| Here're some of the best known differences | | | | system of internal control is evaluated. It is |
| between a Forensic accounting and Traditional | | | | argued that If the internal control system is |
| Accounting in a glance; | | | | deemed to be highly effective, then material |
| 1. A very obvious and discrete key difference | | | | errors are not probable. |
| which one can identify between a traditional | | | | 6. Traditional auditors typically adhere to the |
| auditor VS a forensic accountant is that : | | | | generally accepted auditing standards (GAAS) as |
| The former is someone who checks the math | | | | promulgated by the Public Company Accounting |
| accuracy in the accounting department while the | | | | Oversight Board (PCAOB). External auditors are |
| latter is someone whom are looking behind these | | | | typically reviewing whether an organization is |
| financial numbers find out what's not quite right. | | | | following GAAP. GAAP are promulgated by the |
| 2. The second differentiation is the "investigative | | | | Financial Accounting Standards Board (FASB) .This |
| intuition". | | | | denotes that means that auditors are affected by |
| Intuition refers to the gut instinct which one may | | | | all three of these organizations and must stay |
| have to guide you to the appropriate direction as | | | | current with old, new and changing standards and |
| of where your investigation should start from. | | | | principles issued by all three of these organizations. |
| This is not text book earned, but rather | | | | 7. Instead, forensic accountants use physical |
| something which can be earned through massive | | | | evidence, testimonial evidence, documentary |
| experiences. Most of the time, no investigation | | | | evidence and demonstrative evidence to help |
| intuition is found nor required in the traditional | | | | identifying suspect and culprits. |
| accounting scope. | | | | 8. For Forensic Accounting, any type of evidence |
| 3. Traditional auditing is a process of auditing | | | | can be used as information, be it documentary |
| others' work to determine if they have followed | | | | paper, a computer video or audio. However, it |
| the documented official policies, procedures and | | | | requires an expert to interpret the evidence and |
| practices of the company. The determination is | | | | present it. Demonstrative evidence is not actual |
| based on evidence. It is a matter of fact and not | | | | evidence. It is just an aid to understanding just like |
| merely a matter of opinion. This kind of audits is | | | | a model of a body part or pictures or other |
| required by financial intermediaries and the | | | | devices are used to help clarify the facts. |
| government depending on circumstances. | | | | 9. Forensic Accountant is often asked to serve as |
| 4. Traditional auditing focus on error identification | | | | an expert witness for a lawsuit or criminal case in |
| and prevention. Prevention is the result of an | | | | a court, the forensic accountant needs to have |
| effective internal control system. The auditor | | | | applied reliable principles and methods to sufficient |
| reviews the effectiveness of the internal control | | | | facts or data. The expert witness is a recognized |
| system by sampling transactions of some | | | | specialist relative to the principles and methods |
| agreeable percentage. Materiality is the accounting | | | | applied to the sufficient facts or data. |
| way of designating the importance of a | | | | 10. A forensic accountant typically need to |
| transaction or an event. | | | | possess the expertise and skills in these 2 fields : |
| 5. Traditional Auditors use statistics to determine | | | | Private investigator and Accountings are what |
| the probability that material errors will or will not | | | | specifically required to be a great forensic |
| be identified and the possibility of its happening. | | | | accountant. On the other hand, there is no such |
| This is a concern since only a sample of | | | | requirement in the traditional accounting space. |
| transactions and events will be reviewed. The | | | | |