Contemporary Business 14th Edition by Louis Boone, David Kurtz

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Forensic Accountants: Fraud Busters When most people think of accountants, the image that prob-ably comes to mind is that of someone poring over stacks of ledgers or computer printouts, calculator in hand. Although a good deal of accounting does involve ledgers and printouts, forensic accountants don't simply accept a company's numbers at face value-they are crime fighters. People who work in this growing field investigate such white-collar crimes as business fraud, improper financial reporting, and illegal investment schemes.Forensic accounting is accounting performed in preparation for legal review. Forensic accountants take the skeptical view, investigating below the surface of an organization's accounting system to find out what actually happened. They may also testify as expert witnesses if a case goes to trial. The job requires a bachelor's degree in accounting and CPA certification, with further training in investigative techniques for certification as a certified fraud examiner (CFE) or a certified forensic accountant (CrFA). When the energy giant Enron Corporation collapsed, forensic accounting investigations revealed that for several years, company executives had issued false financial statements that exaggerated the company's earnings and thereby increased the firm's stock prices. The statements painted a rosy picture of steady profits that met earnings expectations. In reality, Enron's own investments were doing badly, and its profits were nonexistent. The company was actually losing money. Even after the truth began to leak out and the company's stock prices fell, the executives continued to issue false financial statements in the hope of slowing the fall.
-How might forensic accounting change the world of business?