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Compliance Accounting Advisory and Forensic Accounting Advisory: Protecting You

A compliance advisory provides guidance that will protect you from fraud and keep you on the right side of the law. To an extent, all accountants provide some compliance advice. For example, every time you ask a question about tax or payroll, your accountant’s answer is a form of compliance advice.

Compliance Advisory vs Forensic Financial Advisory

Compliance advisory services deal with the prevention and remediation of fraud. Forensic services deal with discovering who, what, why, and how internal controls were broken down and circumvented to commit fraud. The aim is to uncover information that can be used in legal proceedings to prove and substantiate fraud.

Compliance is the hallmark of a responsible business owner. It’s about more than just being current with filing and paying your taxes—it is about confirming that your data is accurate and reliable.

Compliance Services

Most of the accountant’s tasks are compliance activities:

  • Preparing an income tax return.
  • Filing Sales Tax.
  • Running Payroll.
  • Reconciling a Bank Account.

Processes exist to ensure that federal, state, and local laws are followed, and that accuracy and transparency exist in a company’s financial reports.

It is the task of the Compliance Advisor to monitor changes and events that can affect the accuracy and reliability of your company’s records and reports. In this context, a compliance advisory is a part of an accountant’s bookkeeping services.

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A Clean-Up Engagement

When you ask your accountant to organize your financial records following accounting standards and practices, you are involved in compliance activity. Typically, the advisory will be included in the service already provided, but sometimes the accounting professional will need a separate engagement for the clean-up project.

Clients who engage in a clean-up assessment most often also require further advisory engagements, including:

  • Internal Controls Assessment
  • Full Forensic Examination

Types Of Compliance And Forensic Services

  • Business Registration/Deregistration

All new enterprises must register with the federal government and the states and towns where they operate. Your compliance advisor will guide you through the forms you need to file.

Your accountant must be careful when they offer advice on compliance. For example, helping you to complete business registration forms and other requirements fall in their purview. Still, they cannot help you complete your articles of incorporation or other legal, organizational documents – this might be construed as the unauthorized practice of law.

  • Accounting System Setup

Another task for the compliance advisor is the setup of your accounting system. It entails selecting charts of accounts, the design of workflows, and the creation of internal controls.

  • Audit Support and Tax Representation

You will need your compliance advisory when you receive a letter from the IRS, state, or local tax authorities. Your accountant in these matters must be authorized to represent you before the IRS and state tax authorities. Their representation allows them to correspond and negotiate with the authorities on your behalf. Audits can relate to:

    • Income Tax
    • Sales Tax
    • Payroll Tax
    • Property Tax
  • Workers’ Compensation & Other Insurance Audit Reporting

Prices for worker’s compensation insurance policies are based on your expected payroll for a period. Then, at the end of the policy, an audit is done to “true-up” the price based on the actual payroll.

Failure to submit the required audit report can allow the insurance company to ‘lock in’ the quoted rate, and you can end up leaving money on the table.

  • Assistance with Loans

You might need help organizing the paperwork to apply for loans or guidance on the best credit card products and merchant service providers out there.

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Specialty Compliance Services

Specialty Compliance Services require expert knowledge and unique skill sets to meet specific rules and regulations.

  • Federal Defense Contracting Accounting Audit Support.

Contractors to some US government agencies are subject to the Federal Acquisition Regulation (FAR). Set forth by the Office of Regulation Management and enforced by the Defense Contractor Management Agency (DCMA), these regulations are substantive.

    • Contractors are subject to mandatory audits of their accounting system processes.
    • An annual audit of their financial records for every year they receive contracts.

Setting up a FAR compliant accounting system is complicated, and you will require support from your compliance advisory.

  • Internal Control Assessments

As your business grows and needs more staff, internal controls become critical to prevent fraud. Your compliance advisory can do internal control assessments to help uncover inadequacies and create procedures and processes to protect your interests.

  • Subject matter-or expert witness

When you are involved in legal proceedings, you might one day require a compliance advisory with deep knowledge and experience to appear as a subject matter expert or an expert witness.

Compliance Advisory comes in many forms. It includes tax and regulatory advice, loan advisory compliance, and institutional needs like personal asset statements. Compliance is about a lot more than filing tax returns on time. Your data must be accurate – you have to be sure that you are not fraudulently understating income to relieve your tax burden. Without internal controls and proper procedures, the value of a company goes down.

    • Anything that poses a very high risk to the enterprise MUST be fixed within thirty days. Therefore, timeline goals are always related to the risk level.
    • Compliance advisory is about knowing what information is required and when and maintaining relationships to comply with the rules and regulations.

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