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CPAs “Money Sleuths”.

The earlier forensic accountants join the team during litigation, the more value they add to the attorney’s team and the client’s case.  Because of the accelerating expansion of litigation in every imaginable area of our society, attorneys are, employing certified public accountants who specialize in forensic accounting in ever-increasing numbers. Universities all over the world are offering courses in forensic accounting. In the United States, law enforcement and regulatory agencies are recruiting CPAs.

Professional organizations such as the American Institute of Certified Public Accountants (CPAs), the Association of Certified Fraud Examiners, and the Association of Certified Valuation Analysts are providing certification in specialized areas of forensic accounting.

In other words, forensic accounting is today’s sexy buzzword.

This rush to employ accounting experts raises questions. How does one locate a forensic accountant? What skills and training should a forensic accountant possess? How do you verify the bona fides of a forensic accountant? When in the process of litigating should you employ a forensic accountant?

Variety of skills

A forensic accountant is someone with a combination of skills. Beyond being CPAs, a forensic accountant has auditing and investigating capabilities that are ideal for detailing the complexity of litigation involving tax and finance.

For example, a forensic accountant is extremely helpful with the investigative accounting needed for litigation support, particularly in cases that involve mountains of ledger sheets, bank statements and receipts. A forensic accountant can take a needle-in-a-haystack pile of financial information and distill it to the important elements that need to be presented clearly and concisely as courtroom testimony.

Get In early

For the maximum benefit, a forensic accountant should be retained early in any case where he or she is needed. Bringing the forensic account in early can result in lowering expenses in a case by identifying potential problems before they snowball.

Waiting to bring in a forensic accountant after discovery can result in a complex case becoming even more complex. Also, a forensic accountant needs to begin reviewing all documents as soon as possible to be the most effective in determining damages and/or helping with any settlement negotiations.

Look beyond the résumé

Locating an appropriate forensic accountant is not necessarily easy. Not all accountants have the same résumés.

Don’t believe all of the advertising you read. Minimally, locating CPAs with an investigative background and training is the best starting point, especially when ferreting out information is necessary.

Because a resume is no better than the character of the person whom it purports to support, asking for and checking references is absolutely necessary. Finally, after locating a forensic accountant and verifying his bona fides, deciding the suitable moment during litigation to retain him may determine success or failure.

When seeking a forensic accountant to help with a case, look at personal characteristics beyond the resume. For example, the forensic accountant should have a “can do” approach no matter how complex a case – a confidence driven by curiosity and persistence.

In addition, a good forensic accountant has a sense of creativity and organization so that financial material is distilled to understandable terms that won’t put a judge or jury to sleep.

Finally, a forensic account has the professional judgment and sense of discretion necessary in any litigation.

A different perspective – CPAs “Money Sleuths”

In my experience, a significant number of commercial and civil litigators believe that forensic accounting brings little to the process of production requests and depositions, so the lawyers bring a forensic accountant into the process rather late.

They probably do not realize that forensic accountants view information and sources of information from a different perspective. Because rules of professional conduct governing forensic accountants do not permit advocacy and their training is in a vocabulary completely different from that of attorneys, they dispassionately see and make informational connections often unseen by attorneys. In other words, capable forensic accountants are able to “think outside of the box.”

The earlier they join the team during the process of litigating, the more value I they add to the attorney’s team and the I client’s case.

Stanley I. Foodman is a Miami-based forensic account and former auxiliary special agent for the Florida Department of Law Enforcement. He has worked as a consultant to the Miami office of the U.S.I attorney in the area of civil RICO money-laundering recoveries.

CPAs “Money Sleuths” published on Jan. 3, 2005