Forensic report on accounting fraud:

In the contemporary business environment, the suspicion of accounting fraud constitutes one of the most critical situations that a senior manager, a board of directors, or a shareholder may confront. The implications extend far beyond the immediate economic impact; it precipitates a crisis of confidence that compromises corporate reputation, paralyzes strategic decision-making, and, in numerous instances, implicates the personal liability of the administrators.   

When indicators of irregularities emerge—manifesting as treasury discrepancies, inconsistencies in operating results, opaque transactions, or valuations that are fundamentally unsustainable—the corporate response must be technical, organized, and legally robust. Within this context, the forensic report for accounting fraud (informe pericial) becomes an indispensable instrument to objectify the facts and preserve the enterprise's value.

Accounting fraud rarely arises in isolation. In the majority of cases, it is the cumulative result of erroneous decisions, intense pressure for results, deficiencies in internal control systems, or fragile corporate governance structures.

When financial information ceases to be reliable, the entire business strategy rests upon a spurious foundation: negotiations with financial institutions are conducted based on unreal figures, investors are courted with unfulfillable expectations, and growth decisions are adopted that the company cannot structurally sustain. In these scenarios, accounting fraud is frequently inextricably linked with situations of business crisis.   

The expert report facilitates the reconstruction of the company's economic reality, allowing for a critical differentiation between negligent management and the deliberate manipulation of financial information—a distinction that is paramount when personal liabilities are adjudicated.

At Maraz Corporate Finance, expert reports are approached from a forensic, strategic, and decision-oriented perspective, amalgamating profound financial analysis with a lucid understanding of the legal and reputational risks confronting the entity.

Forensic report on accounting fraud: What is it?

A forensic report for accounting fraud is a technical opinion prepared by an independent expert in accounting and finance with a forensic focus. Its objective is not merely to verify formal compliance with accounting standards, but to analyze complex economic facts, identify relevant irregularities, and quantify their economic impact.   

Unlike a traditional audit, forensic expertise focuses on specific operations, reconstructs economic flows, and translates financial complexity into a clear narrative comprehensible to judges, lawyers, and decision-making bodies.

Forensic Report vs. Financial Audit: Two distinct approaches

A company can pass financial audits for years (without qualifications) and still hide fraud. Financial audits are based on materiality and sampling; in contrast, the expert/forensic report investigates specific operations deeply, without dependence on materiality thresholds. Furthermore, many frauds leave no accounting trace: a sale collected in cash and not recorded does not generate an order, delivery note, or invoice. Unless the volume is very high or clear warehouse anomalies appear, it can go unnoticed or be justified as "shrinkage" or obsolescence.   

This approach is especially relevant in contexts of shareholder conflict, restructuring, or M&A (Mergers and Acquisitions), where a distorted financial image can destroy value.

The distinction drawn in the text between statutory audit and forensic investigation is critical and often misunderstood by clients. We must elaborate on the technical divergences using the research data.

  • Statutory Audit : Operates on the concept of "Reasonable Assurance." Auditors calculate a materiality threshold (e.g., 5% of Pre-Tax Profit). Errors below this threshold are often ignored or aggregated. A fraud of €50,000 in a €100 million company may be deemed "immaterial" and overlooked.

  • Forensic Investigation: Operates on a "Presumption of Irregularity." In a fraud context, a €50,000 misappropriation is not just a number; it is evidence of a control breach, a criminal intent, and potentially the tip of an iceberg. The forensic accountant examines 100% of transactions within the suspect scope, often using Data Analytics to identify patterns that sampling would miss.   

Most common types of accounting fraud in the company

1. Manipulation of revenue and results

This is the most frequent and, often, the most damaging typology. It includes the anticipated recognition of revenue, the creation of fictitious sales, or the artificial deferral of expenses to inflate results.

The Gowex case is paradigmatic. For years, the company presented inflated revenues through non-existent or oversized contracts, creating an appearance of growth that attracted investors until the fraud became unsustainable. A well-designed expert report would have detected the lack of correlation between results and cash flows early on.    

Revenue manipulation creates a divergence between Accounting Profit and Cash Generation.

  • Premature recognition: Shipping goods to distributors at year-end that were not ordered, with a hidden "right of return." This books revenue in the current year (boosting bonuses) but leads to massive returns in the next.

  • Fictitious sales (The Gowex Model): Creating fake invoices to shell companies. To balance the accounting equation (Assets = Liabilities + Equity), the company must also create fake assets (Accounts Receivable).

  • Expense deferral: Capitalizing operating expenses (e.g., treating maintenance costs as "asset improvements"). This moves the cost from the P&L (lowering profit) to the Balance Sheet (increasing assets), falsely inflating both current earnings and asset values.

