In Türkiye, the concept of forensic accounting is still not widely recognized, and most organizations remain unaware of its significance. Yet globally, forensic accounting has long been employed as an effective tool in addressing challenges stemming from fraud, corruption, and financial disputes.
In this article, we will explore the concept of forensic accounting and discuss why it carries critical importance for organizations.
What is Forensic Accounting?
Forensic accounting combines accounting, auditing, and investigative techniques to uncover the true nature of financial events. It goes beyond merely analyzing numbers, aiming instead to understand the story behind them. In doing so, it helps expose fraud, misconduct, or errors that may occur within or outside a company.
Who is a Forensic Accountant?
A forensic accountant can be described as an expert who views financial data through a different lens. Equipped with both accounting knowledge and investigative skills, they operate much like detectives—collecting evidence from documents, accounting systems, and digital records. By piecing these clues together, they reveal the underlying realities of financial events.
What Does Forensic Accounting Cover?
Although the term includes “accounting,” its scope extends far beyond traditional accounting practices. Forensic accounting encompasses a wide range of areas—from investigating internal fraud to tracing hidden or misappropriated assets. Detecting fraud, providing expert opinions in litigation, or supporting the resolution of financial disputes all form integral parts of this discipline. Additionally, forensic accounting involves analyzing digital data, testing business processes, and evaluating the effectiveness of internal controls.
How Does Forensic Accounting Benefit Companies?
Forensic accounting can be seen as both a shield and a scalpel in the business world. As a shield, it strengthens internal controls and reduces the risk of fraud. As a scalpel, it uncovers the truth in the event of misconduct, quantifies losses, and provides management with a reliable basis for sound decision-making. Its value becomes particularly evident when irregularities are brought before the courts: forensic accountants prepare evidence-based reports that enable legal proceedings to move forward more quickly and effectively, while also providing organizations with a solid legal foundation.
Case Study
At Cerebra, we conducted an investigation following allegations that two employees had misappropriated funds from company cash and bank accounts. We collected and analyzed 10 years of bank statements and listed all suspicious withdrawals. In addition, we identified suspicions of fraudulent and inflated invoices issued through certain vendors to siphon funds. Through digital data analysis, we uncovered the involvement of third parties and proved a conflict of interest between the accounting manager and one of these vendors.
We discovered that the accounting manager had used multiple accounts and complex booking methods to conceal various types of fraud. By meticulously tracking these transactions, we identified all fraudulent entries and the techniques employed. Ultimately, we consolidated our findings and evidence, calculated the total financial loss, and submitted a comprehensive report to management. As a result, legal proceedings were initiated against the two individuals, and approximately 80% of the funds misappropriated by the accounting manager were recovered.
Conclusion
In short, forensic accounting is a powerful tool for preventing problems before they occur. When issues do arise, it uncovers the truth and paves the way for resolution.
As highlighted at the beginning of this article, forensic accounting unfortunately remains underutilized and insufficiently recognized in Türkiye. Yet, a more active adoption of this field could provide organizations with significant benefits—not only financially, but also in terms of operational efficiency and corporate reputation.
