At what point is Forensic Accounting needed?

This is a question we are asked on a regular basis, and can deadlock a company if left unanswered. The simple response is BEFORE IT IS TOO LATE! Forensic accountants are typically used in 2 scenarios: on the front end minimizing the risk of fraud; and providing support in situations where there is a suspicion of fraud or the potential for crisis. In either instance, the earlier a forensic accountant is retained, the better.

As forensic accountants, we love working with our clients by developing programs to minimize fraud, creating a risk aware culture, and putting our clients in a position for future sustainability and growth. However, not every situation can be ideal. It is impossible to eliminate risk, which can put individuals and businesses in a position of reacting quickly when the rubber meets the road.

Mike Tyson once said, “Everybody has a plan until they get punched in the mouth“. How are you going to react when you get the right hook to the chin? Forensic accountants work with individuals, attorneys, and businesses of all sizes to answer this question. It is never too early to bring a forensic accountant on board, however it is better late than never.Mike Tyson

In an interview in August of this year, Eric Stephens,our managing director was asked:

Q: How often are you called before a company discovers fraud?

A: “A small percentage overall is serving proactively. A client calls us for an initial discussion, ‘We have offices here, here and here,’ and they simply want to stay out of trouble. That’s usually from a company that has expanded quickly or is perhaps in a new arena. For example, a local company contacted us that was expanding in Brazil. In this case, they said, ‘We’re opening in Brazil. How do we stay clean there?’ In this case, we saw the client was already being asked to do something that was in violation of U.S. FCPA standards. We helped initiate a compliance program for that new office.”

As you can see, forensic accountants may be retained to provide expertise on an international scale, but companies of all sizes hold risks that need to be controlled. Let’s revisit the question: At what point is forensic accounting needed? The best answer is before someone takes a swing, but put yourself in a situation so that when you are “…punched in the mouth”, you are able to take the punch, and remain on the top of your game.

If you have questions about how we would handle a particular situation, please call me at 612.455.4555 or visit our website at www.intellexforensics.com.

Thanks!