2. Concealment of liabilities and financial risks

Another common modality is the non-accounting of relevant debts, provisions, or contingencies. The balance sheet appears solvent, but the company bears hidden obligations that compromise its viability. This type of fraud is usually the prelude to financial restructuring processes, an area where Maraz assists companies and creditors to organize liabilities and protect value.   

3. Falsification of balance sheets and overvaluation of assets

Inflated inventories, non-existent assets, or unreal valuations allow for the maintenance of an artificially solid equity image.

The Pescanova case illustrates how the combination of hidden debt, cross-operations, and balance sheet manipulation can maintain an accounting fiction for years, with devastating consequences when reality surfaces.

The expert report allows for the reconstruction of the real balance sheet and quantification of the economic damage suffered by partners and creditors.   

4. Misappropriation and unfair management

This includes the diversion of funds, payments to fictitious suppliers, personal use of social assets, or decisions deliberately harmful to the company. In SMEs and family businesses, these frauds are often linked to an excessive concentration of functions and a lack of internal controls.

It is a specific crime in many civil law jurisdictions (like Spain and Chile) -  called "Administración Desleal". It occurs when a director, having the power to dispose of company assets, causes damage to the company by abusively exercising those powers or acting against the corporate interest.   Unlike simple theft, "administración desleal" often involves valid legal mechanisms used for invalid purposes.

Example: A director signs a consulting contract with a company owned by their spouse. The contract exists, the invoices exist, but the service is either unnecessary or overpriced.

The Fraud Triangle as an analytical framework

To understand accounting fraud, identifying the irregularity is not enough. It is necessary to analyze the context: the pressure the fraudster suffers, the opportunity derived from control failures, and the rationalization of the conduct. This approach allows for not only explaining what happened but anticipating future risks.   

How a forensic report on accounting fraud is structured

A solid expert report combines technical rigor and expository clarity. It begins with the expert's declaration of objectivity, precisely defines the object of the assignment, and details the methodology used. The body of the report sets out the detected facts, supported by financial analysis and documentary evidence, and ends with clear technical conclusions, without issuing legal judgments.

Technology plays a key role: massive data analysis, detection of anomalous patterns, and financial visualization allow for the identification of irregularities that would go unnoticed in a traditional review.   

Structure of the Report (Best Practice)

  • Declaration of Independence: Essential for court admissibility.
  • Scope of Work: What was reviewed (and what was not reviewed).
  • Executive Summary: For the judge/client (non-technical language).
  • Methodology: Explaining the tools.
  • Findings of Fact: The detailed irregularities.
  • Quantification: The calculation of damages (Lost Profits vs. Actual Loss).   
  • Exhibits: The raw evidence (emails, bank statements).

Ratification in Court: Where the report gains value

The work does not end with the delivery of the report. The ratification in trial is the moment when the expert must explain their analysis, defend their methodology, and convey technical solvency. The clarity and consistency of the report are decisive for its evaluation.   

FAQs: Questions about the forensic report on accounting fraud

When is it advisable to commission an expert report for accounting fraud?

When there are reasonable signs of accounting manipulation, conflicts between partners, or relevant financial tensions.

Can it be used outside of a judicial procedure?

Yes. It is especially useful in negotiations, restructurings, and purchase and sale processes.

Who usually commissions these reports?

Companies, boards of directors, partners, funds, or lawyers.

Does the report determine legal responsibilities?

Not directly. It provides the technical base on which the legal strategy is built.

How much time is required for its preparation? 

It depends on the scope and complexity but usually requires several weeks to ensure rigor and solidity.   

Forensic Reports on accounting fraud: The Maraz approach

An expert report for accounting fraud allows for:

(i) Identifying and documenting relevant irregularities.

(ii) Quantifying their economic impact.

(iii) Presenting clear and defensible conclusions, useful for decision-making (restructuring, sale, negotiation) and potential judicial procedures (including court ratification).

In Maraz Corporate Finance, we prepare these reports combining deep forensic financial analysis, the use of technology for irregularity detection, clarity for decision-makers, and absolute independence and objectivity.

If signs of accounting fraud exist, time and rigor are on your side. The sooner the information is ordered, the evidence secured, and the scope delimited, the greater the company's ability to protect its position, reduce uncertainty, and make informed decisions.

If your company or partners need to objectify economic reality or define a strategy for negotiation or litigation, Maraz Corporate Finance prepares forensic expert reports with a practical and results-oriented approach.   

Paula Rey Bonastre 

Analyst - Maraz Corporate Finance