Joe Epps 2013-01-16 04:06:41
The work of a forensic accountant is based on documentation. A substantial portion of the time, and thus cost, of forensic accounting services is dependent on the volume, condition and nature of the documentation provided through discovery. The nature of the documents provided can make a significant difference in the monetary investment required for forensic accounting services. One of the most effective ways to control costs associated with a forensic accountant is to request certain types of documents in their native form. For example, requesting an opposing party to provide spreadsheet documents in Microsoft Excel format (rather than PDF or hardcopy) can save hours of input time. There are two instances where a document may be obtained in Excel format. The first instance is when the document was originally created in Excel. In today’s business world many data intensive documents are created in Excel. Also, most accountants use Excel to prepare their analysis of financial data and this is particularly true with forensic accountants. A second instance where documents may be obtained in Excel is when the data is extracted from a software program such as QuickBooks, Peachtree or some other accounting program. Often when the document request is for “income statements” or “balance sheets”, or some other standard accounting report prepared by the business, the request is filled by the other party providing a document in hard copy or in PDF format. With either a hard copy or a PDF document, analysis of the data requires the expert to recreate the original calculations in an electronic medium, such as Excel. However, if the document production request specifies that the document is to be provided as an Excel data file, the cost of the analysis is greatly decreased since the detailed data does not have to be input. There is another benefit to requesting documents from the files of opposing experts, accountants and parties in their native data format. Often the original preparer of the document will insert comments, use color codes or otherwise leave indicators in the electronic file which may not be picked up when the document is either printed or converted to PDF format. Also, by obtaining the document in its native format, a forensic accountant can perform a review of the actual formulas and data links which generate the results shown on the face of the spreadsheet document; information which is not otherwise visible without the native format being available for inspection. Any document production request which includes accounting information should include a request for a copy of the books of original entry in the form an electronic accounting data file. Many small- to medium-sized businesses use QuickBooks, Peachtree or some other off-the-shelf accounting software program. Any experienced forensic accountant should have access to these software programs. Obtaining a copy of the data file will allow the most efficient and effective opportunity for your expert to analyze the data. When making a request for an accounting software program data file, it is best to ask for identification of the specific version and the login and password (if any) necessary to access the data file. Larger companies, and some medium-sized companies, frequently use customized accounting software programs, thus making it impractical to obtain direct access to the accounting data in its native environment and format. In these instances, it is best to request the critical accounting data be exported to a compatible format or to Excel for easier review. A sample document request for any accounting report might look something like this: If the company uses QuickBooks, Peachtree or some other off-the-shelf accounting software, provide a portable copy of the data file. Include identification of the version of the software and any login and password information necessary to access the data. If such a data file is provided, it is not necessary to provide the list of specific accounting reports listed below. If the company does not use an off-the-shelf accounting software program, provide the following: -Identification of the accounting software program in use, including the version of the program. -Provide all requested accounting reports in Excel format if the accounting software program is capable of exporting the reports into Excel. -Provide the following financial reports: List specific reports requested such as income statements, balance sheets, etc. Also include the time periods for which the reports are being requested including monthly, quarterly or annual reporting. With knowledge of the accounting software program in use, the forensic accountant can determine if the software is capable of exporting reports in Excel format (most such programs have this capability). Engaging a forensic accountant to perform an analysis of financial data is often an expensive proposition due to the time-intensity of their work. However, attorneys can take steps to reduce the amount of time spent on data entry and formatting activities by following the simple steps outlined in this article.
Published by Target Market Media . View All Articles.
This page can be found at http://digitaleditions.walsworthprintgroup.com/article/FORENSIC+ACCOUNTING/1286615/142685/article.html.