Forensic accounting still key following recession

It is too simple an answer to suggest that the recession has created only increases in financial fraud. A report published by Kroll highlights the fact that partly it depends on where your sector sits, and how it has been affected, by the recession, which relates to how it has been affected by financial fraud in the last year.

Increases in financial fraud have been on the rise where:

· Dissatisfaction is high (high staff redundancies, dissatisfaction with changes to pay structures) and motivation is higher for those concerned about the real effect on their financial position.

· Closeness to the sectors most affected by the recession- financial services and professional services firms

Financial Fraud has dropped in sectors where:

• There has been a drop in available funds/ industry output (think construction and manufacturing)
• There was previously a huge growth and move into new markets.

An increased level of risk: more need for due diligence & forensic accounting

Be aware of the potential risks you may face after changes:

• If you are reducing internal controls, ensure that they are ones that are not high risk or leave you too vulnerable to loss
• If you’ve made changes to pay structure/ redundancies, reduce opportunities for single sign off for key transactions, and ensure that you have a culture of compliance and spot checks.

What if you do have an issue at your firm?

If you do have an issue with financial risk and you think you may have a specific issue, it is worth taking advice from a forensic accountant. A forensic accountant will work through the data objectively & prepare an expert report for you that can then be used in expert witness testimony if you do need to take this through to litigation. From this you will be able to understand if a fraud has occurred, how long the fraud has been in progress, and quantify the amount of loss you have been subject to.

For me, the benefit of working with an independent means I know I have someone with exactly the right blend of expertise, skills and knowledge to get to the heart of the matter in as timely a matter as possible. This means you can then use this information to resolve the matter and reduce ongoing risk to your business, as well as handling it objectively and independently which means you feel you have a stronger result when you finish your case.

Resources

Forensic Accountants

Advice on money laundering

Business crime solicitors

Expert Witness Institute