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How to… Choose a forensic accounting firm

Forensic accountants don’t just crunch numbers. They also do detective work, suspiciously combing through books and records to uncover clues, plots and stolen assets.

When they’re on your side, they can help you set up systems to prevent theft within your company, uncover theft that has already occurred, trace and recover missing assets and provide expert court testimony on your behalf.

When choosing a forensic accounting firm, as with any other professional service, it’s a good idea to ask around for recommendations. Speak to friends and colleagues at companies that are similar to yours in size to find out if they have had occasion to hire such a firm, and if they were satisfied with the firm’s work.

If you already work with an accounting firm for general business purposes, ask your contact for a recommendation. Your accounting firm may have a forensic department. However, in the interest of objectivity, it is often best to bring in a firm that does not have a pre-existing relationship with your staff.

Interview a few forensic accounting firms so that you can compare the services they provide and the fees they charge. During these conversations, you should get a feel for the firm’s competence and commitment level. How long has the firm been practicing forensic accounting? If you are looking for the firm to set up controls to prevent fraud, ask how many clients it has created similar systems for, and if they were effective. If you suspect that fraud has already been perpetrated within your company, does the firm have a track record of uncovering such crimes and recovering assets? If you expect your matter may wind up in court, find out if the firm has the expertise to provide court testimony.

How do you fit in to the firm’s client list? If you are the smallest or largest company on the roster, this firm may not be the best match for you. Ask for a few client references, and call them.

Find out which professionals will be assigned to handle your business. Ask if they are certified fraud examiners, which means they must meet certain experience requirements, take relevant continuing education courses and pass a rigorous exam. Also, because you will be working closely together, make sure you like these individuals, and that you find them trustworthy and professional.

Because of their size, small companies often lack separation of duties which can often compromise the organization’s security. A forensic accounting firm can help these companies set up controls so that more than one person must sign off on checks, contracts and other documents. When setting controls, it is especially important to pay attention to high-level employees, who have often gained the trust of the owners and have more access to company funds. To monitor the quality of the people that you bring into the company going forward, the forensic team can help you set up hiring policies that include extensive background checks.

The firm can also help you create a company policy that spells out what actions constitute fraud, such as using expense accounts for a purpose other than what was intended. Also, the firm can advise you on setting up a whistle-blower policy that encourages employees to come forward with information without fearing for their jobs or that their concerns will be taken lightly.
Once a forensic team sets up controls, keep the relationship going. Put the firm’s skeptical minds to work every six months or so to monitor how your systems are working, make necessary updates and spot any wrongdoing. Besides the possibility that something will be uncovered, this measure has a preventative benefit, as well.

The checklist

* Find out which professionals will be assigned to handle your business. Ask if they are certified fraud examiners, which means they must meet certain experience requirements, take relevant continuing education courses and pass a rigorous exam.

* Because of their size, small companies often lack separation of duties. A forensic accounting firm can help these companies set up controls so that more than one person must sign off on checks, contracts and other documents.

* When setting controls, it is especially important to pay attention to high-level employees, who have often gained the trust of the owners and have greater access to company funds.

* Your general accounting firm may have a forensic department. However, in the interest of objectivity, it is often best to bring in a firm that does not have a pre-existing relationship with your staff.

Bernadette Starzee can be reached at starzee@optonline.net.

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