Forensic accountants follow the money trail to assist investigations and help solve crimes.

BY CHRISTINA MOTLEY | SPECIAL TO BRBJ

A local restaurant is ruined by fire. The owner files an insurance claim, and the insurance company is liable unless it can prove arson.

An investigation begins and the owner, who has been losing money and is in distress, becomes the lead suspect.

The fact that the owner didn't include sound equipment in the insurance claim seals the case.

The night of the fire, the entertainers performing at the restaurant had been required to bring in and remove their equipment. But come to find out, the owner's son had taken out the equipment the day before the fire.

The insurance company proves arson and does not pay the claimant. What began as a civil suit results in a criminal case.

The story is true. The sleuth who solved the case is Walter Jones, a retired IRS criminal investigator, certified public accountant and owner of Forensic Investigative Services LLC in Roanoke, who has spent 40 years in forensic accounting.

Forensic accounting involves tracing financial records and interviewing witnesses and suspects, as well as serving as an expert witness at trials. It has been around since ancient Egypt, when pharaohs had scribes account for their gold and assets. However, it came to the forefront of the accounting profession after the Enron and WorldCom scandals and is a new area of specialty offered for master's degree candidates.

Kim White, owner of Accounting Outside the Box LLC in Roanoke, just earned her master's degree in forensic accounting from Florida Atlantic University.

"I wrote a research paper on forensic accounting for my bachelor's degree and realized it covered several areas I'm interested in, including accounting, psychology and investigation," White said. "I knew this was my calling. I was so excited about the master's degree program that I started two weeks after earning my BBA."

No special designation is needed to be a forensic accountant, but several are available, said Olaf Barthelmai, a CPA and partner with McLeod & Co. in Roanoke, which has qualified CPAs to provide forensic accounting services such as fraud detection and prevention, loss analysis, risk assessment and litigation support.

The American Institute of Certified Public Accountants offers certified financial forensics and certified fraud examiner credentials, while the Institute of Certified Forensic Accountants provides a certified forensic accounting professional designation. The certified fraud examiner is most common, said Barthelmai, who said he knows of seven CPAs in the Roanoke Valley with this certification. Additionally, there is a Forensic CPA Society.

Forensic accountants have been used for a long time by the IRS, the FBI, lawyers and insurance companies, White said. She now helps small businesses -- who are especially vulnerable to internal fraud, she said -- by developing fraud prevention plans.

"Forensic accountants are like medical examiners," said Matt Broughton, a partner with Gentry Locke Rakes & Moore, which represented a company with an internal bookkeeper who created a fake expense category and paid that "vendor" $3,500 monthly until the owner realized the company was losing money.

Forensic accountants also can help business partners determine different methods to value their company, if one wants to sell to the other, he said.

"There is an insatiable need for forensic accountants," said Jones, who said he has worked on civil and criminal cases involving arson, embezzlement, property theft and alleged slips and falls.

"Financial transactions leave a trail," he said.