If you're a fan of CSI, you'll probably associate the word 'forensic' with gathering blood splatters and DNA to find a serial killer. So when a forensic accountant wrote to us last week, we had to say we were intrigued...
Andrew Firth is a Partner at Rushmore Group, a forensic accounting agency based in North Sydney that helps small businesses across Australia. Rushmore assists many sole tradersand small businesses in regional Australia. 'Over the past few months, my clients have been located in the Central Coast of NSW, the Blue Mountains, Perth, and Dalby Queensland,' he says, and he hasn't killed anyone yet. So what does Andrew do and why would a small business need him? We go hunting for clues. When we think forensics, we think trying to find the tiny missing pieces that solve a grisly murder mystery. Is forensic accounting a bit like that but with numbers instead of bodies?
That’s spot on, forensic accounting is like trying to solve a jigsaw puzzle or a mystery. At the beginning of an engagement, no one is really sure what has actually happened or there may be 1,000’s of documents and they need to be arranged and organised so that the facts of the matter can be clearly seen. Instead of blood and bodies we mostly deal with bank statements, share trading statements, land title and other financial documents. There are probably a very low proportion of small businesses who know what a forensic accountant can do for them. Can you outline what services you can help our readers with?
Most small businesses will require a forensic accountant if they have been defrauded by a customer, employee, shareholder or some other person connected to the business. We can help the SMB to investigate the fraud, prepare a report for the Police and assist the lawyers with any civil claim that is commenced. If a SMB is considering some other type of litigation, then a forensic accountant is often called in to review the books and records of the business and prepare an expert report for the Court. A Forensic Accountant can also assist a SMB with background searches such as ASIC Company and Individual Director searches, Real Property Searches and tracking people down through social media. We often use Facebook, Twitter, and LinkedIn in these types of jobs. It’s still amazing to see how much personal information is held in publicly available databases and websites and we can access this information to help our clients resolve their fraud or litigation matter. Many of your recent clients seem to be from regional areas. Is there less help for SMBs out there and why do you think they’re coming to you?
Clients in regional areas may have access to a local accounting firm, however when a SMB has been defrauded or is involved in some type of litigation, it’s critical that they obtain expert accounting and finance assistance and seek out the help of an expert forensic accountant. We are in regular contact with our clients over phone and email and in many cases we never meet our clients face to face. In fact, I have been working on an investigation for over 12 months with a client based in Chicago and we still have not met each other! The physical distance between us and our clients is not an issue, however we offer a personalised service to our clients and regional clients in particular appreciate this type of dedicated service. What’s one really great part of your job that nobody else would know about?
Many of my clients are wives or mothers who are going through separation and divorce. In most cases we find that the husband has been in control of the finances and our clients often allege that their partner has hidden assets (either interstate or overseas). One of the best parts of my job is running a property or assets search and finding property that has been hidden. This is where we can add a lot of value to our clients and hearing the mixture of relief and gratitude from the client makes the job extremely satisfying. Does a forensic accountant ever require his own forensic accountant?
Hopefully not! Each week we typically have people calling us who have got into trouble by either over borrowing or losing money to unscrupulous investment promoters. Hearing these stories constantly reminds us of what can go wrong. As a result, forensic accountants are conservative by nature and ensure they have done their due diligence before making a financial decision. You obviously deal with a lot of financial records in your line of work. Which type of businesses are usually the most scrupulous with this and which ones are completely hopeless?
Most SMB’s are focused on preparing basic financial information for their GST and BAS Statements. This means that if they become involved in any time of financial investigation or litigation, they may not have all the relevant documentation. Sole traders, and businesses with less than 5 employees have particularly poor record keeping, however if documentation is not available then we can usually find a way of quantifying a loss through other means. It’s the last thing any business operator wants to think about, but we notice some of your work revolves around fraud. How important is it to have a forensic accountant to help you through these situations?
It can be catastrophic for any SMB to lose money through theft or fraud however these types of events can often cause a business owner to spend less time with their clients and working in the operations of a business. This can cause further loss to the business. When a SMB instructs a forensic accountant to conduct the investigation, they can focus on continuing to run the business. Using a forensic accountant also means that the SMB has a greater chance that the Police will investigate the matter as the forensic accountant has prepared the evidence in a form that the Police can easily understand. Having a forensic accountant on board will ultimately mean that you have a greater chance of recovering the loss.
Many people think that Forensic accountants are only used on large commercial matters and their costs are prohibitive. On the contrary, we work for individuals, SMB’s, law firms and corporates and we find that our clients actually save money by using a forensic accountant. This is because the lawyers need to spend less time understanding the accounting and financial issues in the particular case. Find out more about Rushmore Forensic here
See also: The most ridiculous tax deductions of all time.