Corporate fraud is more common than people realize. In fact, an estimated 40% of companies commit accounting violations and another 10% engage in securities fraud. It’s the job of a forensic accountant to find evidence of these crimes through audits and investigations.
However, businesses can also take advantage of these accountant’s services to prevent fraud and follow best accounting practices.
Here are some of the benefits of having a forensic accountant within an organization.
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These are five benefits of working with a forensic accountant:
1. Implement Strong Internal Controls
One major advantage of having a forensic accountant within an organization is implementing strong internal controls.
Internal controls are designed to prevent fraud and losses while improving operational efficiency. They can include:
- Risk assessment
- Ensuring the integrity of financial records
- Protecting business cash and assets
Forensic accountants rely on their experience and expertise to identify areas that are most vulnerable to exploitation. They can then recommend areas that should have more advanced controls to safeguard a business’s finances.
Strong internal controls act as another layer of protection to help prevent fraud and ensure that financial documents are reliable.
2. Fraud Detection
Forensic accountants are often charged with finding evidence of fraud, and they can use this knowledge to help businesses detect fraud early on and take action before it progresses.
Having a forensic accountant within your organization also means that you can perform internal audits without exposing company secrets. When these accountants catch fraud early on, steps can be taken to remedy the situation quietly and efficiently.
3. Minimize Losses and Exploitation
Through strong internal controls and regular internal audits, forensic accountants can help minimize losses and exploitation. Fraud can lead to significant monetary losses for businesses. Preventative measures can prevent or minimize these losses.
Forensic accountants can also identify vulnerabilities that can be exploited and recommend solutions to patch these “gaps” to prevent future issues.
By minimizing losses and helping prevent future exploitation, forensic accountants can save businesses a great deal of time and money.
4. Reduce the Risk of Legal Issues
Recovering from internal or external fraud can be a lengthy and costly process. Along with monetary costs, businesses must also repair their reputation and deal with the legal issues that will follow.
A forensic accountant will work to implement controls and measures that prevent these issues from happening in the first place. There’s no surefire way to prevent fraud, but these accountants can reduce the risk, protecting the company’s reputation and finances in the process.
5. Safeguard the Company’s Reputation
Fraud is a serious crime, and it can sometimes tarnish a company’s reputation beyond repair. Winning back the trust of customers or clients can feel like an uphill battle.
With a forensic accountant on your team, you can better protect against fraud and other activities that cause reputational harm.
Conclusion
Forensic accountants are specialized CPAs who know how to detect fraud. But they can use this same experience and expertise to help businesses strengthen their internal controls, implement safeguards against fraud and protect their reputation.