examiners (ACFE) describes forensic accountants as “fraud examiners who are experienced, trained, and knowledgeable in the different processes of fraud investigation: how to interview people (especially the suspect) effectively, how to write reports for court, how to provide expert testimony in court, how the legal system works”. Contrarily,
Tommie Singleton et al. (2006) opine that financial auditors are those who utilise “the process of evaluating compliance of financial information with regulatory standards, usually for public companies, by an external, independent entity”.
Is there a need for Forensic Accountants?
• Of course, there is the need for forensic accounting, and for that matter, forensic accountants, in the ever-changing corporate environment.
The benefits that forensic accounting brings are enormous.
• Even though professional accountants may perform the tasks of forensic accountants to some extent, there is a need for experts to be trained specifically as forensic accountants.
Recognising the need for forensic accountants in society, and specifically in Ghana, some professional bodies have registered with the Registrar-General Department to provide professional services, specifically in the area of forensic accounting.
One of such notable professional bodies in Ghana is the Chartered Institute of Tax Law and Forensic Accountants, Ghana (CITLFAG). ICAG also engages in forensic accounting.
This clearly shows that gradually, there is a realisation of the distinctive functions of forensic (forensic auditing) and financial auditing (normal audit).
• Also, some universities in Ghana have started enrolling students into forensic accounting and fraud examination programmes as a result of the need for such expertise, and, for that matter, experts in various institutions in the country and elsewhere.
• As far as there is a principal–agent relationship, and there is an increasing quest for institutions to meet targets, forensic financial analysis is increasingly important. Forensic financial analysis can uncover situations where some institutions try to find ways to shortchange the public, shareholders, tax authorities and other stakeholders by engaging in creative accounting of their financial statements and other financial information to achieve a particular objective.
Usually, forensic accountants are brought into the picture after there is ample evidence or suspicion of the commission of fraud.
They are to provide proof or otherwise of the occurrence or existence of fraud.
Forensic accountant’s report and the law courts
Even though forensic accountants are experts, they often translate the complexities in the results obtained from their analysis into a form that an ordinary person could understand.
This aspect of their work is very necessary because in situations where cases relating to fraud are on trial in a court of law, the jury, mostly made up of ordinary persons, has no expertise to interpret the report of the forensic accountant.
The forensic accountant can also serve as an expert witness to testify in a court of competent jurisdiction.
More so, the work done by a forensic accountant can be tendered in as evidence in a court of law in legal proceedings, in order to prosecute people who commit fraud.
Forensic accounting enables organisations to put in corrective measures to correct weaknesses identified in the governance systems, financial systems, and processes. This helps to prevent the worst situations that may befall the organisation in the future.
Analytical tools used by forensic accountants
Forensic accountants often use both basic and advanced techniques in line with their work to achieve desirable results. The choice of these tools is dependent on the complexity of the case under examination.
Some basic techniques often used include, among others, horizontal analysis, vertical analysis, budget variance analysis and operating ratio analysis.
Some of the advanced techniques often used by forensic accountants in complex situations include the Beneish M–Score, Altman Z–Score, F–Score, and cash realised from operation technique (CRO). The others are Asset Quality Index (AQI), Dechow–Dichev Accrual Quality, and Benford’s Law Analysis.
The type of technique to employ depends on what the investigation seeks to achieve, and sometimes the nature and complexity of the case to be examined.
It is expected that the introduction of forensic accounting programmes run by professional bodies and academic institutions will help train more forensic accountants so that the occurrence of fraud will be curtailed.
• Charles Ekornunye Ansah is a member of the Chartered Institute of Tax Law and Forensic Accountants – Ghana (CITLFAG), and an employee of the Ghana TVET Service. email:
• Stephen Mensah Dzodzodzi (PhD, CA, Ch. EE, Ch. PE, CGMA) is a chartered petroleum economist, tax and management consultant and CEO of Centre for Professional Studies, Ho.
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