empirical accounting

Introduction

Forensic accounting is a specialized field of accounting with a focus on investigation and legal applications. It combines auditing and accounting procedures and financial analysis techniques with investigative skills, to uncover fraud and white-collar crime. It can also be employed in a variety of legal proceedings, such as business divorce, divorce settlements, bankruptcies, shareholders rights cases and other civil litigation. Back in the early days, forensic accounting was limited to detecting and uncovering fraud, but today, its much broader.

History of Forensic Accounting

The term forensic accounting is said to have originated in America in the 1940s. Back then, it was used in litigation cases involving the examination of financial statements and the discovery of facts and valid evidence that could be used in a court of law. It was in the 1960s that it started to become popular in a more general sense, when it started to be used to detect fraud and other types of financial misfeasance.

The field has since grown in scope and stature. According to a 2011 survey by the Association of Certified Fraud Examiners, forensic accounting is the franchise profession most sought-after by businesses when it comes to combating fraud.

Forensic accountants are employed by companies, law enforcement, government agencies and law firms. They use a variety of investigative techniques, such as summarizing financial records, analyzing bank and loan documents, investigating companies financial records, tracing money trails and conducting interviews.

Uses of Forensic Accounting

Forensic accounting is used to detect and investigate fraud, mismanagement, misrepresentation and other financial improprieties in a variety of different areas. Some of the most common uses include:

* Litigation support: Forensic accountants can be called in to provide evidence in court cases. This includes cases of fraud, contract disputes and accounting malpractice.

* Financial fraud investigation: Forensic accountants can help to uncover any financial irregularities that indicate fraud. This includes tracing money trails, tracing fictitious companies and tracing assets.

* Forensic audits: Forensic accountants can conduct a forensic audit to determine whether a companys financial records are accurate and up-to-date. They can also assist in identifying any discrepancies between the accounting records and other financial information.

* Bankruptcy investigations: Forensic accountants can be used to assist in uncovering fraud, misstatements and misrepresentations that may have been committed by companies or individuals filing for bankruptcy.

Conclusion

Forensic accounting has evolved over the years and is now an important tool in uncovering fraud and identifying financial discrepancies and irregularities. It is used in a wide range of legal and investigative contexts, including fraud investigations, litigation support and bankruptcy investigations. By combining investigative skills and financial analysis, forensic accountants can provide invaluable insight into financial matters and help to uncover fraud and other forms of wrongdoing.

Evidence-Based Accounting (EBA) is a new and developing field of accounting. It is an evidence-based approach to accounting that helps decision makers and financial professionals use financial data to make more informed and reliable decisions.

EBA combines financial expertise and data to provide guidance, recommendations and insights that would otherwise be unavailable. Through the use of research and analysis, EBA is able to take into account the special characteristics of different types of businesses and their operating environment. While traditional accounting was focused on what was possible and what had been done in the past, EBA looks for evidence to provide reliable and useful answers to todays accounting questions.

The core of EBA is the publication of financial statements from businesses. Each statement provides a snapshot of a business’s financial condition, which serves as the starting point for analysis. EBA then uses evidence-based techniques to help businesses make their decisions. Examples include using data analytics to identify fraudulent transactions or pinpoint areas of risk; using statistical analysis to assess credit worthiness; and using benchmarking and performance measurements to compare different financial entities.

EBA can be applied to any size business and can be a powerful tool to help make reliable decisions. Many small businesses have already begun leveraging EBA to gain insight into their financial health and to better understand their financial performance. By leveraging evidence-based techniques combined with traditional finance knowledge, these businesses are able to make sound decisions that lead to greater success.

As the popularity of EBA grows and more businesses take advantage of this new approach to accounting, the field is likely to evolve and expand. The future of EBA is an exciting one and will likely provide many benefits to both decision makers and accounting professionals. Ultimately, evidence-based accounting is a valuable tool that can provide businesses with reliable and actionable insights.