DO YOU NEED A FORENSIC ACCOUNTANT IN A PARTNERSHIP DISPUTE?

Two highly valued credentials to look for when hiring a forensic accounting firm in today’s digital age include:

• Certified Forensic Computer Examiner (CFCE)

• Certified Fraud Examiner (CFE)

All persons involved in a company, including shareholders and partners, have a fiduciary duty to the business – meaning they must operate and control financial transactions in a correct and responsible way.

Violations of the law or of partnership term agreements, such as embezzlement or misuse of business accounts, can lead to legal action for those who are liable. Several common scenarios of breach of fiduciary duty include:

• Taking money out of company pension funds

• Stealing from clients

• Misreporting payroll or income to the Internal Revenue Service

• Using company funds or property for personal use

In order to protect not only the credibility and the financial integrity of the business, as well as the personal interests of all those involved, it is necessary to identify any possibility of fraudulent actions being committed.

Jeff Neumeister, Partner
CPA/ABV/CITP/CFF/CGMA, CFE,
CMA/CSCA, CM&AA, PCI, MA, MBA, MS²

Frequently during business disputes, tensions are high and chaos can happen quickly. The facts and truth can be skewed through differing viewpoints and competing interests. But involving a forensic accountant can alleviate some of the strain and tension. Acting as an impartial third party, a clear financial picture can be drawn out and all financial transactions can be identified and recorded without any bias or hidden agenda. Hiring this external specialist can prove highly beneficial, ultimately allowing for a smoother and more thorough investigation.

A forensic accountant is trained to identify gaps and irregular patterns in business operations and records that may highlight weak areas. These weaknesses open up opportunities to facilitate illegal practices to happen under the radar. The forensic accountant can track and analyze money trails left behind by combing through and analyzing documents and systems to ensure all evidence is accounted for.

Most businesses rely heavily on computer technology to run at least the minimum core systems of their business operations. While technology has proven highly advantageous in streamlining business operations and services, unfortunately it also goes hand in hand with the increase in white collar crime. Thus, there is a growing need to protect and secure sensitive digital information and valuables.

Not only can a forensic accounting firm provide value during partnership disputes, but they can also perform check-ups on the current status of a company to see how the internal controls systems are working. This type of review aims to prevent the existing system from becoming too dormant or easy to infiltrate by either internal or external threats. This is a smarter and less costly way to prevent fraudulent activities before they have an opportunity to start.

Without the proper controls in place, fraudulent behavior can go undetected for months or even years, leading to devastating financial loss and terrifying legal consequences. A thorough forensic review of financial statements and records can reveal inconsistencies and falsified documents. With regular updates and checks and balances in place, any anomalies or unusual activity are more likely to be picked up, and the internal system of checks and balances can be modified as needed before things turn sour.

In Summary

Hiring a forensic accountant can be costly and isn’t necessary for all partnership or shareholder disagreements. However, cases involving financial disputes or discrepancies may create the need to bring in this type of investigatory specialist and is, in fact, highly recommended.

Operational transparency and being fully aware of money coming in and out of a company is essential to protect both the company as a whole and the people involved, which as a result, fosters a more successful future. If you’re facing a precarious financial based problem within your own business partnership, we invite you to reach out to us.