Sarah Parker
When a property loss involves money that was never earned, inventory that was destroyed, or records that don't add up, the numbers become part of the claim. That's where forensic accounting comes in.
What it is
Forensic accounting is the use of accounting, auditing, and investigative skills to answer financial questions in legal, regulatory, or insurance matters. A forensic accountant reviews the records, reconstructs what happened, and presents findings that others (insurers, attorneys, courts, or appraisal panels) can evaluate.
Many hold credentials like CPA (Certified Public Accountant), CFF (Certified in Financial Forensics, from the AICPA), or CFE (Certified Fraud Examiner, from the Association of Certified Fraud Examiners).
Where it shows up in property claims
Business income (business interruption): measuring the income a business likely would have earned during the period of restoration, plus continuing expenses. [VERIFY: if you cite a specific ISO form, confirm the current edition first.]
Extra expense: reasonable costs a business incurs to reduce the interruption or keep operating, like a temporary location.
Inventory and stock losses: using purchase records, sales history, and counts to estimate what was on hand at the time of loss.
Loss of rents: using leases and rent rolls to support lost rental income.
Record review: checking financial records for accuracy, consistency, or gaps.
Insurers often retain forensic accountants to evaluate financial claims. Policyholders and their representatives (public adjusters or attorneys, for example) may retain their own. And when both sides have one, their numbers may differ, based on assumptions, methods, or which records each one reviewed.
Why it matters to you
You don't need to be an accountant to work a claim with a financial component. But it helps to know what a forensic accountant does, what they may ask for (tax returns, P&Ls, general ledgers, bank statements, payroll, inventory records, leases), and how their findings could affect the claim.
Organized records, gathered early, can help a financial claim move forward with fewer back-and-forth requests.
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