Both forensic accounting engagement and financial statements are investigative and examination techniques. However, their objective and parties who conduct the process coupled with the procedures differ, as illustrated herein. In financial statement auditing, the auditor seeks to provide his or her opinion on whether the information provided in the firm’s financial statements is in accordance with the Generally Accepted Accounting Principles (GAAP) and the Generally Accepted Auditing Standards (GAAS). The process enables auditors to present the actual and fair financial position of an organization.
Moreover, financial statement auditing is historical in nature, which arises from the fact that it is conducted after financial transactions have been conducted. In summary, financial-statement auditing can be defined as a process of confirming financial transactions. Moreover, auditors have a responsibility towards the stakeholders who may depend on the financial statements in their decision-making.
On the other hand, forensic accounting is multipurpose. Some of its objectives include calculating the loss, pension plan, and loyalty. Forensic accounting may be conducted using techniques and procedures similar to financial statement auditing. However, the purpose differs. For example, a forensic accountant may assess trial accounts in order to confirm the calculations. Consequently, the accountant is in a position to determine whether the financial information presented is adequate to meet the goal of a specific engagement.
Therefore, the role of financial accountants is not to confirm financial data. Additionally, forensic accountants are only answerable to their clients and not third parties. In summary, Pedneault et al. posit, “The objective of forensic accounting is to facilitate claims and settlement by minimizing the financial component in a particular continuing dispute or debate.”