Saved by the Bill: The Rise of Forensic Accounting
Putting a number to an accidental lost limb or on racial discrimination or deciding the overall value of a dead man’s assets is difficult, but for forensic economists and forensic accountants, it’s daily work.
What Is It?
What do forensic economists and accountants do? (1, 2)
Examples of their work include:
- The calculation of due damages in a legal dispute.
- Liability analysis and fraud protection.
- Policy analysis and asset evaluation.
- Establishing timelines of financial activity.
- Working on cases like bankruptcies, insurance claims, divorces and more.
Forensic accountant jobs (2)
Median salary: $103,000
10-year job growth: 15.7%
Total jobs: 1,216,900
Why We Need It
Economic crimes requiring a forensic approach are alarmingly numerous, in both personal and professional lawsuits.
Businesses
1 in 3
Businesses worldwide that report issues with financial crime (3)
Most common economic crimes reported by businesses: (3)
Asset misappropriation: 69%
Procurement fraud: 29%
Bribery and corruption: 27%
Cybercrime: 24%
Accounting fraud: 22%
Personal
Over 90,000
Wrongful deaths in the U.S. from medical malpractice annually (4)
4,383
Fatal work injuries in the U.S. in 2012 (5)
12 million+
U.S. identity fraud victims in 2012, many of which required an estimate of due damages (6)
On the Case
Through the years, and still today, forensic economists and accountants have done some incredible work in criminal and civil cases. (10, 11)
Al Capone
In the 1930s, forensic accountants were able to track Capone’s illegally made income. This led to his arrest, as the notorious criminal evaded capture on robbery and assault charges for years.
Capone owed $215,080.48 in taxes in 1931 from gambling profits.(7) Today, that would be equal to $3,372,560.98.(5)
O.J. Simpson
After Simpson’s was acquitted in criminal court, various civil suits were filed against him for wrongful death. Though Simpson claimed poverty, forensic accountants were able to find millions stashed by the former football star.
The plaintiffs were awarded $33.5 million in damages. As of 2014, nearly 20 years after the first trial started, the family of Ronald Goldman, one of Simpson’s alleged victims, had collected less than 1 percent of the damage award. (10, 12)
Paul McCartney
After his divorce from Heather Mills, she employed forensic accountants to find McCartney’s hidden assets. Accountants found no hidden assets, but Mills made out well in the end.
Mills was awarded $48.6 million after her divorce with McCartney. (8)
Terrorism
Today, forensic economists have been approached to help track terrorism. How? By tracking transactions and spending behaviors, they have been able to construct and use trends to pinpoint possible terrorist activity. In some cases, small businesses have been found to be fronts for terrorists because of their spending patterns. (9)
Sources:
1. http://www.wisegeek.com
2. http://www.mymajors.com
3. https://www.pwc.com
4. http://www.lawyershop.com
5. http://www.bls.gov
6. https://www.javelinstrategy.com
7. http://www.chicagohs.org
8. http://www.people.com
9. http://www.washingtonpost.com
10. http://www.charteredaccountants.com
11. http://www.accountingweb.com
12. http://www.cnbc.com
