Importance Of Forensic Accounting And Situations Which Call For It

If you are a business owner, you must be aware of the fact that there are several aspects to running a business from expanding the business to increasing the returns on investment to minimizing losses. One of the aspects of making sure that you minimize your losses is that there is no fraudulent activity going on. Unfortunately, in this technological era, frauds are a frequent problem that businesses face each day. Many of these frauds go undetected and when they finally get detected, much wrong has already been done.

Every business has certain rules and regulations as well as the country’s laws that can stop frauds from happening but there is only way that you as a business owner can prevent such a situation in the first place. That is through forensic accounting. Through forensic accounting, you can identify if you are missing any money, who is responsible for it, and what can be done to recover it. If you are starting up a business, book-keeping can help to prevent frauds or at least help in such situations as well.

When it comes to forensic accounting, the best option is to hire a professional forensic accounting service that excels in its field and that can carry out the tax investigation and auditing to the best of their capabilities. Morrison Management is one such company in Singapore that possesses all the required tools and expertise to help clients uncover fraudulent items. They analyze and interpret financial information, carry out in-depth study of transactions, and uncover the true nature of transactions so that any irregularity or fraud can be identified. They can also help you with registering a company in Singapore.

There are several benefits of forensic accounting for a business. Some of the situations where it is absolutely necessary are discussed below.

Tax Fraud

One of the responsibilities of a forensic accountant is to detect any kind of tax fraud. Tax fraud occurs when an individual or business makes false claims about its earnings so that they can evade the taxes by paying less or none. Although, a business which itself is involved in tax fraud will not hire a forensic audit, a company which is falsely accused of being involved in tax fraud may hire professional forensic accountants to prove that their accounts and taxes are clean and according to the law.

Stock And Securities Fraud

One benefit of hiring professional services in this regard is in the situation where investors are offered false hopes or made false promises which makes them invest more in the business. At the end, the investors lose all or some part of their invested money. In such cases of stock frauds and securities frauds, investors can hire professional forensic accounting services to look into the accounts of the business to see if there was any kind of fraud and if they would be able to get some or all of their money back.

Fraudulent Insurance Claims By The Business

Another situation where a forensic accountant will be required is fraudulent insurance claims. Sometimes a business or company may make false claims about their assets and claim a bigger amount from the insurance company. There may be a situation where there was a theft but the company may claim to have incurred a larger loss from the theft than the real amount in order to claim more from the insurance company. A forensic accountant hired by the insurance company can help make the accounts straight so they can pay the right claims.

Insurance Companies Not Willing To Pay The Rightful Claim

On the other hand, there may be a situation where the insurance company is not willing to pay the rightful claim to a business. In such a case, the business can hire a forensic accountant to investigate the matter so that the insurance company can be legally forced to pay the rightful amount.

Identify Small Irregularities In Accounts

Forensic accounting is also required in cases where you want to identify even the smallest irregularities in accounts that may be missed in a regular or standard audit. This can help identify patterns of irregularities so that the ultimate fraud or theft can be identified.

Marital And Family Disputes

On an individual level, forensic accountants job also includes investigating marital and family disputes where either people are not given the amount that is lawfully owed to them or the finances are hidden from such family members in order to evade any paying off to them. Through forensic accounting, individuals can check if any such fraud is being carried out in the family finances and try to find a solution if possible.

Inheritance Disputes

Another fraudulent situation can arise in matters of inheritance where the concerned parties may feel that their inheritance should have been more than what they have been given. They may hire professional forensic accountants who can calculate the total estate’s worth, check for any will and testament claims, and determine the most equitable fund disbursement.

Bankruptcy Or Economic Losses

If a business is suffering from bankruptcy or facing economic losses, they may hire forensic accountants to see what went wrong or if there was any fraudulent activity that led to these losses. Usually, the professional companies that offer these services also offer other types of corporate services such as financial management. Hence, in these situations, they are also able to advise the business on how they can move forward from there so that losses can be minimized and they can make better and profitable investments.

Cyber Security Breach

Another situation where a forensic accountant is beneficial is when any form of terrorism or counter intelligence needs to be detected. They can work after someone has suspected a security breach or they may be employed to prevent any such situation from arising. They can keep an eye on the accounts and finances, so any irregularity or security breach can be traced back to the accounts in much less time and before major damage has occurred.

Should you need help with other corporate-related matters such as company incorporation services, tax advisory, corporate recovery, corporate secretarial services or litigation support services, find our team and we can best advise you what to do next! 

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Conclusion

Whether you're starting a new business or looking to improve your current operations, Morrison Consultants is here to help. Our company incorporation services ensure a smooth start for your business, while our accounting and GST filing services allow you to stay focused on growth without worrying about compliance and financial management. Let us handle the details so you can focus on what matters most.