UNDERSTANDING FORENSIC ACCOUNTING

The word forensic known as forensis in Latin means public or forum, and it is define by Merriam-Webster dictionary as follows:

1. Belonging to, used in, or suitable to courts of judicature or to public discussion and debate.
2. Relating to or dealing with the application of scientific knowledge to legal problem.
3. Argumentative; rhetorical.

Whilst accounting can be define as a system of recording and summarizing business and financial transaction that involve analysis, verification and reporting the results through the application of principles and procedures of accounting.

Thus, forensic accounting generally can be understood as the examination of historical or current business and financial transaction in determining the authenticity of the figures, the adoption of the procedures and principles in recording the transaction into the books where any irregularities unveiled is subjected to challenge in the court of law.

Since forensic accounting requires a person to scrutinize financial standing of a business enabling it to be use in the court of law, thus the ability to have an analytical thinking and focus on every detail of the transactions is vital to uncover any irregularities. Hence, the personality of a forensic accountant should be such as a vampire where he is able to detect slightest unusual business transaction.

The knowledge of forensic accounting not only rely on the accounting knowledge per say but it involves the application of legal understanding, finance, business management and human behavior. Through this combination of knowledge a person performing forensic accounting needs to master a special skills in gathering the vital detail i.e. investigation skills.

Having able to think like a criminal is also an added set of skills in order to reveal the truth.