It's almost impossible for the uninitiated to avoid picturing a forensic accountant as a white-coated man clutching a calculator. RGL International partner Catherine Rawlin couldn't be further removed from that image, but she admits that the role of the forensic accountant is not well understood.
The profession only emerged in the UK about 20 years ago, although it had been well established in the US for some time.
Forensic accountants are usually called in when there is a business interruption, product liability or personal injury claim. They request financial documents, correspondence with customers and other records from the affected business, then measure the effect the event had on its operations and finances. They talk through any questions raised by the figures with the insured, insurers and loss adjusters, with the aim of providing loss adjusters with the information needed to negotiate a settlement.
“The idea is to try to get to the right answer but it's not an exact science – some people load their claim and sometimes they don't claim enough,” Rawlin says.
“The fundamental thing is to have a good understanding of the business so you can assess the impact.” The time taken to investigate can vary greatly.
“We've been known to get commercial claims completely done in a couple of weeks but that's rare,” Rawlin says.
“Mostly it's a year or so and can go up to five or six years for litigation claims from the time of the accident to the settlement.”
She says forensic accountants were originally used by lawyers to assist in litigation, and still do much expert witness work, but “over the years insurers over here have realised it's useful”, partly since some commercial policies started to include claims preparation clauses. The clauses gave the insured the ability to call in a forensic accountant, so insurers began bringing in their own to stay on an even footing.
A growing sector
RGL, which has offices in the UK, US and Australia, investigates all sizes and varieties of claims, from under £5,000 to hundred of millions of pounds, but specialises in assisting loss adjusters in loss of profit cases. Other forensic accountants look at speciality areas such as fraud.
“We handle everything from handwritten records to huge plcs with very detailed accounts,” Rawlin says.
She says the sector is growing rapidly, although firms are experiencing a squeeze on their fees by insurers. “They're trying to manage their claims costs but, on the other hand, they're paying much higher fees to insureds' advisers. It'll balance out eventually, but it's certainly one of the big issues for us.”
Forensic accounting was just taking off when Rawlin, previously with Coopers & Lybrand's forensic department, joined RGL in 1989.
“I was attracted by the variety, that you have to learn a lot in a short period of time and I enjoy working in a team with loss adjusters and seeing a claim settled in front of your eyes,” she says.
“There's always a new challenge, it's never the same.”
Rawlin, who became a partner in 1997, says the speciality is becoming more popular with accounting students, and less male-dominated.
“Now, people can start doing their training in forensic rather than auditing,” she says.
“When I started there were fewer women, but it's becoming more even and there are more women than men in this office.”
Dos and don'ts
Forensic accountant Catherine Rawlin offers some advice on how to ensure the best recovery from business interruption:
