The Role of Forensic Accountants

Reflective Communication Exercise

Forensic accountants play different roles in organization. Thus, they can be consulting or independent experts. Both consulting and independent experts are important in the process of investigating corporate crimes. Thus, both have their different roles and duties in different cases. Independent experts are those professionals and forensic accountants that are not part of the organization or company. They are hired in order to investigate the internal and external performance of the company, connected with the accounting process. They provide an opinion before the Service in an audit, or at the Appelate Division in an appeals conference.

Aside from that, they are also assisting counsel out of court in order to understand technical issues, at the same time prepare for the case: 2005). Thus, their roles and duties in an organization is being affected by APES 215 with accordance with the Section 100, where in a member must observe and comply with the public interest obligation, during the provision of the Forensic Accounting Service. Therefore, it is important to consider the interests and advantages of the society, which include considering the rights and situations of the client’s stakeholders. On the other hand, an expert accounting consultant or witness draws upon his or her knowledge and skills in order to offer independent and objective advice and opinions no matter whose side the expert represents (Pagano & Buckhoff 2005).

 It is important to consider that the role of forensic accountant as consultant is not limited to litigation support or expert witnessing, but they can be hired in order to review and strengthen internal controls, in order to determine if any assets are missing, or to discover if tax laws or accounting rules have been applied correctly to company transactions. They are hired in order to determine if embezzlement has occurred or, if so, how much is missing and how it was done (Telpner & Mostek 2003).

 As an expert consultant, an accountant usually performs many roles and tasks that may overlap with those of an expert witness. Therefore, it is vital that before beginning an engagement, an consulting expert should first undertake a conflict search. Once conflicts have been cleared, it is vital for the accountant to understand the theory of the case and the part that he or she will play (Pagano & Buckhoff 2005). This roles and responsibilities will be affected by the APES 215, particularly because if a member in public practice is asked to offer a Professional Service to a client where: the member or the member’s firm is offering or has offered an expert witness service to the client; or the member or the member’s firm is offering or has offered an expert witness service to a different client, and the proposed professional service is connected to the expert witness service, and the member determines that a reasonable and informed third party having knowledge of the important and helpful information, including safeguards applied, would regard the objectives of the proposed professional service to be undertaken as being inconsistent with the objectives of the expert service, then the member shall decline the engagement or the relevant part thereof. As a result, it is important to disclose matters in the report of the member that will assist the court in order to assess the degree of the independence of the member (Accounting Professional and Ethical Standards Board 2008).

Generally, there are two types of testimonial witnesses, which include lay witnesses and expert witnesses. Lay witnesses are also known as the fact witnesses, because they testify with accordance to the fact within their personal observation. This include testimony that the suspect entered the store, drew a gun and ordered the clerk to empty the register is considered as a layperson testimony. The witness, assuming was in the store had personally observed the acts to which he or she is testifying. On the other hand, the expert witnesses have slightly greater latitude. This is because of the fact that they are allowed to testify with accordance to their opinions, given that they are qualified in the said field.

 They are allowed in court because of their expertise and experience and its help towards the area in order for the judge and jury to understand a given facet of the case in clearer manner. Even though the experts cannot render an opinion with accordance to the guilt or innocence of the defendant, they can offer an opinion as to a given elements of the offence. They are hail from all features of the scientific community and offer testimony on different types of cases (Sheetz 2007). In the case of Brad, he is a consulting expert in a civil litigation matter, at the same time; he was present during the time that the interview was conducted. As a result, he is an expert witness, at the same time, a lay witness.

 This is possible, because considering the lay opinions; in general, it is important to note that experts may also be called upon in order to offer testimony regarding the fact that they have perceived themselves (Telpner & Mostek 2003). For instance, in the case of Brad, he can testify regarding what he have observed and experienced during the time, that the previous employees done during the interview with the dependant. On the other hand, because Brad is qualified to be an expert witness, he can testify to matters that are considered as outside to his personal observation by focusing on the matters that will enable to help the jury to determine the ultimate fact in issue.

 The subject matter to which they may testify is limited to the area in which they have superior skill, education or ability (Silverstone & Sheetz 2007). As a result, because Brad is an expert in civil litigation matters, he can testify about the issue of the statement in the interview, because he is professional in representing parties in trials, hearings, arbitrations and mediations before administrative agencies, foreign tribunals and federal, state and local courts (Kane n.d.).

