There are some concepts in forensic accounting that are fundamental! These concepts are generally, but not categorically, true. They serve reliably to give you a meaningful “gut reaction” to what the proper treatment is likely to be when understood and mastered. They are a foundation for what I call my “smell tests.”
Accountants (forensic and otherwise) sometimes miss the opportunity to learn valuable information from a client because an obvious question remains overlooked, or the accountant delivers their inquiry in an offensive or careless manner.
Years ago, after a small bank discovered that an employee had embezzled $30,000, they hired me to do an internal control study. They wanted to reduce risks going forward, and the bank’s president had other related questions about information documentation. A low-level middle-aged employee with minimal bookkeeping background discovered the embezzlement. I was curious to meet this person to see how they had found the fraud, so I made that my first chore after the initial talks with the president. I asked the employee to show me what they had seen, and they did. Then I ask the employee what turned out to be the critical question, “Is there anything else that bothers you about the system?” Nobody else had posed that question to this astute, alert, and caring employee! The employee went on to point out to me significant internal control deficiencies. These deficiencies answered the president’s expressed concerns and revealed several others.
