Forensic Accounts and Pepsi the Pepsi Refresh

According to Kranacher et al (2011), Forensic accounting is the process of gathering and analyzing financial information to investigate embezzlement or fraud and use the information in legal proceedings. A forensic accountant must be of high integrity and good moral character. He or she must also have knowledge on legal proceedings and requirements to present relevant information in the court.

Q.1 Skills Needed by a Forensic Account

These skills include effective oral communication skills, ability to simplify information, critical thinking skills, ability to identify key issues and auditing and investigative skills (Golden, 2011). Effective oral communication refers to the ability to provide clear and precise information to the recipient. It is very important for forensic accountants because they will often require testifying in court. These skills ensure that they are audible, clear and effective in communicating their message to the audience. It reduces the risk of loopholes caused by vague and unclear communication, which often causes speculation.

Ability to simplify information is a very important skill for forensic accountants. Other than auditors and Certified Public Accountants, the rest of the educated population does not understand accounting. People do not understand the terms used in accounting let alone their interpretation. A forensic accountant must therefore have the ability to explain mathematical figures into simple language that the court can understand (Kranacher et al, 2011). He or he must explain the meaning and relevance of positive and negative signs to the financial status of a business.

Forensic accountants must possess critical thinking skills. This is the ability to analyze information and think outside the confines of a given situation. Since forensic accounting plays a major role in informing legal proceedings, it is essential that the information is accurate. It is also important to factor in all possible issues that may influence the financial accounts of a business. Forensic accountants must therefore be able to analyze financial information critically to point out any errors or omissions that may have influenced the financial status of a business.

Financial accounts usually include recordings of all financial transactions of a business. A forensic accountant should identify key issues that may be the cause of irregularities in a business. He or she must be able to identify the important areas that influence the financial records of a business. This requires the ability to prioritize issues based on their relevance and influence of the financial operations of a business.

Auditing and investigative skills determine the accuracy and precision of information provided by forensic accountants. They must therefore be able to audit financial records of companies as well as investigate the missing links in the records. They must also be able to follow up on hunches and intuition to identify fraud in financial records. This is because those who keep financial records are also smart and would hide their misdemeanors to avoid getting caught.

Q.2 Forensic Accountant’s Role in Court

In the courtroom, the forensic accountant plays a key role especially in litigation. The forensic accountant helps provide financial knowledge and finesse on various matters within the court that may require financial expertise. The forensic accountant provides the financial acumen and sleuth approach in tackling issues that involve identifying financial information, investigating the information, analyzing the results and giving the court an overview of the results and their opinions with the aim of following the money trail that involves a case (Giliker, 2010). Financial accountants are usually called to oversee cases that involve fraud cases such as embezzlement and tax evasion (Giliker, 2010). Their results in most cases help to determine lost or misplaced profits, identify some hidden assets, and locate income that had been unreported or assist either the prosecution or defense in any matters that the case requires. More specifically, they perform the following duties.

Data collection and analysis:

The forensic accountants are tasked with finding and accumulating financial data with the purpose of either supporting of refuting some of the legal financial claims that are brought up in the case. This role requires them to review company financial records, tax records and returns and income statements. Depending on the form of litigation, forensic accountants can be asked to perform their own analysis of the data collected and provide their own report, which can be matched against the recorded reports that have been put forward by the prosecution or defense.

Interpersonal:

The forensic accountant can be requested to perform interviews on the various parties involved with financial records within the case. This can involve clerks, bank tellers, accountants and other auditors that are in one way or another involved with the financial details that are under investigation within the case. This will assist in data analysis and the forensic accountant can help in performing a targeted financial background research in individuals that have a role to play in the case.

Foundational:

The forensic accountant can give their expert help with case development targeting the financial backbone of the case. They help to provide the financial framework of the case from a professional viewpoint and with legitimate analysis results to back their findings and claims. They also assist in judging the quality and authenticity of any relevant financial documents that are presented by either the prosecution of defense.

