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drp forensic accounting

drp forensic accounting - T he role of the forensic...

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The role of the forensic accountant has expanded significantly during the last several years for many reasons, including the requirement for greater scrutiny on corporate governance brought about by the Sarbanes-Oxley legislation and the widespread recognition of the risks and prevalence of financial fraud in today’s business environment. A forensic financial specialist is usually retained to support special investigations related to a broad range of subjects. This can include the financial impact of marketplace events, such as intellectual property infringement and anti-trust actions, financial reporting fraud, asset impairment and business valuation. These investigations occur in contexts such as civil litigation, alternative dispute resolution, insurance claim adjustment, internal fraud investigation, securities class action and internal corporate investigations. The questions posed to the forensic financial expert are increasingly more complex, requiring skill sets beyond a typical understanding of financial records and Generally Accepted Accounting Principles (GAAP). Knowledge of forensic accounting is only part of the equation. A team of forensic financial specialists with a variety of skill sets is needed to address the many challenges posed by a case. For example, the logistics of finding data in numerous locations such as tape drives, personal computers and BlackBerry wireless devices require forensic technology specialists who are familiar with electronic data systems and who can identify and ferret through electronic storage devices to find case critical documents. An allegation of market manipulation often requires an understanding of economics, finance and how financial investment firms operate to fully document issues of
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causation and actual loss sustained. Permanent impairment of a company’s value due to an alleged act will necessitate the use of accepted valuation skills. This complexity has created a need for a multidisciplinary profession of “Financial Forensic Experts” who are proficient in accounting, finance, economics, computer technology, statistics, valuation and legal processes. Specific industry expertise is also an important element in the equation, making this team a group of highly-specialized experts indeed. The investigative forensic team rarely has access to all of the relevant information related to a case. Therefore the ability of the team to respond with absolute certainty is not always possible. Manipulation of records, destruction of evidence, time limitations on completing the investigation and restrictions imposed by the litigation investigative process by the parties involved are some of the reasons that certain data cannot be found. With this in mind, the forensic team must utilize a number of skills and techniques to reconstruct or uncover the facts. As many damage calculations require construction of a theoretic reality “but for the event,” the team must also be adept at working through the facts and a hypothetical situation as if no damage
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