Financial Forensic Evidence and Acceptability in the Court of Law

Financial Forensic Evidence and Acceptability in the Court of Law

Varaidzo Denhere
DOI: 10.4018/978-1-7998-8754-6.ch003
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This chapter explores the role of forensic accounting in uncovering evidence for use in courts to litigate and arbitrate on financially related crimes. The chapter differentiates the operation of forensic accountants from external auditors and other accountants. It also provides examples of financial crimes and describes the role of forensic accounting in assisting courts deal with these crimes. Furthermore, the chapter outlines differences between forensic accounting and audit reports as well as discussing the admissibility of forensic accounting evidence in courts. Issues around forensic accounting are articulated. Recommendations include the convergence of all important stakeholders to agree on the appropriate curriculum for forensic accountants as well as guidelines and standards to shape the profession and prevent entry by incompetent and unqualified people. Future research should focus on the current inconsistencies on the profession's education mode of delivery, content, pedagogies, and empirical studies to establish specific skills required by forensic accountants.
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Oftentimes lawyers and their clients need advice from experts on financial matters crucial to the outcome of litigation. They get this through financial forensics, also called forensic accounting. According to Sinha (2020) the word ‘forensic’ came from a Latin word ‘forensis’ which means ‘in open court’. This shows that forensics have something to do with the courts of law. Shapiro (2015) defines financial forensics as a skill set that employs accepted knowledge and empirical data to come up with an expert opinion useful in settling issues with the potential of an adverse impact on business performance objectives. Examples of accepted knowledge include laws of evidence, customary practices, as well as professional ethics, while empirical data includes financial statements and non-financial measures among others. Renzhou (2011) also described forensic accounting as a composite discipline that integrates accounting, audit, and law, whilst targeting maintaining and adding value to a legal subject matter, treating the legal system as the criterion, and the economic business facts as the foundation. Furthermore, it is invariably considered that forensic accounting sees the court as its operating objective, and criminal or civil lawsuits as its primary service inclination (Renzhou, 2011). The eventual goal of forensic accounting is to provide expert advice in form of an expert report as well as expert evidence resulting from investigations. In courts, the expert evidence is embraced as adjudicator evidence to prove legal liability by a defendant who has committed a financial crime.

Key Terms in this Chapter

Expert Opinion: Is a belief or judgment about something given by an expert on the subject.

Plaintiff: Refers to a litigant or an individual who institutes a case against another individual in a court of law.

Expert Advice: This is advice given by someone who has studied a subject thoroughly.

Witness: Refers to a person who provides evidence in a court of law as a result of having seen an event or a crime taking place.

Cyber Crime: Refers to criminal activities committed by means of computers or the internet.

Admissibility: Refers to the acceptability or validity of evidence in a court of law based on its quality.

Litigation: Is the process of taking legal action.

Defendant: Is an individual, company, or institution sued or accused in a court of law.

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