Forensic accountants can save businesses a lot of money by identifying and stopping embezzlement, calculating economic damages, and more. However, these services come at a cost.
Because each case is unique, exact costs are impossible to pinpoint at the outset. But some helpful tips help you keep costs down when retaining these professionals.
Retainer Fees
Forensic accountants are relied upon for a wide range of cases. Some of the most common are insurance claims, where forensic accounting can help verify that the policyholder’s economic damages are legitimate and that fraudulent activity hasn’t been taken advantage of.
Another instance when forensic accounting services are called for is during civil or business legal disputes. In these situations, a forensic accountant can help determine the value of shares, businesses, partnerships, and intangibles that are in dispute or lost and quantify commercial losses such as those associated with business interruption, product liability, construction claims, and intellectual property infringement.
In cases of these kinds, the forensic accountant will often work with a team of professionals to ensure that all aspects of the case are considered and that a thorough report is produced. So, how much does a forensic accountant cost? Depending on the type of matter, this may result in higher hourly rates for the forensic accountant. This is why it’s important for those considering retaining a forensic accountant’s services to discuss billings with their chosen provider beforehand.
Hourly Rates
Forensic accountants often work for law enforcement agencies and fraud and investigation units of major corporations and financial institutions. They also serve on legal teams as expert witnesses during criminal and civil litigation cases.
In addition to detecting fraud, insurance companies frequently employ forensic accounting services to confirm that claims are legitimate. Forensic accounting can save the insurance company significantly by uncovering inflated damages or identifying fraudulent activity that would otherwise be unnoticed.
The cost of forensic accounting services can vary greatly depending on the complexity of the matter at hand. It’s important to establish open communication and a clear understanding of the project scope, expected deliverables, and costs from the beginning of the engagement.
For example, the time it takes to review a case of suspected embezzlement depends on how many years of information are involved and the quality of the source documents. For this reason, forensic accountants cannot quote an exact rate for the entire engagement upfront.
Expenses Associated With Travel
Forensic accountants frequently travel for work. They may need to visit locations where financial information is stored or interview witnesses as part of an investigation. In this case, they’ll need to book flights and hotels.
Forensic accountants often work as consultants for law firms, insurance companies, and private individuals or businesses. They’re hired to help uncover financial fraud and assess damage. These investigations can involve many types of fraudulent activity, including bribery, embezzlement, false billings, improper asset valuations, ghost employees, and other schemes. They’ve also worked with police departments on white-collar crimes, traced assets belonging to Holocaust victims, and testified in a televised murder trial. This is some of the most interesting and difficult work a professional accountant can do. It requires skill, tenacity, and an unwavering commitment to finding the truth. And it can be expensive, too. But the rewards outweigh the costs. The results of forensic accounting can save people and businesses millions of dollars.
Additional Expenses
Forensic accountants can work for various clients, including law enforcement agencies and corporations. They can also work with individuals to help prevent financial crimes and strengthen internal controls.
For example, forensic accountants can help identify red flags such as a lack of segregation of duties and excessive reliance on one person for all accounting functions in small businesses. This can be a significant red flag for fraud and should be investigated by a professional.
They can also assist attorneys and insurance companies calculate economic damages related to personal injury, wrongful death, and lost income. These calculations require a thorough understanding of state laws, especially the ‘but-for’ concept that outlines how a plaintiff would have been financially better off for the occurrence in question. Forensic accountants can also help insurance companies determine whether claims are fraudulent or inflated and ensure that any payments are legitimate. This could save the insurance company significant amounts in the long run.