C.S.I. – Accounting
Tuesday, June 29th, 2010
I don’t know that I see a TV show in our future, but forensic accountants follow the money trail in the same way crime scene investigators follow the trail of the murder suspect to build a case. This area of our practice has received more press recently as the Ponzi schemes of Bernard Madoff and others were exposed during the recession. Karen Hellmund and Van Elkins are certified in financial forensics (CFF) by the American Institute of CPAs, and Van has provided expert witness testimony in several cases that necessitated forensics to uncover financial facts and evidence for the court.
We are told in this blog that Ponzi schemes happen more often in financial bubbles as investors abandon healthy skepticism to chase higher returns. When the bubble bursts, the investors discover that their investments have disappeared when they try to withdraw their funds, exposing the fraud. The FBI, SEC, and Commodity Futures Trading Commission are investigating many more securities fraud cases and filing more complaints than they did before the recession as various schemes come to light.
Although the investigations are most often led by law enforcement officials, forensic accountants handle the highly technical task of following the money. Through banking records and other documents, they build a case against the perpetrator and calculate the amounts of money involved through cash flow analysis and other techniques. Their work is essential to building a concrete case against the scammer and in determining how much was lost by each victim.