Forensic accounting, forensic accountancy or financial forensics is the specialty practice area of accounting that describes engagements that result from actual or anticipated disputes or litigation. "Forensic" means "suitable for use in a court of law", and it is to that standard and potential outcome that forensic accountants generally have to work. Forensic accountants, also referred to as forensic auditors or investigative auditors, often have to give expert evidence at the eventual trial. All of the larger accounting firms, as well as many medium-sized and boutique firms, as well as various Police and Government agencies have specialist forensic accounting departments. Within these groups, there may be further sub-specializations: some forensic accountants may, for example, just specialize in insurance claims, personal injury claims, fraud, construction, or royalty audits.
Financial forensic engagements may fall into several categories. For examples:
- Economic damages calculations, whether suffered through tort or breach of contract;
- Post-acquisition disputes such as earnouts or breaches of warranties;
- Bankruptcy, insolvency, and reorganization;
- Securities fraud;
- Business valuation; and
- Computer forensics/e-discovery.
Forensic accountants often assist in professional negligence claims where they are assessing and commenting on the work of other professionals. Forensic accountants are also engaged in marital and family law of analyzing lifestyle for spousal support purposes, determining income available for child support and equitable distribution.
Engagements relating to criminal matters typically arise in the aftermath of fraud. They frequently involve the assessment of accounting systems and accounts presentation—in essence assessing if the numbers reflect reality.
Some forensic accountants specialize in forensic analytics which is the procurement and analysis of electronic data to reconstruct, detect, or otherwise support a claim of financial fraud. The main steps in forensic analytics are (a) data collection, (b) data preparation, (c) data analysis, and (d) reporting. For example, forensic analytics may be used to review an employee's purchasing card activity to assess whether any of the purchases were diverted or divertible for personal use.
Forensic accountants, investigative accountants or expert accountants may be involved in recovering proceeds of crime and in relation to confiscation proceedings concerning actual or assumed proceeds of crime or money laundering. In the United Kingdom, relevant legislation is contained in the Proceeds of Crime Act 2002. In India there is a separate breed of forensic accountants called Certified Forensic Accounting Professionals. In other countries, some forensic accountants are also Certified Fraud Examiners, Certified Public Accountants with AICPA's Certified in Financial Forensics (CFF) Credentials, Chartered Accountants (CA), Certified Management Accountants (CMA) or Chartered Certified Accountants.
Large accounting firms often have a forensic accounting department. But there are also firms such as Matson Driscoll and Damico (MDD Forensic Accountants, that are dedicated to providing litigation support and damage quantification solely for forensic accounting matters. 
Forensic accountants utilize an understanding of economic theories, business information, financial reporting systems, accounting and auditing standards and procedures, data management & electronic discovery, data analysis techniques for fraud detection, evidence gathering and investigative techniques, and litigation processes and procedures to perform their work. Forensic accountants are also increasingly playing more proactive risk reduction roles by designing and performing extended procedures as part of the statutory audit, acting as advisers to audit committees, fraud deterrence engagements, and assisting in investment analyst research.
"While Forensic Accountants ("FAs") usually do not provide opinions, the work performed and reports issued will often provide answers to the how, where, what, why and who. The FAs have and are continuing to evolve in terms of utilizing technology to assist in engagements to identify anomalies and inconsistencies. It is important to remember that it is not the Forensic Accountants that determine fraud, but instead the court." (David Malamed, Forensic Accountant, Toronto Ontario.)
To qualify as a forensic accountant, one must possess the appropriate licence or qualification as recognized by the jurisdiction in which the lawsuit or dispute is taking place. Therefore, for a UK court a Chartered Accountant with the ICAEW would be qualified, while a CPA with the AICPA is qualified in a US court.[page needed]
The types of crimes forensic accountants investigate are classified as "crimes against property." They investigate crimes such as fraud and give expert testimony in court trials. They also perform work related to civil disputes. Forensic accountants are also known as fraud investigators, investigative accountants, forensic auditors or fraud auditors.
- Crumbley, D. Larry; Heitger, Lester E.; Smith, G. Stevenson (2005-08-05). Forensic and Investigative Accounting. CCH Group. ISBN 0-8080-1365-3.
- Cicchella, Denise (2005). Construction audit guide: overview, monitoring, and auditing. Altamonte Springs, FL: IIA Research Foundation. ISBN 0-89413-587-2.
- Parr, Russell L.; Smith, Gordon V. (2010). Intellectual property: valuation, exploitation, and infringement damages. Hoboken, N.J.: Wiley. pp. Chapter 33. ISBN 0-470-45703-1.
- Nigrini, Mark (June 2011). "Forensic Analytics: Methods and Techniques for Forensic Accounting Investigations". Hoboken, NJ: John Wiley & Sons Inc. ISBN 978-0-470-89046-2.
- "Service of Forensic Accountants". big4accountingfirms.org. Retrieved 2014-04-08.
- Kwok, Benny K. B. (2008). Forensic Accountancy (2nd edition). LexisNexis. ISBN 978-962-8972-76-0. Retrieved 1 July 2013.