The Un-Hollywood Forensic Accountant

By Tyler J. Wise|February 12th, 2020|Blog|

Thank you Ben Affleck, no, seriously thank you. I don’t think there has ever been a better accountant movie, even if it was the first. Unfortunately, no, not every accountant, or rather, not any, are a specialised assassin. In that regard the movie fails in it’s portrayal of an accountant, however, one thing it essentially does get correct is the forensic accountant process.

As an accountant with forensic experience, I can attest to the portrayal in the movie. It is not as glamorous as it seems. For some reason, you mention the word “forensic accountant’ and people think it is some super exciting aspect of accounting. Don’t get me wrong, it is exciting, to me, but purely because in addition to looking for errors, and patterns, you are attempting to connect rational and irrational thoughts at the same time, and there are not many aspects of accounting that combine quantitative and qualitative processes at the same time.

For me the process is one I enjoy immensely, and being a fierce competitor, I don’t like being outsmarted, especially in accounting. Ultimately when you are engaged to conduct a forensic assignment, it is not because something good has happened, so generally relationships or marriages are already strained, and proving value in what you are doing, especially when it takes many weeks, or months (even years) to complete can cause all sorts of heartache for all parties involved, including me!

I was speaking with a colleague who also takes on forensic accounting exercises, and it was extremely interesting in the difference that we have encountered in our professional experience. In his engagements the books have been presented immaculately, with little attention being cast on the fraudulent party. When the books are like this it is like looking for a needle in a haystack as there is often no clear starting point (however, generally we all start at the same places, sales invoices and bank deposits). Finding which thread to pull at is a difficult process when it can appear that everything reconciles.

In my experience in forensic exercises, the majority of my cases can only be described as ‘organised chaos’, with it being difficult to determine if the responsible party is incompetent or a genius. They keep their books in such chaos, that ultimately provide mostly correct information. This can have you going around in circles for days or weeks, before you will find the anomaly to explore. Once you find one, generally it is just a case of following the money.

As you can imagine, in both of these circumstances it involves significant data collection, and then a bona fide audit process. In this regard we generally have a leg up on the auditor, we know an error has occurred, and it is generally a significant one. We just need to find it, prove it and report it.
It is this last step, perhaps even 1.5 steps where the movie strays somewhat too. Simply proving that fraudulent activity has occurred is not sufficient. These cases often result in prosecution of some sort, and as a result an extremely detailed report is required (if you get this step wrong, you can cost someone a life changing amount – our biggest identified amount was in the millions!). This report can take as much time and effort as the initial discrepancy location. The reason being is that you must be able to evidence that the error identified was genuinely fraudulent, not incompetence, not a break down in policy or procedure. Ultimately, a pattern will exist and once the guilty party gets away with it once they tend to get more and more aggressive and so it is about looking for the amount, date, supplier patterns to evidence this, akin to cornering a wild animal. You just need to get it in the corner though!

Where it gets tricky is where there are more than one party involved, the engaged management and tax accountants were unaware of the suspicious activity (which is in no way a slight on them, they are not looking for these issues) and they have tidied particular entries, policies or otherwise. There is a constant unwinding of events and transactions to locate if something untoward has really happened or if it was just a mistake.

Proving this un-categorically is quite the process, however, working with an accomplished lawyer assists in this process as they can take the “raw data” provided and present it in a manner that the courts, plaintiffs and defendants can understand.

While all of this can sound pretty cool, and to be honest, that was why I got in to forensic accounting, it is a long arduous process, and one where you are not making many friends, as until you find what you are looking for, you are assuming the worst in everyone, even the party that has engaged you.
Forensic accounting is a career that will test your mental resilience, and is not something I could ever do exclusively due to the mental exertion and anguish. I wonder if the best way to deal with the end of an engagement is the same way that Ben Affleck does, simply hop in your car, with your caravan and head off to another town. Perhaps it is not art imitating life, but the other way around, and something I should try.

Forensic accounting was something I worked very hard to get into, and it is very hard work, but when you win, and help the good guys, I do not know of a bigger professional rush, especially in the world of accounting.

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