When to Hire a Forensic Accountant: Red Flags, Risk Scenarios & Why Timing Matters

What a Forensic Accountant Actually Does (in 2025)

A forensic accountant is far more than just an advanced number cruncher. While traditional accountants focus on maintaining and reporting financial records, forensic accountants specialize in analyzing those records to uncover misconduct, fraud, or hidden patterns that may signal financial irregularities.

At Presti & Naegele, forensic accounting involves:

• Fraud Detection & Investigation: Identifying signs of theft, embezzlement, or financial manipulation
• Litigation Support: Assisting in legal proceedings with detailed financial analysis and expert testimony
• Asset Tracing: Finding hidden or misappropriated assets during disputes, divorces, or business breakups
• Compliance Audits: Ensuring financial records and processes meet regulatory standards

This work often supports law firms, business owners, stakeholders, and government entities who need objective, fact-based financial insights during complex scenarios.

But forensic accounting isn’t just about catching fraud once it's happened. Today, it's also a preventative tool—used to identify weaknesses in internal systems, test financial integrity, and assess business risks before a crisis unfolds.

The Real Cost of Waiting Too Long

The biggest mistake companies make is waiting until there's an obvious problem before reaching out to a forensic accountant. By that point, damage may already be irreversible.

Consider these scenarios:

• A partner has siphoned funds from the company for years before anyone notices
• Payroll fraud continues unchecked due to lax oversight
• A business enters litigation without the financial documentation to support their case
• An investor walks away after spotting red flags in your financials that you missed

Each of these outcomes is avoidable—if a forensic accountant is brought in early enough. The reality is, forensic accountants can help you long before you're facing a legal crisis.

The cost of hiring a forensic accountant early is often far less than the financial losses, legal fees, reputational harm, and operational setbacks that come from acting too late. That’s why Presti & Naegele emphasizes proactive forensic advisory, not just damage control.

10 Warning Signs You Might Need a Forensic Accountant

You don’t have to wait for a lawsuit or a whistleblower tip to consider forensic accounting. Here are 10 common red flags that indicate it might be time to talk to an expert:

1. Unexplained discrepancies in financial statements or accounting records
2. Sudden lifestyle changes in employees with financial responsibilities
3. Duplicate or suspicious vendor payments that don't match purchase records
4. Frequent adjustments or write-offs without clear justification
5. Payroll inconsistencies, such as ghost employees or inflated hours
6. Missing or incomplete documentation during audits or internal reviews
7. Reluctance to provide financial transparency from certain departments
8. Conflicts among business partners or shareholders over financial decisions
9. Anonymous complaints or tips about unethical financial behavior
10. High-pressure financial goals that incentivize manipulation

If any of these issues are happening—or even suspected—consulting Presti & Naegele can help determine if deeper investigation is warranted. Often, what starts as a “minor inconsistency” reveals a more systemic issue.

Common Scenarios Where Forensic Accounting Makes the Difference

Forensic accounting is not just for massive corporations or headline-grabbing scandals. Small and mid-sized businesses, family enterprises, and even non-profits benefit from timely financial investigation.

Here are situations where bringing in a forensic accountant can save time, money, and legal risk:

1. Business Partner Disputes

Disagreements over money between co-founders or partners can escalate quickly. Forensic accountants provide objective analysis of revenue streams, expense records, and asset allocations to help resolve conflicts and protect business continuity.

2. Divorce & Family-Owned Business Conflicts

In high-asset divorce proceedings, especially when a family business is involved, one party may attempt to conceal income or undervalue assets. Forensic accounting can identify irregular transfers, hidden accounts, and undisclosed assets.

3. Suspected Embezzlement or Internal Fraud

Employees in financial roles may exploit weak internal controls. Forensic accountants use transaction tracing and data analytics to uncover fraudulent behavior and provide legally admissible evidence.

4. Preparing for Acquisition or Investment

Buyers or investors may want assurance that your books are clean. A forensic accounting review shows transparency and mitigates the risk of future legal exposure.

5. Tax Audit or IRS Disputes

Facing a government audit? Forensic accountants can help interpret financial records, substantiate deductions, and negotiate with tax authorities based on validated data.

6. Vendor or Procurement Abuse

Kickbacks, bid rigging, or overbilling can go undetected in procurement-heavy operations. A forensic accountant can examine contract history and payment flows to identify manipulation.



Each of these use cases is one Presti & Naegele has handled—tailoring investigative methods to the situation at hand.