 Therefore, based on these expertise and experiences of Brad, it can be said that he has the adequate amount of knowledge and skills that will help him to give opinions that can help the judges and juries to decide about the case. This is important, since once of the most important secondary evidence, which is tape-recorded interview was unclear.

An interview is a conversation with a purpose, and that is to obtain information and, in some cases, an admission. Experienced forensic accounting investigators know that the great majority of white-collar crimes are to be solved by skilled interviewer, not by other forensic means. This is because of the fact that, there is no more compelling proof of a crime than the voluntary admission of the perpetrators (Golden & Skalak 2006).

 Throughout the course of seeking evidence and information, the forensic accountant becomes involved in the interviewing process. This process is considered as another art to master. There are many things about the interview process, and even what order to interview parties of interest, that should be learned. Most important, the forensic accountant must be prepared to handle a confession in a way that ensures that the evidence is admissible in a court law (Singleton & Singleton 2006). However, it is important to consider the fact that there are different factors to be considered during the interview process, including legal, professional and ethical factors.

 Interviews, particularly the admission-seeking interviews may raise certain legal issues and may expose the company as well as the forensic accounting investigator to different risks, including the defamation of lawsuit. Therefore, it is important for the forensic accounting investigator to proceed with the interview process only after consulting with the counsel (Golden & Clayton 2006). This include the affidavit or written or printed declaration or statement made in voluntary manner, thus confirmed by the oath or affirmation of the party by making it before an officer having the authority to administer such oath.

 It is important that the affidavit will be taken when an affiant presents information, written or oral, connected to his or her knowledge regarding the matter under investigation that has a material effect. On the other hand, it is important that two examiners or investigators are presented, where in one representative will swear in affiant after the affidavit is filled out (Manning 2005).

Professionally, it is vital that the interviewer must prepare for the witness interviews by forming and assessing different theories regarding what has occurred, yet the interviewer must always be open to new possibilities. It is important to take note that while forensic accounting investigators are trained to ask questions, different witnesses are most likely not trained in offering answers. Therefore, even witnesses are cooperative; they may not be efficient and may not be aware of what information is important. Consequently, it is important for the forensic investigators to draw out the right questions (Golden & Clayton 2006). On the other hand, in terms of ethical, it is important to focus on the human rights of the witnesses and suspects.

Therefore, it is important to ensure that they are properly informed about what are the causes of their statements, particularly the process of recording. This includes the process of informing the interviewees regarding the interview process, particularly the process of recording and documenting his or her statements and answers in the interview.

As we are in the era where computers are of growing importance to store a wealth of information – legally and otherwise, it would only be plausible to establish a computer-based forensic record keeping system. For instance, the firm could implement a write anywhere file layout filing system. The effectiveness of this is that it makes use of physical and logical backups to preserve legal documents (Hutchison et al, 1999). Its functionality enables replication and mirroring of physical images and replicating data on backup file servers of lower cost which can eventually backup data to tape. Accordingly, the firm could also exploit the use of hierarchical storage management system to preserve the integrity of legal contents. In meeting legal requirements as well such as discovery requests, it would be easy for the requestor to inspect and copy documents especially when there are physical logs and electronic logs. Probably, there is the need to create a secure evidence facility to cater to the needs of the write anywhere file layout filing system.  

Further, the authenticity of evidences does not only points to the physical relevant data but also to adequately document what data is imaged, from which machines, at what point in time and by what methodology. As such, inputs to the data management folder in computers should also include chain of custody documentation (Moorman and Schaffer, 2007). Through this, the movement of the legal documents which could serve as evidence before the court could be tracked and stored from the time of acquisition until the time of trial. Nonetheless, it is expected that data will be more voluminous hence evidence preservation should be pursued. One way to do this is to create logical backup strategies. Backup data are critical and can be kept for a long time to provide file system history while also increasing resilience to disasters. It would be also vital for the firm to use data formats in storing data that are archival in nature hence making finding relevant documents a simple process. 

