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Financial Forensics Body of Knowledge, + Website by Gregory A. Gadawski, Darrell D. Dorrell

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CHAPTER 5

Data Collection and Analysis Phase: Part III

This chapter contains four valuable sections particularly beneficial to forensic operators investigating financial documents from the lowest level of detail to the highest level of summary. The sections include “Financial Status Audit Techniques (FSAT),” “Digital Analysis,” “Valuation & Forensics—Why & How,” and “Valuation's Orphan.”

The section “FSAT” highlights the IRS's five indirect forensic methods that assess the veracity of reported income and expenses. Its techniques give forensic operators simple yet versatile tools.

The section “Digital Analysis” describes techniques applicable for forensic assignments, whether data-poor or data-rich. The data-poor methods include link and gap analysis; while the data-rich methods comprise analytical methods, including Benford's Law.

The section “Valuation & Forensics—Why & How” outlines why forensic operators conducting valuation-related assignments must deploy forensic techniques. A short list of the reasoning parallels technical guidance, comprising normalizations, guideline multiple application, and other tasks.

The section “Valuation's Orphan” covers the most under-addressed aspect of all valuation assignments in the profession: the economic benefit stream. It outlines a practical, technical, and defensible set of techniques forensic operators can immediately deploy to add an incremental dimension of rationale to all valuations.

This chapter permits forensic operators engaged ...

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