Forensic accounting falls under the heading of litigation support and involves both investigation and dispute resolution. Litigation support represents the factual presentation of economic issues related to existing or pending litigation. Forensic accounting quantifies damages sustained by parties involved in legal disputes and can assist in resolving disputes, even before they reach the courtroom.
By examining financial documents for fraud, misconduct, or industry standard violation evidence may be found for use in a possible civil or criminal investigation. Litigation support includes services for both plaintiffs and defendants in civil, criminal, and bankruptcy proceedings as well as fraud examinations.
Often litigation support centers on whether fraud has occurred. Unlike other offenses frauds have the common characteristic that there existence has been concealed. The examination of fraud is approached from two perspectives. To obtain proof that a fraud has occurred and to obtain proof that fraud has not occurred. Under the law, proof of fraud must preclude any explanation other than guilt.
Investigation is the act of determining whether criminal matters such as employee theft, securities fraud (including falsification of financial statements), identity theft, and insurance fraud have occurred. As part of this review recommends may be made to minimize future risk of loss. Investigation may also occur in civil matters where the objective is to identify and locate hidden assets.
Forensic accounting and litigation support involve looking beyond the numbers and grasping the substance of situations.