Many forensic accountants work closely with law enforcement personnel and lawyers during investigations and often appear as expert witnesses during trials.
They may also be called to be an expert witness in a court trial so they must be able to communicate well and at a level that is understandable by individuals without accounting knowledge.
When acting as an expert witness in court proceedings in Federal Court in the United States a forensic accountant is required to give testimony which is based upon sufficient facts or data and is the product of reliable principles and methods, and they are required to have applied the principles and methods reliably to the facts of the case.
[2] When acting as an expert witness in court proceedings in the United Kingdom a forensic accountant is obliged to give "objective, unbiased opinion on matters within [their] expertise".
[5] Forensic accountants need to have a great deal of access to information regarding the company they are investigating or assisting.
The information will determine how much a person actually makes, the worth of a business, if there has been fraudulent activity, who committed the fraud, everyone involved, how much was taken from the company, where the money went, and how much can be recovered.
Some of the less obvious information needs consist of address books, emails, phone numbers, spreadsheets, electronic memos, and so forth.
These days white collar criminals are high tech to the extent of using computers to defraud and perpetrate financial related crimes in such a manner that a traditional forensic accountant can not be able to trace.
Even though forensic accountants need to analyze and compare financial statements most cases of fraudulent activity will not be in plain sight.
Most fraudulent activity will be hidden and manipulated to the point that forensic accountants must dig deep into the company.
[7] An improved technique is based on discriminant analysis,[7] where these ratios are weighted by coefficients to give an overall value or Z-score.
[7][8] The coefficients are chosen based on research by forensic accountants across good and bad business practices, and may vary for particular market sectors or for different models.
[11] J-score is built on the presumption that it is more difficult to manipulate the cash flows than to present an inflated value for an asset, and so emphasises these.
To earn the CFE credential, candidates must pass a four-part examination and abide by a code of professional ethics.
Forensic accounting focuses on litigation support and covers both fraud and non-fraud situations (e.g. economic damages, personal injury, family law, etc.).
The CFE credential is recognized by partner organizations leading the global fight against fraud and including, among others, the Federal Bureau of Investigation, the Securities and Exchange Commission, the Internal Revenue Service, the Ontario Provincial Police, the City of London Police and the City of Toronto Auditor General's Office.
"The CFF credential is granted exclusively to CPAs who demonstrate considerable expertise in forensic accounting through their knowledge, skills, and experience.
The CFF encompasses fundamental and specialized forensic accounting skills that CPA practitioners apply in a variety of service areas, including: bankruptcy and insolvency; computer forensic analysis; family law; valuations; fraud prevention, detection, and response; financial statement misrepresentation; and economic damages calculations.
Some forensic accountants acting as consultants are not paid on salary and are rather contracted to do a specific task for a company.
[21] NACVA's recertification process is designed to ensure that credential holders keep up with changes in the constantly evolving valuation field and that they continue to adhere to the industry's high standards.