Fraud costs American companies $50 billion annually. Employee theft makes up 14% of this sum, and the cost is often transferred to the consumer, who must pay more for services and products.
The financial blow is just one of many consequences of workplace fraud, and the impact on the company experiencing fraud can be extensive. However, one of the most devastating outcomes is the effect it can have on the company brand.
Companies like Enron, Wells Fargo, and Theranos have served as examples of how fraud can destroy a corporate image almost overnight.
For this reason, many companies turn to forensic accountants, whose job it is to investigate accounting practices within the firm.
Forensic accountants scour over financial reports, asset inventories, payroll practices, and more. They’re comparing numbers, performing reasonability checks, and looking for potential holes where the accounting might seem fuzzy. During this process, they may also ask supervisors to complete questionnaires, and the accountants may interview some personnel.
Credit Where Credit Is Due
Think of the forensic accounting process as a diagnostic test. These accountants are compiling enough information to paint a compelling picture of the company’s financial health. In doing so, an audit can:
- identify areas in which to improve efficiency,
- reveal instances of embezzlement,
- lessen the likelihood of litigation,
- reduce risk and show evidence of fraud, and
- document financial activity over time.
Don’t think that the forensic accountant’s only job is to ferret out fraud and other nefarious activity.
As forensic accountants sift through records, reading and comparing balance sheets, they’re looking for more than errors of commission. They’re looking for omissions, especially unintentional ones.
How Your Company Can Benefit from the Value of Forensic Accounting
You do not have to be a huge company to benefit from the services of a forensic accountant. Mid-sized and small firms can — and should — take advantage of the services forensic accountants provide.
Some companies prefer to rely on the investigations of an in-house team. However, hiring someone from the outside adds to the reliability of the audit. The external forensic accounting team has the advantage of being:
- Objective and judicious. The group wants your company to succeed, and they’ll do everything possible to paint it in the best light possible — and make recommendations for improving your processes.
- Well-qualified and experienced. Forensic accounting experts often have a degree in this field, and they acquire additional certifications, like the Certified Forensic Accounting Professional (CFAP).
- Focused. Forensic accountants are focused on one task, whereas your internal team may have other responsibilities that distract from the audit.
You, too, can benefit from the value of forensic accounting by hiring an external team of auditors trained to look for fraud and help your company report its financial activity accurately.
Are you ready to commit to doing due diligence? Whether you’re looking for a full-time forensic accountant or need part-time assistance for special situations, such as an annual audit, talk first with a recruiter who can help you determine how to best meet your financial accounting needs.
We know the best talent in the field and we know the marketplace. Make your next hire a great one by leveraging our knowledge and experience. Contact us to make your next move.