Apr 20 Famous Examples Of Forensic Accounting
From the outside looking in, the discipline of accounting does not seem to be a glamorous choice of profession. From the moment they first do a math problem in elementary school, many are counting down the days until they no longer have to look at another math problem for the rest of their lives. It could be argued that with the right teacher, the right mindset or the right approach to the subject, anyone can learn to enjoy math; regardless, those who do not take to math find it difficult to believe that it is the chosen profession of so many people. Of course, the accounting profession and other professions that deal with numbers are often important in our society and are rewarded accordingly with high compensation; this is the driving force behind entry into accounting for some people.
For some, though, the opportunity to work with numbers each day is an exciting possibility. These analytical minds can see the diversity and creativity within numbers and mathematics that many others cannot. For these left-brained individuals, the broad discipline of accounting and each of its many specializations are potentially interesting. For everyone else, accounting is very rarely considered exciting. The discipline of forensic accounting, though, is a possible exception to the rule.
Forensic accountants work on projects that are used in a court of law. Occasionally, a court case will capture the public’s imagination and become of great human interest even to those who normally pay no attention to legal proceedings. During these cases, the work of forensic accountants is often on public display and enters the cultural zeitgeist in a way that accounting rarely does. Here are a few examples of such occasions.
A Beatle’s Divorce
The services of a forensic accountant are often needed over the course of divorce proceedings. There have been many high-profile divorce cases over the years involving individuals with a high net worth. Disputes over a person’s net worth are often resolved by forensic accounting, as was the case when Sir Paul McCartney of The Beatles and his wife Heather Mills underwent a divorce. The net worth reported by McCartney was disputed by the other party, and the issue needed to be resolved in order to determine the payments made as a result of the divorce. Forensic accounting work was likely undertaken by the law firms representing both parties and perhaps also by the court itself, independent of the parties. Ultimately, a judge used the accounting information to make a decision about McCartney’s net worth and settle the case.
A Mob Boss’s Taxes
Rarely do accountants get to catch bad guys, but that was the case when forensic accountants at the IRS worked to bring down legendary gangster Al Capone. In the early 1930s, the IRS worked to uncover the mob boss’s tax evasion; accountants documented his income generated from his many illegal activities and then charged him with not reporting the income for tax purposes. While catching criminal masterminds is normally the purview of law enforcement, in this case the IRS pulled off what the FBI could not.
A Publisher’s Fraud
Forensic accountants are also often involved in cases of financials fraud such as embezzlement. For example, a European publisher named Robert Maxwell’s company began to fall apart due to financial shortcomings shortly after his death in 1991. It soon became apparent that the reason for the company’s downfall was that Maxwell had been involved in an embezzlement scheme that used money fraudulently obtained from clients and shareholders to prop up the company’s finances. It took forensic accountants more than a decade to sort through the fraud and ultimately determine that Maxwell had swindled associates out of about a billion dollars. While these high-profile cases are rare, they demonstrate the need that exists for a quality Clifton NJ forensic accounting specialist in any personal, business or legal proceedings that involve finances.