How Is Forensic Accounting Applied to Investment Research?
Internal documents cannot be used to directly analyze a company. That would be illegal. In addition, most forensic cases only reach litigation and discovery once a company has already imploded (which is far too late for investors).
Instead, forensic accountants build their expertise by examining numerous high-profile implosions from the inside out. By seeing how troublesome accounting issues work from the ground-up, forensic accountants learn to identify the red flags that existed in the public financial statements before the company experienced trouble. These red flags are then used by the investment team to search for potential problems in other public companies.
ARC is the only independent research firm in North America that built its forensic accounting expertise through direct knowledge of high-profile Canadian investment collapses.