Constantine 2 university
Level: Master 1
Field: Accounting/ Auditing
Forensic Accounting
Read the text carefully then do the following activities
Forensic accounting is the branch of accounting that deals with the detection and prevention
of financial crimes. As a forensic accountant, you'll use your competencies in accounting, auditing,
and investigative techniques to detect and analyze cases of fraud and other financial crimes. The
Association of Certified Fraud Examiners found that the median loss for fraud by business owners
and executives was $459,000 from 2022 to 2023
Forensic accountants investigate fraud, embezzlement, and other white-collar crimes. As
businesses become more complex, so will their financial investigations; oftentimes, forensic
accountants present accounting analysis and evidence in a trial or business-related issues. You might
end up working in one or several of these areas during your career as a forensic accountant:
Business economic losses and bankruptcy: You’ll collaborate with businesses, creditors,
and bankruptcy trustees to investigate possible fraud or mismanagement of assets in business
bankruptcies or other situations involving economic losses.
Family and marital disputes: You’ll liaise with attorneys and clients to investigate cases of
possible fraud or misappropriation of assets in divorce or other family disputes.
Hidden or misappropriated assets: As a forensic accountant, you may look for assets that
have been transferred or concealed by an individual or business.
Insurance claims: You'll investigate the claims to determine their validity.
Money laundering: If you identify a financial crime, you may pass on details to the FBI and
other law enforcement agencies to investigate. You may also work with them as a local
partner.
Securities fraud: You’ll follow the regulations of the Securities and Exchange Commission
(SEC) and Finance Industry Regulatory Authority (FINRA) to investigate cases of possible
securities fraud.
Tax fraud: You’ll work with the IRS and local government to investigate cases of possible
tax fraud.
An organization's financial statements provide an overview of its financial health.
However, these statements may uncover only some of the story. In these cases, a forensic
accountant may perform an investigation. Here is the typical process of a forensic accounting
audit:
1
1. Investigation: The first step in a forensic accounting investigation is to gather all
relevant information. This includes financial statements, tax returns, bank records, and
any other documents that could provide information. Once you have all the needed data, it
is time to start investigating the numbers. The goal of this phase is for you to identify any
irregularities that could indicate fraud or wrongdoing.
2. Reporting: Once the investigation is complete, you’ll report your findings to the client.
Depending on the nature of the case, you may share these findings with law enforcement
or other regulatory agencies.
3. Litigation: In some cases, the findings of a forensic accounting investigation can lead to
litigation. In such cases, you may provide expert testimony or support during the trial.
Activity One: Read the text and say True or False. Correct the false statements.
1. Forensic accounting is not concerned with investigation ………………………………………………………..
…………………………………………………………………………………………………………………………………………………
2. The CFA found that the median loss for fraud by business owners and executives was
$459,000 from 2022 to 2023 ………………………………………………………..
…………………………………………………………………………………………………………………………………………………
3. Forensic accountants often display accounting analysis and evidence in a trial or business-
related issues ………………………………………………………..
…………………………………………………………………………………………………………………………………………………
Activity Two: Read the text and answer the following questions
1. What Is Forensic Accounting?
2. What areas do forensic accountants work in?
3. What are the typical steps of a forensic accounting audit?
Activity Three: Read the text again and find words that are close in meaning to the following
Tacles = ……………………………………….. harm = ………………………………………………………………
Matters = …………………………………………….. finish = ………………………………………………………………
Activity Four: Read the text again and find four words with a finl (-s) and classify them in the
table below.
/s/ /z/ /IZ/
……………….. ……………….. ………………..
……………….. ……………….. ………………..
