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Forensic accounting refers to a strategic approach whereby financial data and non-financial information are gathered, monitored, studied and analysed for fraud-prevention purposes. While the standard accountant focuses on balancing books and maintaining records, the forensic accountant intensively investigates financial activity for evidence of misconduct.
Business accounts can be extraordinarily complex, making it difficult or even impossible for problems to be detected without thorough investigation. To overlook or ignore evidence of monetary misgivings can lead to devastating legal and financial consequences. It is the job of the forensic accountant to look for, prevent and pre-empt fraudulent activity, for the protection of the respective business or organisation.
The digital era has made it easier than ever before for criminals to tamper with business accounts and generally defraud others. Of the 500,000+ new businesses that are established every year, the overwhelming majority rely on computers and the internet. Each time security experts intensify their efforts to minimise external risks, hackers push back with equal force.
Research has also shown that internal ‘white collar’ crime is also a growing problem, contributing to more than $1 trillion in combined losses every year. The contemporary fraudster has a tendency to be highly capable in covering their tracks and leaving little to no evidence behind. Conventional accountants and business managers alike simply do not have the knowledge, the specialist skills or the available time to carry out comprehensive financial audits and investigations.
By taking a proactive approach to accountancy, a business is able to safeguard itself from both devastating losses and dire legal consequences. Forensic accountants investigate financial activities and records in comprehensive detail, searching for any evidence whatsoever of fraudulent or unusual activity. Where detected, the required evidence is gathered, collated and ultimately presented in a clear and concise manner – often in a court setting.
Forensic accounting represents the only realistic approach to gaining a deeper understanding of what’s going on behind the scenes in a financial capacity. As such, for any business with an interest in minimising losses and maximising revenues, it is an invaluable specialism.
The primary benefits of quality forensic accountancy include:
1 –Minimised Losses
The primary benefit of strong forensic accounting is the way in which it can help minimise and prevent unnecessary loss. Fraudulent activity and general financial discrepancies cost the business community extraordinary sums of money, every hour of every day. The forensic accountant ensures this isn’t allowed to happen.
2 – Improved Efficiency.
Forensic accountants play a key role in examining and investigating current financial processes and standards, which can help in the identification of more effective and efficient solutions. The whole process is one of detecting problems and areas of improvement for the benefit of the business.
3 – Reduced Exploitation Risk
By proactively patching any obvious ‘gaps’ in current financial operational standards, the forensic accountant can ensure that risk of future exploitation is significantly reduced. It’s a case of protecting the best interests of the business before fraudulent activity can take place.
4 – Avoidance of Legal Problems
Dealing with instances of fraud (internal or external) can be spectacularly disruptive and costly for the business. In an ideal situation, forensic accountancy can be used to avoid such scenarios from ever occurring by both preventing fraudulent activity and nipping any problems detected in the bud.
5 - Improved Brand Reputation and Authority
A brand that leaves itself wide open to manipulation and fraud is a brand that is very difficult to respect, trust and work with. Fraud can do the kind of reputational damage that is borderline impossible to repair – hence the importance of thorough and ongoing forensic accountancy.
Forensic accounting is a highly-specialist field of growing relevance and value to the global business community. Experience builds professional expertise, but there is also a great deal of theory to master before stepping into a working accountancy role.
Studying forensic accountancy at-length and in-depth is crucial for anyone interested in joining this dynamic and rewarding profession. By exploring the investigative process, the psychology of the modern fraudster and how to effectively build a case, you prime yourself for the next crucial step up the career ladder.
As forensic accountancy is a somewhat niche specialism, competition among qualified candidates tends to be comparatively low.
Here at Oxford Home Study College, each of our forensic accountancy courses has been engineered exclusively with distance learning in mind. Study at home for the chance to earn a recognised certificate, with full tutor support available at all times.
Explore the fundamentals of fraud detection and prevention with our Level 3 Certificate, or take a much more detailed look at the profession with our Level 4 Diploma. With all course materials provided and no deadlines to worry about, we’re proud to make distance learning uniquely flexible and enjoyable. We are proud to announce that we have recently added to our website some of our very popular courses for absolutely free. Check more details about free online courses here.