“I need a forensic accountant on a case like this because first of all I’m not an accountant,” says Hernandez, whose firm specializes in business litigation, general business practices, fraud cases, personal injury and wrongful death. “I look to experts in other fields to help me successfully move my cases forward, and in this case, a forensic accountant will look through financial records and see if someone is making improper financial entries or withdrawals. He will find the path the money takes and connect the dots, or he will find no evidence the money has been improperly moved somewhere else. Either way, my client will learn the truth about his company’s finances.”

Forensic accounting covers two broad and critical areas—investigative accounting and litigation support. Although it can be beneficial in many areas of business, it is especially helpful in financial investigations, fraud detection, damage calculations and due diligence. It is also valuable in divorce cases where a client suspects there are hidden assets, partner disputes, absentee ownership cases, and real estate and construction cases with potential for fraud.

Andy Pappas, forensic accountant, CPA and founder of Scottsdale-based Pappas & Company, says unlike conventional accountants, forensic accountants have the ability to think like someone with an evil mind. They also have the ability to look for what is missing rather than verifying what is correct and assuming nothing is wrong.

“Forensic accounting is a specialized, expanding area and more judges are requiring it today because a forensic accountant will approach the examination from a position of advocacy rather than neutrality,” says Pappas. “Instead of accepting financial records at face value, we approach every engagement with skepticism. We search for evidence of the actual underlying transactions rather than accept financial records to accurately portray what happened.”

Over the past few years Pappas & Company has been hired in numerous local cases—many of which involved Valley business people who swindled large amounts of money.

“Forensic accountants are trained to go beyond the obvious, so we’re never surprised by what we uncover,” says Denise Fritz, a CPA at Pappas & Company, who also has finance and accounting degrees and a master’s in taxation. “We are engaged to do an examination to look for potential fraud. Someone can be robbing a business or person blind and until a lawyer tells them to bring in a forensic accountant, no one does. Some people think a conventional accountant can do forensic work, but that is just not the case. Forensic accounting is a very specialized field.”

On occasion, attorneys bring in a forensic accountant before they file a lawsuit to see if they have a case and to help them determine what type of case to file.

Craig Keller, managing partner of Keller & Hickey PC in Tempe and Daryl Wilson, an associate of the firm, recently hired a forensic accountant for a fraud case involving a $6 million hotel project that was severely over budget in actual construction costs. The expert accountant was able to help the legal team make a connection in the case between suspicion and illegitimate transactions and then to conclude that the transactions were in fact illegitimate.

“The forensic accountant helped us through the discovery process,” says Keller. “In fraud cases, people do not keep good records for a reason and a lot of times records are missing. So in this type of situation, we needed a forensic accountant to go back and establish an accounting of what happened. We also couldn’t take a case like this without a forensic accountant. Since we are not accountants, we would spend countless hours looking at financial records that meant nothing to us. Getting a forensic accountant involved early in the case helps us focus on specific factual issues that make the discovery process more effective. They also tell us what areas of financials are suspicious or problematic and obtain bank records and in-house records related to the subject etc., whereas without that expertise, we wouldn’t focus on that till later in the litigation or maybe not at all.”

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