You are a lawyer, not a CPA (“Certified Public Accountant”), so when one of those “pocket protector wearing paper pushers” (FYI – I am one) starts flooding your inbox with requests for items without any explanation you start to question what it is their asking for, how much is this costing and what purpose does it serve. Your case has a strategy and a budget for that matter and you’re the one the client is yelling at when the bill comes. You don’t have time nor the money to pay someone to nonchalantly thumb through tax returns, invoices, etc. in hopes of finding “something, anything” tangible to your case. You and your client’s resources are better served elsewhere.
I reside in Jacksonville now, but still practice in the South Florida area. What amazes me is that throughout the state three comments are made when I meet with most attorneys and tell them what I do:
- “Cool, like CSI Miami?”,
- Just what does a Forensic Accountant do and how can you help me?, and
- You “guys” make it too complicated.
I agree with all, except #1.
CPAs are not revered for their oral communication skills. Unable to explain our theories or conclusions without making things worse has had a negative effect on the potential benefits of a consolidated team approach between an attorney and a forensic accountant working in the areas of Bankruptcy, Economic Damages, Family Law, Valuation or Fraud Prevention/Detection. As you know, these types of areas require a set of specialized skills and knowledge for the practitioner to be effective. Because of what is required of a forensic accountant in these areas it is also important for them to be effective communicators to assist the attorney accomplish their objective. It is of no use to any one if what is found cannot be easily understood and digested.
In the AICPA report “Characteristics and Skills of the Forensic Accountant” the authors discuss and report on the reasons why forensic accountants are ineffective, from an attorney’s perspective.
“More than 80% of attorney respondents identified inability to simplify the information and ineffective oral communications skills as the top-two reasons why forensic accountants are ineffective, which is consistent with their Top 5 ranking of core skills for forensic accountants.”
Attorneys required that forensic accountants not only be analytical and detail-oriented, but also have the following core skills:
These traits and skills should be evident when interviewing a prospective forensic accountant. You should ask pointed questions to assess their abilities from a technical and personal stance.
Understanding traits and perceived skills is only half the equation. You also need to understand a forensic accountant’s thought process. The type of work that requires the use of a forensic accountant typically involves some sort of a problem-solving exercise. To accurately judge a forensic accountant’s skills you should have them go through a problem dissection exercise.
In order to solve a problem you need to know what that problem is. The reasons for correctly understanding this is to ensure that the engagement’s scope and objective are clearly understood so no time or money is lost and second to decipher what “tools” and/or documents the accountant may need. This is the point when the forensic accountant should be putting together the various scenarios they are going to go through and what they need to accomplish their objective. For example, if I have to value the fair market value of a North American Wine Distributor I am first thinking about industry and economic information, but also the “laundry” list of documents I need are in the back of my mind. Financial Statements to assess and analyze the company’s profitability and its’ activities, a Customer List to identify who it sells product to and what portion of sales are allocated to each and who/where is their supplier and what is their costs. These are just some of my first questions and more will be coming; however, a detailed accountant can lose you in their madness to acquire information whereas a skilled forensic accountant should communicate the purpose and need ahead of time to ensure that objectives meet overall strategy.
The forensic accountant is dissecting the problem in their head and plotting their game plan to prove or disprove the fraud or finding the $500,000 of savings that mysteriously disappeared. If you are handed a sheet of paper with a list of documents and no explanation be cautious. Unfortunately, you may have a person who has not set an objective nor has a plan to execute. One of the best ways to separate the novice from the professional is to review the practitioner’s certifications. In addition, to having a CPA most credible forensic accountants will carry the Certified Fraud Examiner (“CFE”), Certified in Financial Forensics (“CFF”), and/or the Accreditation in Business Valuation (“ABV”).