Expert report and trial:

The forensic accountant can also provide an aggregate of his findings and conclusions made during the various stages of the case associated with financial details. They then submit a report of their findings and in some cases they can testify at the trial or deposition. In most cases, forensic accountants have been called to dispute, critique or validate the opinions of an opposing financial expert that have been brought forward as evidence reports.

Q.3 Legal Responsibility of Forensic Accountants to a Business

In service provision to a business, a forensic accountant has the legal responsibility to provide accurate information concerning fraud or embezzlement to the business manager. He or she provides information concerning all the legal consequences of fraud. In the event that a forensic accountant discovers that fraud or embezzlement in a business has led to the loss of life or has caused harm to people, it is his or her responsibility to report to the police. A forensic accountant is allowed to testify in Court concerning the financial matters of a business, in the event that there is need for further clarity on a case. The forensic accountant should also compile notes and financial records when required for legal proceedings (Singleton & Singleton, 2010).

Q.4 Cases in which Forensic Accountants have been helpful

The first case is the case between Maryse Voltaire, plaintiff versus Home Services Systems (HSS), the defendants. The case number is 09-CV-5668 and it took place on September 30, 2011 in the United States district court. Voltaire was a home health care worker but she collapsed on a Friday, thus got into the hospital. The nurse’s daughter, an attorney requested for the nurse’s absence to be considered a FMLA leave. The HSS contacted the FMLA saying that discrepancies in her income records to be taken as proof of motive and there was a dispute, thus Voltaire’s services were terminated. The nurse and her family helped her to sue them under the FMLA Act of providing rights. The company requested a forensic audit to be conducted and this revealed that her income was being channeled to her sick brother and were not proof of motive. This information was very conclusive with payment reports and receipts provided by the forensic accounts team and the court denied the summary judgment revealing that the reasons for the nurse’s termination were unjustifiable (Gleason and Stiff, 2005).

The second case involves Robert R. Courtney. In August 2001, pharmacist Robert R. Courtney from Kansas City was arrested and later charged pleading guilty to“…8 counts of product tampering and 6 counts each of misbranding and adulterating drugs, in violation of the Federal Food, Drug, and Cosmetic Act (FDCA)” (U.S. Food and Drug Administration, 2010). Investigations conducted by the F.B.A, in collaboration with the FDA and forensic evidence relating to purchase and selling of the drugs reveled that Courtney acted alone, and in his capacity and a pharmacist to dilute and alter chemotherapy drugs jeopardizing the treatment and lives of cancer patients. Forensic experts were able to follow the money trail from victims who had purchased the drugs and traced them back to Courtney. This evidence was used to link him to the case and assisted the prosecution in proving him guilty of the offense.

It is therefore notable that forensic accounting and accountants play a great role in litigation and their position within the courtroom is invaluable. Evidence from financial reports provided by forensic accounting experts helps the court in proving cases of fraud and following the money trail to either prove the accused guilty or innocent. Information provided by forensic accountants also helps the prosecution of defense build their case and is crucial in the courtroom. Forensic accounting is therefore very significant within the courtroom and can determine the outcome of court cases greatly.

References

Giliker, P. (2010). Vicarious Liability in Tort: A Comparative Perspective. New York, NY: Cambridge University Press

Gleason, S. E., & Stiff, R. (January 01, 2005). Research issues in the evaluation of the quality of

Professional services: The case of legal services. Policy Studies Review, 5, 1.

Golden, T. W., & Golden, T. W. (2011). A guide to forensic accounting investigation. Hoboken, N.J: Wiley.

Kranacher, M.-J., Riley, R., & Wells, J. T. (2011). Forensic accounting and fraud examination. Hoboken, N.J: John Wiley.

Singleton, T., & Singleton, A. J. (2010). Fraud auditing and forensic accounting. Hoboken, N.J: Wiley.

U.S. Food and Drug Administration. (2003). Court Sentencing(s) 2003. Inspections, Compliance, Enforcement, and Criminal Investigations. Retrieved on December 13, 2012 from <http://www.fda.gov/ICECI/EnforcementActions/EnforcementStory/EnforcementStoryArchive/ucm096402.htm>