What is Forensic Fraud Income Reconstruction?
My name's Robert Bonavito, New Jersey forensic accountant. This video is part of a series of videos where I discuss forensic accounting topics for educational purposes only. In our firm, we do a lot of fraud investigations. And when you do a fraud investigation, two of the basic methodologies that you use, and you may have... There's a movie out called "The Accountant" with Ben Affleck. And in the movie, he actually used these two basic, very basic fraud investigation techniques. And what they are is bank deposit analysis and financial analysis.
These are two methodologies we use in almost ever case. And the difference is that with the bank deposit analysis, what we do is we go into all the investment accounts, bank accounts, money market accounts, investment accounts, and we figure out what the total deposits are in the accounts. So let's say it's a two million or three million dollars. And then what we do is figure out what their expenses are, and we compare the two. If they don't make sense, we'll do further investigations, all kinds of programs we have to dig deep, but on, you know, mile-high look at this, we just...here's the income, here's the expenses, if it doesn't make sense, we'll proceed to the next forensic accounting technique.
The other one is financial analysis. This is sometimes called, T-account analysis, and this is what Ben Affleck was doing in the movie in some of the accounts where there's some issues. With the T-account analysis, what you do is you figure out what the expenses are. And once you have all the expenses, you figure out from there, well, this is how much income you should have. And it's basically a reverse up method, rather than coming from top down. And this we use a lot for lifestyle analysis in divorce matters and things like that. We'll go in and figure out what their lifestyle is. We'll do an analysis, and we figure, let's say, well they spend $20,000 a month. Well if you're spending $20,000 a month, that means they need to be making, like, $30,000 a month because there's taxes and stuff like that.
And so both of these methodologies are great, it gives you a quick overview of what's happening, and once you do this, you can dig down deep and figure out what's really going on. If you have any questions on these two methodologies, feel free to give me an email.