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WHAT IS FORENSIC ACCOUNTING?

Updated: Nov 30, 2021

If you are not sure what this term means, you are not alone. When I tell people I am a forensic accountant, most people have no idea what that means. They get a blank stare on their face - deer in the headlights kinda stare. In fact, I had two business degrees before I knew what this term meant. Embarrassingly enough, when I heard the term forensic accounting for the first time, my first thought was "what do they do - count dead bodies?" I had no idea what it meant.


The term CPA is very common and usually associated with taxes or auditing. I am a CPA, but I do not do taxes or auditing (if you need these services, reach out to me and I can provide you with amazing referrals). My specialty is forensic accounting. In my PhD program, I spent 6 years researching fraud in small businesses. Yes, fraud is one of the focuses in forensic accounting. Forensic accounting is a broad term encompassing many areas, including fraud examinations, divorce forensics, economic damage calculations, securities fraud, business valuation, & money laundering (yes, money laundering, which often involves organized crime).


As a forensic accountant, I combine my accounting knowledge with investigative techniques to help discover financial crimes, locate hidden assets in divorce cases, and help organizations protect against fraud. It is often like putting a puzzle together. No two days are the same and I get to meet a lot of really interesting people along the way, which is one reason I LOVE my job. I also love being able to help organizations protect against fraud. It makes me feel as though I am making a difference in this crazy world we live in.


Fraud can devastate an organization. One fraud case can cause a business to close its doors. The average loss is $150,000, which is a lot of money - especially for a small business. This is why I am so passionate about fraud prevention. It is a lot less expensive to set up accounting systems to reduce fraud risk than it is to respond to fraud after it happens. Unfortunately, fraud is not 100% preventable. I wish it was, but it is just part of life. More than likely, we ALL will be victims of fraud at one point or another. However, organizations can protect themselves by implementing anti-fraud controls. This makes the discovery of the fraud quicker and the financial losses smaller.


By the way...the losses include more than just money. Reputations can be lost, employee morale may suffer, and trust in the organization may be broken. It is very hard to recover from fraud. Not impossible, but hard! So, there you have it. Now you know what it means to be a forensic accountant, and you don't have to have that deer in the headlights look if the subject ever comes up in conversation.


If you know someone who is going through a divorce and needs help finding assets or if you want to learn how you can set your business up for success, contact us today at clientsupport@carsonmadison.com We would love to meet you and see how we can help!

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