Combination of Accounting and Auditing Investigative - Essay Example

Several techniques can be employed by one to perform a forensic analysis. The direct method is also known as the transaction method. In this method, the appraiser commonly examines:
• Cancelled checks and invoices
• Contracts and agreements
• Public records and notices
• Interview management and staff (multi-levels)
The indirect method is used when the conventional direct method is not productive. The most widely used techniques under the indirect method are:
• Cash T Method
• Source and Application of Funds Method
• Net Worth Method
• Bank Deposit Method

The importance of forensic accounting is unquestionable because whenever the company suspects any form of fraud or misuse of funds, they rely on forensic accounting to conduct an investigation and to find out the root cause behind the problem. So forensic accounting is one of the most relied tools that help in determining and also in controlling the problem. Forensic accounting follows certain well-planned procedures to carry out the whole process of detection. At first, the business structure has to be identified, and then an in-depth analysis has to be conducted for all company's data records. Such scrutinizing provides clues through which prevailing fraud and misconduct can be identified. This procedure also identifies any kind of irregularity related to assets and hence indicates fraud. The procedure of forensic accounting is efficient in conserving the company's precious time and time and money. This technique is often used by strategists in identifying and preventing fraud or misuse of a company's funds which may hamper the business. Many researchers have argued that the technique of fraud accounting is highly efficient in managing civil dispute that includes:

• Tort or contract-related damages and losses
• Breach of contract
• Compensation and business interruption claims
• Personal injury claims
• Company acquisition claims
• Warranty claims
• Business and share valuation
• Professional negligence claims

Forensic accounting can assist in probate cases, this technique is efficient in handling disputes that arise due to cases of overvaluation or the cases of property division between the estate's heirs. Forensic accountants are the experts which deal in disputes related to legal property problems. These experts are equipped with knowledge in the field of accountancy, auditing, evidence gathering, interviews, financial reporting system, and all other developments which are taking place in the national as well as international accounting sectors. Forensic accountants are well-trained for legal procedures and other court formalities.

Legal Issue
Forensic accounting is often used to get the true and fair picture of the business. Forensic accountants may help in this process. They can study the company’s financial statement and can also check whether there is any kind of inflation in the financial statement released by the company.

Managerial Perspective
Forensic accounting is a science that allows us to investigate the proper financial position of a company. Forensic accounting is not what accounting is what we perceive it to be. Forensic accounting can be used in legal issues and fraud accounting. It is also related to the risk assessment of the company. Forensic accounting is used to determine the true and fair picture of the accounting methods of the company. It is all about projecting a proper view of the future profitability of the company. Forensic accountants apply their skills to the areas of the business where the investigation of accounting books is needed. Ethics are very important. Being able to “think straight, talk straight” is needed in this field. (Ansari n.d.). Read More