Forensic Accounting

The role of a forensic accountant has many different aspects and duties that are done in combination to find fraud or to correct accounting procedures that currently exists. Many companies hire investigative accountants to find errors in their books, or sometimes to assist in a providing documentation and help with a legal action against the company. The ability to analyze information and help establish a solid defense is what the forensic accountant will perform in cases when a client has been charged with fraud against the government, public, or private business, or a fraud involving insurance claims, real estate, investments and financial instruments. Financial expertise, fraud knowledge, and a good understanding of business reality along with a working awareness of the legal system are all areas that a forensic accountant will have to acquire. There are many different businesses and industries that hire forensic accountants, and one major industry that relies on accounting services is the health care provider industry.

In the healthcare industry, such as a pharmacy would need many different accounting controls that would have to be in place to insure that funds are flowing through the business correctly. "Health care costs in the United States are higher per person than anywhere in the industrialized world. Health care spending was a little over 13 percent of the GDP in 2000 and is projected to be almost 19 percent of the GDP by 2012 (Ford, 2007)". As spending surges, the health care industry has become a profitable target for fraudulent schemes. At a pharmacy, there are a few areas that will have to be especially reviewed to provide assurance that the numbers correlate with the flow of business. Billing the correct patient and the correct amounts to make sure the accounts receivable is balanced is important. Some clients pay in cash and others by insurance a right separation for these transactions will have to be in place. Inventory at a pharmacy is a major concern with the high cost of medication. A strict inventory policy will have to been in place and a forensic accountant will thoroughly review the inventory process. Doctors at times will order prescriptions for patients from their office and therefore there may be some discrepancy in these records. Insurance is another major are of concern for a pharmacy. The prescription drug program that the government has implemented is susceptible to fraud thus an audit of government insurance users will be recommended. These areas of the pharmacy business should be scrutinized by a forensic accountant and will be beneficial for the company in the future.

The forensic accountant can provide valuable services to a pharmacy business in discovering accounting problems and red flags in the company's accounting system. There has been a loss of confidence in the financial statements and the underlying data due to scandals involving Enron and WorldCom that apply to public and private companies (Silverstone & Sheetz, 2007). The days of observing a financial statement and deriving an opinion of the financial viability of an entity is something from the past. Understanding how the data is obtained and recorded is what a forensic accountant can examine to give assurance to the integrity to the numbers. A pharmacy has many different revenue streams from cash paying customers to insurance payments from government agencies that a forensic accountant can review to correct any differences in the numbers that have been recorded. When a pharmacy is accused of creating fictitious Medicare claims and over billing the government, a forensic accountant