Forensic Accounting is defined as:
A) The practice of applying defined financial ratios to investigate a company's financial health.
B) The use of law enforcement to subpoena financial records to determine unlawful actions.
C) The application of investigative and analytical skills for the purpose of resolving financial issues in a manner that meets standards required by courts of law.
D) The investigatory arm of the Securities and Exchange Commission.

Question

Quizplus · Accepted Answer

Forensic accounting involves using investigative and analytical skills to resolve financial issues in a manner that meets legal standards. This can involve analyzing financial statements, tracing funds, and detecting fraudulent activity. It differs from traditional accounting in that it is specifically geared towards legal proceedings and may require testimony in court. Option A is incorrect because financial ratios are just one tool in a forensic accountant's toolkit. Option B is incorrect because while law enforcement may be involved in some cases, it is not the defining characteristic of forensic accounting. Option D is incorrect because the Securities and Exchange Commission is a regulatory agency, not an investigatory arm of forensic accounting.

Forensic Accounting Is Defined As