The History of Forensic Accounting

             It has been stated that the first known use of forensic accounting was in the conviction of Al Cappone!

             As the business world has grown and simultaneously become more complex, the need to prove that one side or the other (in a contractual interpretation) is closer to reality!

             An insurance policy is an example of a contract where the two sides often disagree over dollars when a loss has occurred.  Today, most businesses carry some form of insurance coverage to cover “loss of income” or “business interruption” insurance to cover fixed expenses when there is a loss of income.  Even inventory levels may be hard to prove without re-establishing the financial trail.

             In most occasions where there is a partnership (marriage or business) and it needs to be dissolved, there is a dispute over what each side is entitled to and a dispute over what encompasses the entire asset base.

             Forensic accounting is also necessary to establish what adding a new product line will cost, or what it will earn.  Whenever there is an acquisition or a merger, forensic accounting is the basis for doing or not doing the “deal.”

             It’s easy to see that with the increased reliance of lawyers to most everyday business transactions, there is also a need to protect your financial position.

             NAFA is a natural place to seek a certified CPA to perform forensic accounting analysis.

Copyright 2007, National Association of Forensic Accountants, Inc. (NAFA), All Rights Reserved

National Association of Forensic Accountants