Forensic accountants play a critical role in financial exploitation cases. While almost anyone can scan through a bank statement and get a general idea of the activities that have taken place, often we are presented with a more complex case of financial abuse, especially in situations that have gone on for years before being discovered or reported. These types of cases usually result in a messy web of activity, with thousands of transactions and financial documents to sort through and it may be necessary to engage a forensic accountant to provide a complete financial analysis to determine the full extent of the financial exploitation that has taken place.
The first step in any financial exploitation investigation is to obtain background details about the victim and of the suspected financial abuse, and to collect financial records. Forensic accountants work directly with attorneys, Adult Protective Services (APS) or other similar agencies, the victim, family members, and/or law enforcement to gather information, especially if a subpoena is necessary to obtain financial information. Forensic accountants will use background information about the victim to help determine what financial data needs to be obtained as part of the investigation, to provide context to transactions and events that may be uncovered during the analysis of financial records, and to allow for a clearer understanding as to who was responsible for initiating transactions in victim accounts.
Once sufficient financial records have been collected, the forensic accountant can easily extract and organize all the transactions using various software and technical skills. Transactions from any number and type of accounts may be sorted by payee/payor, type of transaction, spending category, or any other relevant classification to the case. From there, the data is then organized into schedules or other formats to easily analyze account(s) activity and begin to build a case. Analysis of the data cannot only determine a dollar value of payments to or assets taken directly by the suspect, but can also establish clear patterns and timelines of spending to uncover the “not-so-obvious” ways fraud has occurred, discover other individuals who were involved, find other missing assets and accounts where further financial exploitation may have occurred, and any other information that may not be detected by simply scanning through bank statements. Based on background information and supporting documentation provided, the forensic accountant will go through each transaction or group of transactions and attribute the spending to either the victim or the suspect(s). However, if sufficient support has not been provided for certain transactions, the accountant may deem such spending as unaccounted for and provide recommendations to obtain further financial records. Often follow up questions and requests are necessary to complete a full forensic analysis.
Forensic accountants will work closely together with attorneys, law enforcement, or victims and family members to determine the best form of deliverables for every case and situation. They can provide organized schedules of bank account activity that easily shows the sources and dispositions of funds, or full reports that provide further case detail, such as a comprehensive summary of the transactions that occurred, the basis for the attributions of spending, and other relevant background information. Forensic accounts can also prepare other more complex analyses to further support the findings of the case, such as a financial projection of the available funds if the fraud had not occurred. Further, if investigations lead to legal proceedings, such as guardianship/conservatorship or criminal prosecution, forensic accountants may be called to testify on their findings in court.
Forensic accountants bring a significant amount of value to any financial exploitation case. Financial abuse can be complicated and often emotional for all involved, and a forensic accountant will provide the necessary expertise and knowledge uncover fraud quickly, efficiently, and thoroughly.