A forensic accountant’s input is valuable in criminal tax evasion cases. Tax fraud costs the UK a massive amount, and HMRC rightly must come down hard on tax fraudsters. However, HMRC’s allegations and assumptions can be somewhat zealous, and the need for a balanced and impartial assessment is essential.
This year seems to have brought more tax related cases to Mark Jenner & Co Limited than usual, but my forensic accounting practice does typically show trends and cycles from time to time. Hawala Banking and money laundering cases are another popular subject of late.
Every year I spend some time “stoking” the marketing flames by writing a number of articles and occasionally a newsletter. When sitting down at the keyboard I have to consider what subjects to promote and often spend some time head scratching! I have not come across another forensic accountancy firm, or indeed any forensic accountant, who specializes solely in criminal fraud. Forensic accountancy is such a specialized area in itself, I suppose most practitioners see no need for further limiting what they do. Indeed, many who undertake forensic assignments do so alongside a general accountancy practice.
Must A Forensic Accountant Also Be An Accounting Practitioner?
There is some merit in being familiar with accounting practices of course, and best practice would dictate that the most credible “experts” are those that still do the work themselves. However, if you examine the situation closely you will see some flaws in this argument along with some caveats.
An accountant who acts as an expert in a case of audit negligence should really be a practicing auditor. It is the only way appropriate current experience can be brought to bear and the expert be up to date with an ever developing audit framework.
However, a forensic accountant commenting on quantum of loss of profits for example, will be drawing on his general accounting skills that are practiced on every single forensic case that he works upon! In such a case being a general accounting practitioner might possibly be a benefit.
Where expert witness assignments are only a small proportion of a general practitioner’s portfolio, there is some argument that there may be the lack of actual forensic accounting expertise and experience itself. The understanding of the nature and legal framework of the dispute and the ability to turn complex accounting issues into reports that can be understood by anybody are both critical – and must be finely honed with regular use.
Every case that I accept involves investigating fraud in some way or another. Yes, I do investigate fraud – I have been trained to do this, have the qualifications and the experience on a practical level. Also, every criminal fraud or money laundering case includes practical fraud investigation methods along with general accounting and tax skills. These skills are refined on every single case. I believe that having general audit and tax clients might potentially dilute my skills in the field of fraud and crime.
Most people tend to specialize in areas in which they feel most comfortable. These are the areas in which they take an interest, keep up to date with and as a consequence, can speak of with some authority. When I examine an assessment of income or corporation tax by HMRC in a criminal tax evasion case, I consider the calculations from first principles – not simply plug the underlying data into an HMRC software application. This means that I consider the underlying data and how it impacts the overall tax position, often over a series of years and between several different taxes. This does not indicate that I profess to have legal tax expertise, but it does allow me to speak with authority regarding the mechanics of the underlying financial and business activity and allows me to be confident when presenting a tax calculation within an expert accountant’s report that is markedly different from that of HMRC!