Forensic Accounting – Business as Usual?

I write as the Corona virus strengthens its grip within the UK. It is heartening to see the enthusiasm that the government and the country is putting into protecting us and, for the most part at least, the response by the public. I consider it a shame that there are some that criticize the efforts being made despite the fact that we are have entered the unknown.

Unfortunately a global pandemic will not stop the tide of disputes that arise within the population, and I have written in the past how major events, such as recessions in particular and now a seemingly unstoppable disease, have a knock on effect effect on financial crime. There will be plenty of arguments over resources in the coming months and fraud will be rife. This has the effect of stocking up the regulators’ diaries and court lists for years to come.

The level of funds that is being injected into the economy is being measured in £100 billions, and the total for the UK would not be dwarfed by the USA’s current boast of a $2 trillion boost to the economy. Such new investments around the world will have a massive beneficial effect stimulating the economy – so much so that I am less worried about this aspect of the pandemic. However, such spending will inevitably go hand in hand with mouthwatering levels of fraud – much (but not all) of which will be investigated and prosecuted over the next decade or so. Equally, with the potential pressures on many businesses, there will be much civil strife. Settlement of contacts will be avoided and debts will be ignored leading to a raft of litigation for years to come.

I sometimes reflect on the nature of forensic accounting, a business that depends on people’s need to argue over money or steal it. However, my conclusion is that there is a need for resources that help protect and correct such human flaws. These include the police, the prosecutors, the court and all the private sector lawyers, accountants and others that work within this arena. It is also why my fraud and crime focused business has subtly changed its nature over the years that it has been running. While I still welcome Proceeds of Crime cases where a Section 16 Statement of Information must be challenged and a better (lower) level of criminal benefit proposed to the courts, I generally try to seek out those cases where my expert accountant assistance in a dispute goes some (or all) the way to reaching what you might say is “the correct result”.

One thing that an expert accounting witness should avoid is advocacy. This means that I cannot strive to achieve what I think is the “just” result. That is a matter for the judge and jury. I am only interested in the factual evidence, and am able to provide my opinion on what I think that it shows. Yet it is impossible to accept case after case without forming some thoughts about the level of guilt or culpability of the parties involved, even if I am unable to voice these in my reports. What is satisfying for me though is seeing the court make what I consider to be a fair judgement, based on my knowledge of the case. Then I feel as though I have actually helped somebody.

These types of cases seem to be more frequent these days. For example, if a company for whatever reason has failed to declare the correct level of tax, my investigation resulting in a fair figure due might be accepted by HMRC. A very good example last year was a teacher accused of theft by her school and local authority. The latter had conducted a perfunctory investigation that revealed that yes, some money was missing. However there was zero proof that my defendant had taken anything. When you looked a little deeper (as the employers should have done) there was actually proof that some of the missing money at least was explained within the accounting methods being used. In the end, the judge criticized the local authority for its negligence by not monitoring its spending over a lengthy period of several years. Despite perjury by the school’s headmaster the teacher was exonerated and his tears of relief when the verdict was given told their own story.

I do not know how much the present pandemic will affect forensic accounting. These days almost all the work I do is carried out within the isolated environs of my own office. Meetings are conducted by phone or Skype/Facetime and documents normally provided via email or secure server access. The pinch point is where matters go the full distance and end up being heard in court. The vast majority of cases are settled before this, but where they are not the likelihood is that evidence can be given by video link (like the time I was asked to give oral evidence in London at very short notice during an annual vacation in Skye a couple of years ago!).

My good wishes go out to those adversely affected by the pandemic, and like everybody else I am looking forward positively to a resolution before too long. You never know, it may even contribute something good – by making us all realize what is important in life such as family, friends and above all – our health.

Leave a Reply

Please use your real name instead of you company name or keyword spam.