Forensic Accounting & Forensic Auditing
The first actor to play the role of world’s famous detective, Sherlock Holmes, was an accountant. It has to identify the difference between three terms forensic Accounting, forensic Auditing and forensic Investigation.
In the 19th century Scotland, a young accountant advertised his expertise in arbitration support in 1824. In late 1800’s and 1900’s articles appeared covering the matter on an expert witness, evidence arbitration, and awards. It has been said that phrase “Forensic Accounting” was first published in an article in 1946 by Maurice E Peloubet, a partner in a New York accounting firm.
The word Forensic means “suitable for use in a court of law” or “relating to the application of scientific knowledge to a legal problem”. Forensic Accountant, also known as a fraud investigator, fraud auditor or investigative auditor, investigative accountant. They mostly work in accounting firms for investigating tax investigations, mergers, acquisitions, economic crime investigation, civil litigation support, special audits and also in a terrorist investigation. It is basically the practice of utilizing accounting, auditing, and investigative skills to assist legal matters.
Forensic Investigation is to carry out an inquiry in such a manner that the outcome will have application to a court of law. It may be grounded in accounting, medicine, engineering and some other discipline.
Forensic Audit is an examination of evidence regarding an assertion to define its correspondence to established criteria carried out in a manner suitable to the court. For example, a forensic audit of sales records to determine the quantum of rent owing under a lease agreement, which is the subject of litigation.
What’s the difference between forensic accounting and forensic auditing?
The scope of the job has been defined in both fields. The scope of the job of forensic accounting is to support the legal and administrative decision based on present analytical accounting and financial information. While on another side the opinion on financial statements of business entities considering all criteria used in its preparation. With respect to periodicity the forensic accounting when necessary and particularly according to periods stipulated by the Jude or client. In auditing, the reporting period is covering the fiscal year to substantiate the activities of accounting period.