Forensic accounting cases can be a minefield of complications, disputes, and potential stumbling blocks. This in addition to the extremely high stakes that come with such cases. So, how do you know if a forensic accountant is the best option for you?
Over the years there have been a select few highly famous examples of forensic accounting cases where specialist accountants have resolved situations that will be remembered for decades.
In this blog we discuss what forensic accounting means, explore some of the most famous examples of forensic accounting cases.
What Does Forensic Accounting Mean?
Forensic accounting is a form of accounting that utilises all the necessary skills of a traditional accountant, plus auditing and further investigative skills. Forensic accountants are instructed to conduct thorough investigations into the finances of individuals/businesses — to provide clear and concise analysis that would be suitable for use in legal proceedings.
Forensic accountants will look past the numbers in any case and investigate the business itself to determine the realities of the situation.
Now we’ve covered the basics of forensic accounting, let’s take a look at a few examples of the practice in action.
Examples of Forensic Accounting Cases
Forensic accountants can be instructed to assist with all manner of different types of cases, from commercial and matrimonial disputes, to fraud and financial crime and beyond. Due to the diversity of the field, forensic accountants can be instructed by all manner of different people, including companies, lawyers, creditors and insurers.
Examples of forensic accounting cases includes:
Commercial Disputes
Commercial disputes are a varied field of conflict. They can cover:
- Contractual disputes
- Transactional disputes
- Shareholder/partnership disputes
- Professional negligence
- And more
As a result of the vagueness of a ‘commercial dispute’ case, a forensic accountant is ideal as they will conduct a detailed and thorough investigation of the situation and uncover any and all issues, as well as their root cause to help provide a tailor-made solution and plan for their client.
During a commercial dispute resolution, the main heavy-lifting from a forensic accountant will come during this investigative stage. However, they can also work to quantify damages, and act as an expert witness should the situation require it.
Divorce and Matrimonial Disputes
Dealing with divorce and matrimonial disputes is considered one of, if not the most difficult form of dispute a forensic accountant can be instructed to assist on. This is due to the heightened level of emotion present, and the need for the dispute to be resolved as quickly and as fairly as possible.
The core role of a forensic accountant during a matrimonial/divorce dispute is to ensure that all assets and income are distributed fairly. They will achieve this by leaving no stone uncovered in the pursuit of the truth.
The process of valuing assets or property/business interests can get incredibly complicated incredibly quickly if you are not careful — funds can be hidden out of sight either abroad or with friends and family.
A forensic accountant ensures fairness prevails and that the possibility of one side pulling the wool over the eyes of the other is minimised as much as possible.
Financial Crime
Examples of types of financial crimes that a forensic accountant can expertly assist with include allegations of:
- Theft
- Accounting irregularities
- Money laundering
- Fraud
Generally, in financial crime cases, the prosecution’s case will be based primarily on their own interpretations of facts and figures, and not based on evidence from experts in the fields. With the assistance of a specialist like a forensic accountant, this case can be fought, and often beaten.
Additionally, a forensic accountant will be adept at helping present the evidence. A key skill of a forensic accountant is the ability to clearly and concisely present their findings so laymen will understand, this is particularly helpful in a court setting.
A forensic accountant can also act as an expert witness in court, giving key evidence under cross-examination. They will be confident in dealing difficult questions and utilise their expertise to help swing the case in your favour.
Contentious Insolvency
It is incredibly common for there to be some element of unhappiness and dispute in any case of business insolvency. However, when it comes to the additional contentious cases of insolvency, a forensic accountant could be the difference between company directors being faced with serious ramifications.
Common causes of contentious insolvency include:
- Serious mismanagement
- Fraud
- Wrongful trading
Without the expertise of a specialist forensic accountant, cases of contentious insolvency can be hugely difficult to navigate and resolve amicably. There is a high possibility for the situation to devolve and snowball into a significantly larger issue for all parties if not handled correctly.
Forensic accountants have the keen eye for details when analysing key information and documents that could be vital in securing a positive outcome.
Financial Fraud
Cases of financial fraud are highly complicated. As a result, the actual amount of attention-to-detail required in pursuit of a fair conclusion can be too much for a standard legal team to handle on their own. This is where the input of a forensic accountant can make or break a case.
A forensic accountant will offer all manner of different services to investigate financial fraud, this includes:
- Asset tracing and recovery
- Corruption investigations
- Bribery investigations
- Quantification of loss
- Background checks
In a financial fraud investigation, the forensic accountant will be responsible for building a compelling, strong case that will stand up in court under cross-examination.
Famous Forensic Accounting Cases
Across the course of modern history, there have been near endless examples of forensic accounting cases. However, there have been a few which have stood out compared to others. These include the arrest of legendary New York gangster Al Capone, and the divorce of Sir Paul McCartney and his then-wife Heather Mills.
Likely the most famous examples of forensic accounting cases in history, the infamous Al Capone was not caught thanks to the hard work of the police uncovering his crimes in undercover operations, nor was he caught red handed in a warehouse raid. He was eventually brought down thanks to the hard, diligent work of forensic accounting.
During the 1930s, the Internal Revenue Service (IRS) sought to pursue the mob boss, and attempted to uncover his tax crimes. During the process, the IRS’ team of forensic accountants generated the income he would earn from his illicit activities, and were successfully able to prove that Scarface was — of course — not reporting this income for tax purposes.
As a result, the IRS were able to land one of the most famous arrests of the century, right under the noses of the FBI. Even after the initial work was complete, it still took around two years of additional work to prove that tax had not been paid on the vast amounts of money Capone was reported to be earning and spending.
Other famous cases of forensic accounting in action include the high-profile divorce of Sir Paul McCartney from Heather Mills in 2008.
In this case, the contention came as a result of disputes over the net worth reported by McCartney. This is a common issue that forensic accountants are expected to be instructed to assist.
In the end, the forensic accountants worked to discover the exact net worth of the former Beatle in order for a settlement to be made in court.
Further famous examples of forensic accounting cases include:
- The Civil trial of OJ Simpson where the former NFL superstar was found to have falsely pleaded poverty despite being worth over $33million — a settlement was found for damages.
- The downfall of the companies of Robert Maxwell after his embezzlement was uncovered by forensic accountants post-death, proving that he was taking money from the pension-fund to keep his businesses afloat.
Why Inquesta Can Help Your Case
Forensic accounting cases are generally highly complicated, with extremely high stakes. As a result it is important that you work with accountants you know you can trust.
Inquesta have been operating in the field of forensic accounting and investigation for decades. We have a proven track record and sterling reputation.
Our specialist team of forensic accountants have been instructed to support in a wide variety of different situations and cases, including but not limited to cases involving financial crimes like:
- Fraud
- Theft
- Accounting irregularities
- Money laundering
- Drug cases
We work tirelessly in our drive for the best result possible for our clients. Your needs are at the forefront of every single thing we do, from top to bottom. For more information on a forensic accounting service that you can trust to deliver results, contact a member of our team today or book a free consultation.