Not just the forensic accountants, the accounting firm in general must understand the value of digital data hence upheld such value through protecting them. To ensure that the staff that will comply, record keeping policies and procedures must be established. Legal documents should be bonded between the firm and its users through a system of policies and set of related procedures. Such policies must cover aspects of document retention, storage area, responsibility for record keeping, box indexing procedure, box identification procedure, confidential document storage procedure, document destruction procedure and document retrieval procedure (Bragg, 2002). Hashed data procedures and custody documentation procedures will be also covered. This is to ascertain that legal documents retrieved are handed to have legitimate access and penalized those who will improperly use the documents or evidences retrieved. 

Basically, “guardian angel” qualifies for protection because s/he is an employee and holds a relevant position in Townsville Ltd. Townsville Ltd also provides services to the company under investigation hence the former is a supplier of the latter. Other grounds that make the discloser qualify for a protection is that it is made to a forensic accountant working in an accounting firm. The issue is that between Townville and the supplier company there is a contract and between “guardian angel” and his/her employer. Breach or end of contract on the former will definitely have an effect on the contract on the latter. On the other end of the spectrum, it was noted on the situation above that disclosure is made even before the discloser’s name was revealed, opposing sec. (c) of 1317AA. Nonetheless, the disclosure is done in good faith while also recognizing the fact that the act of whistle blowing contravenes with the standards of the corporation s/he is working for. 

 There is the general requirement to protect the identity of the whistleblower or to take steps to ensure that the safety and welfare of the employee which may include administrative leave, relocation or personal security. While doing this, the employee will be advised to refer to the company’s employee arbitration policy so that controversies that could likely to arise will be addressed by the employer and the employee himself/herself. Also, the whistle blower should acquire knowledge on issues of entitlements to damages – all compensatory and special damages (Cendrowski, Martin and Petro, 2006). Other than that, whistleblower will be advised of other available remedies for him/her. To wit, the whistleblower would be advised that s/he remains the right to pose questions of conflict of interest among the company, its officers, directors, employees and shareholders.

In the event of retaliatory actions by the employer, the whistle blower would be advised that s/he is protected by the law since criminal penalties of fine or imprisonment of up to 10 years or both for retaliation against a whistleblower who provides truthful information before the ASIC and other authorities having jurisdiction such as this accounting firm. Any form of intentional retaliation is also prohibited including interference with the lawful employment or livelihood of the whistleblower.

Further, s/he would be also advised to file a complaint with the department of labor within 90 days from where the action was undertaken (Cendrowski, Martin and Petro, 2006). Through this, the employee would be reinstated on his/her employment, awarded back pay with interest and awarded special damages especially when there is a reasonable cause to believe that adverse actions had taken place. With this said, the whistle blower will be also advised to document any events following the whistle blowing that concerns his/her employment. This could be regarded as evidence which could demonstrate the occurrence of retaliation notwithstanding the protected activity.      

References

Bragg, S M 2002, Accounting reference desktop, John Wiley and Sons, New York.

Cendrowski, H, Martin, J P & Petro, L W 2006, The Handbook of Fraud Deterrence, John Wiley and Sons, New York.

Hutchison, N C, Manley, S, Federwisch, M, Harris, G, Hitz, D, Kleiman, S & O’Malley, S 1999, Logical  vs. Physical File System Backup, Proceedings of the 3rd Symposium on Operating Systems Design and Implementation, New Orleans, Louisiana.

Laro, D & Pratt, S 2005, Business Valuation and Taxes: Procedures, Law and Perspective, John Wiley and Sons

Manning, G 2005, Financial Investigation and Forensic Accounting, CRC Press

Moorman, J & Schaffer, G 2007, ‘Introduction to E-Discovery, in D R Carmichael, R Whittington & L Graham, Accountant’s handbook, 48-1 – 48-15, John Wiley and Sons, New York.

Pagano, W & Buckhoff, T 2005, Expert Witnessing in Forensic Accounting, RT Edwards, Inc.

Sheetz, M 2007, Computer Forensics: An Essential Guide for Accountants, Lawyers and Managers, John Wiley and Sons

Singleton, T, Singleton, A, Bologna, J & Lindquist, R 2006, Fraud Auditing and Forensic Accounting, John Wiley and Sons

Silverstone, H & Sheetz, M 2007, Forensic Accounting and Fraud Investigation for Non-Experts, Wiley-IEEE

Zeph, T & Mostek, M 2003, Expert Witnessing in Forensic Accounting: A Handbook for Lawyers and Accountants Expert Witnessing, CRC Press