What is Forensic Accounting and How Can I Use it for Lost Data?
Did you backup your data? When your computer is hacked or is damaged from an electrical surge, that's often the first thought that goes through your head. Unfortunately, if you didn't, that data may be lost. How can you account for that information so that you can keep your business running without spending all of your time in the process? Two words: forensic accounting.
Forensic accounting is a process used in criminal law circles to recover information that has been otherwise lost or tampered with during a crime. However, that isn't necessarily the only application for the science of forensic accounti
ng. A forensic accountant takes previous business accounting data and uses it to determine the financial impact a particular event has on a business' financial situation.
Forensic accountants look at a particular set of information to determine this impact. They'll start by looking at historical financial information of the company to determine what is considered normal for that business. They'll move on to financial statements and income projections made in the past.
Once they've reviewed this information, they'll conduct short interviews with business leadership that can help provide additional context for the situation. Next, the data type that was lost is reviewed and evaluated. Additional sources may be used to rebuild the data as much as possible, such as bank statements that show income and expenses. Finally, if sensitive data was hacked, the pertinent laws and regulations will be reviewed.
If you don't have some of the documents mentioned above, that's okay - not all businesses will have all of this information available. Depending on the nature of the data loss, the forensic accountant may not even need to see all of the documents mentioned to move your data recovery process forward. Just ask the accountant what is needed to get started.
As you can see, forensic accounting is a great option to consider when you've lost accounting data. But where can you find someone to help you with the process? At AccountRely, our focus is on helping our customers do what they do best - run their business. Reach out today to get connected to an accounting professional who can help you recover your lost accounting data.