6/3/2012

As we have learned, fraud can be committed in a wide variety of ways; however, it can only be prosecuted by one of two ways, criminally or civilly. While both, criminal and civil cases are heard throughout courtrooms all over the country, there are many distinct differences between litigating the two types of cases, as well as the role a fraud examiner plays in each. I will define both types of court cases, review five distinct differences between the two and roles an accountant can have in supporting the litigation process. Criminal law, as opposed to civil law, is the body of law that relates to crime. It might be defined as the body of rules that defines conduct that is not allowed because it is held to threaten, harm or endanger the safety and welfare of people and that sets out the punishment to be imposed on people who do not obey these laws. [1] As noted in our textbook, most criminal cases never make their way to the criminal justice system due to what is known as the criminal justice funnel. This theory is where most criminal activity occurs at the top of the funnel; however, on the way down the funnel to the smaller end, most crimes are not discovered, reported, convicted or pursued and therefore few convictions come out at the bottom. A majority of us are more familiar with criminal cases due to the fact that there is more publicity for criminal cases. I believe this occurs because it is the government, whether federal, state or local, that is prosecuting and punishing individuals and organizations for their criminal behavior. Also, it is attributed to the fact that criminal acts are general more violent in nature such as battery, assault, theft or murder. The process for litigating a criminal court case have a fairly generic path, as noted in our textbook. The typical stages for a criminal court case are as follows: a crime is committed, crime is reported, crime is investigated, arrest

is made, bail is set or denied, arraignment occurs, pre-trial motions occur, trial, sentencing and an appeal if necessary. Civil law, as opposed to criminal law, is the branch of law dealing with disputes between individuals or organizations, in which compensation may be awarded to the victim. For instance, if a car crash victim claims damages against the driver for loss or injury sustained in an accident, this will be a civil law case. [2] In criminal court cases the government is the one which brings suit, whereas, in a civil court case an individual or organization are the one to bring suit against another individual or organization for the purpose of recovering losses from a specific act that had occurred. Fraud is not the only wrong that may enter the civil justice system; others include various torts, breach of contract, negligence, misrepresentations, divorce, and alimony. While civil cases can vary in their stages, a somewhat common process would follow the following stages: a complaint is filed, an answer is filed, discovery occurs, motions are filed, some form of alternative dispute resolution (ADR) occurs, a trial occurs, and an appeal if necessary. While there are few similarities when comparing the litigation stages of a criminal court case to a civil court case, the differences far exceed the similarities. I decided to review five general differences for purposes of this paper; however, there are far more than five when comparing the two in their entirety. First, in a criminal court case the plaintiff is always a sector of the government which represents the people and prosecutes the defendant. The prosecutor(s) are generally the county, state or district attorney. The defendant is generally represented by a trial

attorney. In a civil court case the both the plaintiff and the defendant are represented by their own attorneys and the criminal justice system is not involved. Second, the various stages within the litigation processes are very different. As you can see from above, the stages that the litigations go through start and end similar, however the in between stages are complete different. Third, in a criminal court case the defendant is given the option for a jury trial where a panel of their peers collectively decides if they are guilty or not. In a civil court case, the defendant is not always given the option for a jury trial. If not the case is then heard and decided on by the judge only, which is known as a bench trial. Fourth, to be found guilty in a criminal court case the defendant must be found guilty beyond a reasonable doubt and the burden of proof is always on the prosecutor. In contrast, to be found guilty in a civil court case the defendant must only be found to be liable or guilty by a preponderance of the evidence. Lastly, the punishment is different when comparing the two. In criminal court cases, the defendant can be punished by incarceration, fines, penalties and worst of all by the death sentence. In civil court case, no one is ever incarcerated or given the death sentence. The punishment is by way of fines and penalties, cease and deceased orders or enforcement of an action. Both criminal and civil court cases alike need support from various professionals throughout the litigation process. A fraud examiner or forensic accountant can use their skills to provide the necessary support throughout this process. As highlighted in our textbook, a fraud and forensic professional may be brought in to support in one or all of

the following ways: educate counsel, reconstruct cash flows, reconstruct cash flow and performance from records, guide additional investigation and discovery, make connections, draw conclusions and offer observations, determine whether evidence supports theories of case, provide objective evaluations of the information, data and evidence, draft report and exhibits, offer deposition and trial testimony. When offering support by way of providing testimony, one can do this by being a fact witness or an expert witness. A fact witness is provided by a lay witness to verify facts. They may also attest to facts regarding a specialized topic if is from firsthand knowledge of that specific topic that is used within their normal responsibilities. On the other hand, an expert witness can provide testimony based on their profession, education or experience as long as it is deemed reasonable that they have more knowledge in that area than the average person. Fraud and forensic professional general provide expert testimony based on their specialized skills, knowledge and experience. In general, they tend to provide more support as an expert witness in civil court cases then they do in criminal court cases. Fraud and forensic professionals provide support by numerous ways for attorneys. They provide ongoing support throughout the investigations to all individuals involved. This must be done by remaining independent and objective as possible. Their investigative skills, attention to details, communication skills, analytical reasoning and ability to think critically all allow them the necessary instruments to draw the necessary conclusions to provide the attorneys and courts the necessary reports and testimonies throughout the litigation.

In conclusion, fraud and forensic accountants provide an essential element of support to both criminal and civil court cases alike. Their skills, experience and ability to communicate equip them with the necessary tools to be an essential element within the support system throughout the litigation process.