Why is a forensic accountant used? Many would answer by saying a forensic accountant is used in the hope of obtaining a better outcome during a financial dispute. By “better” it should be remembered that a forensic accountant is impartial, and technically will not be seeking a better result for one party or another. The value of an expert is not as a hired gun, but as one who presents a fair and balanced view on whatever issues are being argued.
For most, this would infer getting a better result. When faced with the attention of the regulators, or arguing over the unfulfilled terms of a contract, employing someone who can distill the facts and present them succinctly and without bias will be seen as the way to a better result.
I would use the term “fairer” or “more balanced” when describing the outcome from using an expert forensic accountant. The role involves checking the work of others, and explaining why it is wrong or exaggerated. For such criticism to be credible, the expert accountant must be precise and knowledgeable in his work.
It would be unusual for me to be instructed in a matter whereby a civil claimant is bringing a spurious dispute in the hope of making a quick buck. In a financial dispute, it would be normal for both parties to have a degree of justification in their claims, and most likely one or both parties are confused about the size or reasons for the argument. This is where the forensic accountant can unravel the problem, explain in clear terms and sometimes help to draw a halt to the proceedings altogether. At the very least, he can often provide the basis for sound negotiations that can avoid court and the lottery that is the judicial decision.
In a case where assistance is being provided to the criminal regulators in a financial matter, the forensic role can often be likened to that of a public sector auditor. The expert is checking the Crown’s case. This is not an arrogant statement – my hat goes off to the diligent and hard working efforts of the police officers and tax inspectors. I know that on occasion that they welcome input from a qualified and experienced outsider, a second opinion if you like. The main reasons why I am asked to assist in cases for the fraud and financial regulators are:
- To examine a case to see if it makes sense and if the evidence supports the allegations
- To respond at the last minute to an expert report produced by the defence
- To provide routine inputs during a case as an extension of the regulators’ existing resources
This last reason is not so common because the Crown does not have the budget normally for buying additional resources. However, when a sound case looks threatened by the defence teams’ response, the funding can usually be found.
There have been a number of thrusts over the years attempting to bring the public and private sectors closer in the fight against crime. Given the robust asset recovery scheme in action since the introduction of the Proceeds of Crime Act 2002 there has been the expectation that additional funding may have become available. If there has been any success with this, it hasn’t seemed obvious. I see one or two police cases each year, demanding highly competitive quotes to say the least. Compare this with perhaps twenty or so criminal or regulatory defence cases, both publicly and privately funded, and the disparity between the expertise allocated between the two seems clear.
Very often suffering a top tier accountancy firm forensic team’s city centre rates is the price a client pays for wanting a “rubber stamp” report. I disagree with this philosophy, and continue to present an argument that competent “boutique” firms can equal the best. Forensic accountants within this separate tier are normally big firm trained (like myself), and have absorbed professionalism and high service standards during their time there. They often leave with a desire to continue the same work, offering better rates due to their lack of overheads. A small team is capable of all but the very largest cases, and the streamlined service is less likely to hide any padded costs.
Having made a pitch for utilizing a specialist forensic accountancy service, it is essential to point out that the market place does seems to be massive. It does go hand in hand with the size of the criminal fraud framework and the expanding litigious society that we live in. Therefore, the demand for expert accountancy services from firms, large and small, remains healthy.