CHAPTER 3:

SCREENING
AND
STAGING
ENGAGEMEN
TS

©2015 Pearson Education, Inc. All rights reserved

Learning Objectives
1. Identify five primary factors that should be
considered when screening an engagement
2. Define a conflict of interest in the context of a
forensic accounting engagement and explain the
importance of identifying and disclosing any
potential conflicts
3. Describe the purpose and content of an engagement
letter

©2015 Pearson Education, Inc. All rights reserved

Learning Objectives
4. Identify the factors involved in “framing” a case
and explain how each impacts case development
5. Explain how a scientific approach can be utilized in
forensic accounting engagements
6. Describe the value and role of research in forensic
accounting

©2015 Pearson Education, Inc. All rights reserved

Identify Five Primary Factors
that Should Be Considered when
Screening an Engagement
Learning Objective 1

©2015 Pearson Education, Inc. All rights reserved

Screening Engagements
 Screening is a vetting process to avoid undesirable
clients and cases.
 Accepting an engagement requires careful evaluation
of the proposed risks and rewards.
 Economic assessment can be stated in terms of its
risk-reward ratio.

©2015 Pearson Education, Inc. All rights reserved

Pre-Engagement Considerations
 Engaging attorney
 Conflicts of interest
 Competence and due care
 Nature and scope of the assignment
 Compensation

©2015 Pearson Education, Inc. All rights reserved

Define a Conflict of Interest in the Context
of a Forensic Accounting Engagement and
Explain the Importance of Identifying and
Disclosing Any Potential Conflicts
Learning Objective 2

©2015 Pearson Education, Inc. All rights reserved

Conflicts of Interest
 Real or perceived incompatibility between:
 Interests of two clients
 Interests of the client and the forensic accountant

 Key considerations:
 Objectivity
 Independence

©2015 Pearson Education, Inc. All rights reserved

Describe the Purpose and Content of an
Engagement Letter
Learning Objective 3

©2015 Pearson Education, Inc. All rights reserved

Engagement Letter
 Contracts that define the legal relationship and
demonstrate understanding and acceptance of
responsibilities
 Content
 Identification of responsible parties
 Purpose
 Nature
 Limitations on the scope, and so on

©2015 Pearson Education, Inc. All rights reserved

Identify the Factors Involved in
“Framing” a Case and Explain How Each
Impacts Case Development
Learning Objective 4

©2015 Pearson Education, Inc. All rights reserved

Staging an Engagement
 Planning and coordinating the engagement
 Relevant to this effort are:
 Framing
 Scientific approach
 Value of research

©2015 Pearson Education, Inc. All rights reserved

Framing a Case
 Boxing the case by specific control factors including:
 Type of case
 Jurisdiction
 Professional standards
 Nature of the engagement
 Purpose of the engagement
 Scope
 Relevant date(s)

©2015 Pearson Education, Inc. All rights reserved

Explain How a Scientific Approach Can
Be Utilized in Forensic Accounting
Engagements
Learning Objective 5

©2015 Pearson Education, Inc. All rights reserved

Scientific Approach
 Provides order, reasoning, and direction to the
assignment
 Enhances the credibility of the expert’s opinions
 Makes communication of opinions easier

©2015 Pearson Education, Inc. All rights reserved

Five Steps of the Scientific Process
Define the purpose (or problem)

Form a hypothesis

Gather evidence

Interpret data and refine the hypothesis

Draw conclusion(s)

©2015 Pearson Education, Inc. All rights reserved

Benefits of Scientific Approach
 A systematic process that can be duplicated
 Reflects professionalism and due care
 Decreases liability
 Process and results are more easily communicated
 Is more defensible

©2015 Pearson Education, Inc. All rights reserved

Describe the Value and Role of Research
in Forensic Accounting
Learning Objective 6

©2015 Pearson Education, Inc. All rights reserved

Research
 Systematic process that:
 Starts with a question or problem
 Involves the collection, analysis, and interpretation of
information
 Substantial component of forensic accounting work
involves research
 Forensic accountants perform both primary and
secondary research

©2015 Pearson Education, Inc. All rights reserved

Primary Research
 Engagement specific and involves the collection,
analysis, and interpretation of primary data
 Based on a sample selected externally by the client or
the forensic accountant
 Can be time-consuming and expensive

©2015 Pearson Education, Inc. All rights reserved

Secondary Research
 Collection, analysis, and interpretation of data that
has been compiled and published by others
 Utilized by forensic accountants in refining a
hypothesis, developing critical assumptions, and
selecting methodologies
 May serve as a springboard for primary research

©2015 Pearson Education, Inc. All rights reserved

Online Research
 Employs the Internet
 Exercise caution

©2015 Pearson Education, Inc. All rights reserved

Characteristics of Good Research
 Starts with a clearly stated problem or question
 Follows a specific plan of procedures
 Guided by the specific problem and a working
hypothesis
 Accepts certain critical assumptions
 Requires reliable methodology

©2015 Pearson Education, Inc. All rights reserved

©2015 Pearson Education, Inc. All rights reserved