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FAch1 3
FAch1 3
Chapter 1
1. What are the key elements of the definition of forensic accounting?
a. The key elements of the definition of forensic accounting are:
accounting (the communication of financial information), special skills (such as
knowledge of the law, evidential matter, interpretation and communication),
litigation services, and investigative services.
2. What does the word forensic mean?
a. The word forensic means pertaining to law.
3. What are the two areas into which the practice of forensic accounting is typically
divided?
a. Forensic accounting is divided into investigative services and
litigation services. Investigative services include forensic accountants acting as
consultants in cases that do not include litigation. Litigation services include
forensic accountants acting as testifying experts and non-testifying consultants in
litigation cases.
4. How does auditing differ from forensic accounting?
a. Auditing is different from forensic accounting because auditing is
focused on expressing an audit opinion on whether the financial statements are
fairly represented. Forensic accounting, on the other hand, is focused on the
clients particular needs.
5. By whom and when was the term forensic accounting coined?
a. The term forensic accounting was coined by Maurice Peloubet in
an article he published titled Forensic Accounting-In Todays Economy in 1946.
6. What are some of the knowledge and skills required in forensic accounting?
a. Forensic Accounting requires a knowledge of accounting,
psychology (understanding a suspects motives), Law (familiarity with the court
systems, federal and state rules of procedure, and rules of evidence), and
accounting information systems (knowledge of internal controls and business
procedures).
7. What are two examples of types of financial cases that require investigation?
a. Two examples of financial cases that require investigation are
determining the value of a spouses assets in a divorce case and investigating
public corruption.
8. What is the difference between fact witnesses and expert witnesses?
a. Fact witnesses are only permitted to testify in court to what they
perceive through their senses (what they saw, heard, touched, smelled related to
the case) while expert witnesses give their opinions on the relevant events of the
case.
9. What are the three management activities associated with fraud risk
management?
a. The three management activities associated with fraud risk
management are:
10. What special skills and knowledge are required to conduct forensic accounting
investigations?