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  • Writer's pictureMatthew Gobig

What are the different aspects of forensic accounting and how it is beneficial?

Updated: Jan 24

In accounting, there are different types of accounting processes. Among them, two of the most diverse and important processes are forensic accounting and traditional accounting. Both are vital components of the financial landscape. They each serve different purposes and employ unique methodologies.

Are you thinking of hiring forensic accountants in London? Then you need to know the difference between a forensic accountant and a traditional accountant.

Difference between forensic and traditional accountant

Objective and purpose

Traditional accounting is the process of recording, summarising, and reporting financial transactions. It focuses on providing a snapshot of a company's financial health. Purpose is to help stakeholders make informed decisions.

In contrast, forensic accounting goes beyond the routine financial reporting. It is a specialised field that investigates financial discrepancies and irregularities. It is used for legal purposes such as fraud investigations, disputes, or litigation support.

Time frame

Traditional accounting operates on a regular and cyclical basis. You can get financial statements at predetermined intervals (monthly, quarterly, annually). On the other hand forensic accounting is conducted on an as-needed basis. It involves digging into historical financial data to uncover evidence related to a particular incident.

Scope of work

Traditional accounting deals with the day-to-day financial transactions, bookkeeping, and preparing financial statements in accordance with accounting principles. Forensic accounting extends beyond routine financial activities. It may involve reconstructing financial records and identifying patterns indicative of fraud or misconduct.

Tools and techniques

While traditional accounting relies on standardised accounting principles, software, and routine auditing processes, on the contrary, forensic accounting utilises a broader range of tools and techniques, including data analytics, investigative skills, and a deep understanding of both accounting principles and legal procedures.

Legal implications

It is concerned with ensuring compliance with accounting standards and tax regulations. Whereas forensic accounting is intertwined with legal proceedings. These accountants serve as expert witnesses in court, providing their findings and opinions on financial matters.

Preventive vs. investigative

Traditional accounting is primarily preventive, focusing on maintaining accurate and transparent financial records to facilitate decision-making and regulatory compliance. On the other hand, forensic accounting is investigative in nature, diving into existing financial data to uncover fraud, embezzlement, or other financial crimes.

Sum it up

While both traditional accounting and forensic accounting contribute to the financial wellbeing of an organisation, they cater to different needs and objectives. Traditional accounting lays the foundation for financial transparency, while forensic accounting acts as the detective unearthing financial irregularities.

Get in touch with Centum Tax. We offer reliable and professional forensic and tax accounting services in London. To find out more about our services, contact us today.


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