Criminal Accounting

Criminal accounting, also known as forensic accounting, is the investigation of financial records to detect and expose fraud, embezzlement, money laundering, and other forms of financial crime. It’s a specialised branch of accounting where the focus shifts from reporting performance to uncovering wrongdoing.

Forensic accountants combine financial expertise with investigative skills to support criminal prosecutions, civil disputes, regulatory action, and corporate internal reviews. Whether it’s a director misusing funds or a large-scale fraud ring, forensic accountants help connect the numbers to the truth.

What Is Criminal Accounting (Also Known as Forensic Accounting)?

Criminal accounting involves the examination of financial transactions for signs of intentional wrongdoing or misconduct. Forensic accountants analyse records, transactions, emails, contracts, and internal controls to detect inconsistencies or evidence of manipulation.

This work is usually used in:

• Criminal cases (e.g. fraud, theft, corruption)

• Civil litigation (e.g. partnership disputes, loss of earnings claims)

• Regulatory investigations (e.g. FCA or HMRC probes)

• Corporate internal audits following whistleblower reports

It’s not about everyday bookkeeping — it’s about financial investigation that stands up in court.

What Do Forensic Accountants Do?

Forensic accountants are financial detectives. Their job is to dig through the data, identify irregularities, and explain complex financial matters in a way courts, lawyers and juries can understand.

Key tasks include:                 

• Tracing assets and identifying misappropriated funds

• Reconstructing accounting records

• Quantifying losses in fraud cases

• Preparing reports for use in legal proceedings

• Giving expert witness testimony in court

• Supporting law enforcement, legal teams, regulators and businesses

Their work often helps determine whether a crime has taken place — and who was responsible.

What Qualifications Must Forensic Accountants Have?

In the UK, forensic accountants are typically qualified chartered or certified accountants. Most have qualifications such as:

• ACA (Institute of Chartered Accountants in England and Wales)

• ACCA (Association of Chartered Certified Accountants)

• CIMA (Chartered Institute of Management Accountants)

On top of these, many pursue specialist training or certification in forensic accounting or fraud examination, such as:

• Certified Fraud Examiner (CFE) – issued by the Association of Certified Fraud Examiners

• Diploma in Forensic Accounting (various providers)

• Legal training or expert witness training, if court appearances are expected

Strong analytical, investigative and communication skills are essential, especially for explaining technical issues to non-specialist audiences.

Why Is Forensic Accounting Important?

Forensic accounting plays a crucial role in identifying financial crime and holding individuals or organisations accountable. It helps uncover hidden transactions, falsified records, and internal misconduct that traditional audits might miss.

Its importance includes:

• Supporting fraud investigations and legal cases

• Preventing financial losses and deterring misconduct

• Assisting insolvency practitioners in identifying wrongful trading

• Helping HMRC and other bodies investigate tax evasion and financial abuse

• Providing evidence that can be used in court or arbitration

Without forensic accounting, many complex white-collar crimes would remain hidden, or unproven.

Real Example: Polly Peck International Fraud Case

One of the most high-profile cases involving forensic accountants in the UK was the collapse of Polly Peck International in the early 1990s.

At its peak, Polly Peck was a FTSE 100 company, led by businessman Asil Nadir. After concerns about missing funds, forensic accountants were brought in to trace transactions and investigate the flow of money between the business and Nadir’s personal interests.

Their investigation uncovered widespread fraud, including illegal money transfers, fictitious transactions, and misuse of company funds for personal gain.

Outcome:
Asil Nadir was eventually convicted in 2012 of stealing nearly £29 million. He was sentenced to 10 years in prison, and the case demonstrated how detailed forensic analysis of financial records can unpick complex, international fraud.

Final Thoughts

Criminal (or forensic) accounting is a powerful weapon in the fight against financial crime. With the skills to decode data, follow the money, and present evidence clearly, forensic accountants play a vital role in upholding justice and corporate integrity.

Whether supporting a criminal investigation or helping a business uncover internal fraud, their work ensures that financial wrongdoing doesn’t go unnoticed — or unpunished.