Reem Mohammad

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?

a. Three special skills that are required to conduct forensic

accounting investigations are: investigative skills (how to identify different types
of fraud schemes, how to conduct an investigation, and how to detect deception)
auditing skills (how to collect, interpret, and evaluate data), and digital forensic
skills (using computer assisted audit tools and techniques to extract and analyze
data from ERP and accounting systems.
11. Are communication skills critical in forensic accounting? Why or why not?
a. Yes, accounting itself is the language of business so an
accountant needs good communication skills communicate what is in the
financial statements to the user. It is even more important for forensic
accountants to have great communication skills because, as testifying experts
they are called upon in court for cross-examinations and depositions.
12. What are two areas in which forensic accountants, as expert consultants, can
give advice?
a. Expert consultants can give their advice on the value of an estate,
the financial impact of mergers, acquisitions, and bankruptcies, and fraud risk
mitigation.
13. What are the names of three organizations that are applicable to forensic
accountants and what factors play a role in determining the organizations to which
forensic accountants belong?
a. The AICPA is one organization that is applicable to forensic
accountants it grants CPAs the Certified in Financial Forensics certification which
tests forensic accounting knowledge. The ISACA is another organization that
benefits forensic accountants. It grants the Certified Information Systems Auditor
certification which focuses on the advanced computer skills needed by forensic
accountants. The last organization is the National Association of Certified
Valuators and Analysts. The NACVA provides valuation and litigation services for
various types of business transactions.
14. What are the names of four credentials that are specific to the forensic practice of
valuation?
a. The four credentials that are specific to the forensic practice of
valuation are: Certified Valuation Analyst (CVA), Accredited Valuation Analyst
(AVA), Accredited in Business Appraisal Review (ABAR), and Master Analyst in
Financial Forensics (MAFF).
15. Why is the skill of problem-solving so important in forensic accounting?
a. Problem solving is an important skill for forensic accounting
because forensic accountants must be able to uncover what the opposing side is
trying to hide.