Forensic Accounting in Recent Fraud and Insolvency Cases

Two developments over the past twelve months have expanded demand for forensic accounting expertise in fraud and financial crime cases. The Economic Crime and Corporate Transparency Act 2023 introduced a corporate criminal offence of "failure to prevent fraud" that came into force on 1 September 2025. Separately, the Court of Appeal's judgment in Taktouk v R [2025] EWCA Crim 71 has demonstrated that POCA confiscation orders can be challenged where the prosecution's financial analysis is flawed.

The "Failure to Prevent Fraud" Offence

Section 199 of ECCTA creates a new offence making large organisations criminally liable where a specified fraud is committed by an employee, agent, or other "associated person" for the organisation's benefit, and the organisation lacked reasonable fraud prevention procedures.

The offence applies to organisations meeting at least two of three thresholds: turnover exceeding £36 million, balance sheet exceeding £18 million, or more than 250 employees. Specified fraud offences include fraud by false representation, fraud by abuse of position, false accounting, fraudulent trading, and cheating the public revenue.

SFO Director Nick Ephgrave has warned of "aggressive corporate investigations and prosecutions" from 2026. On 26 November 2025, the SFO released updated guidance on evaluating corporate compliance programmes, replacing its 2020 guidance. The first prosecutions are expected within twelve to eighteen months.

The "Reasonable Procedures" Defence

The only statutory defence is that the organisation had "reasonable procedures" in place. The Government's statutory guidance (November 2024) outlines six core principles: top-level commitment, risk assessment, proportionate procedures, due diligence on associated persons, communication and training, and monitoring and review.

The guidance deliberately avoids a rigid checklist. This creates a practical challenge: what does "reasonable" look like for a specific business? This is precisely where forensic accountants add value. A fraud risk assessment evaluates existing internal controls against the six principles, identifies gaps, and recommends improvements. The assessment becomes the evidential foundation of the defence.

In our experience, the most common deficiencies are inadequate segregation of duties, insufficient monitoring of high-risk transactions (particularly those involving agents), weak whistleblowing mechanisms, and a gap between written policies and actual practice. The policy document exists; the training programme does not.

Taktouk v R: POCA Confiscation Under Scrutiny

On 5 February 2025, the Court of Appeal delivered judgment in Taktouk v R [2025] EWCA Crim 71. Taktouk had been sentenced to seven years for fraud and disqualified as a director. Southwark Crown Court issued a Confiscation Order under POCA 2002 requiring payment of £4,549,925.29 within three months, with an eight-year default sentence.

The appeal raised three grounds: the prosecution wrongly included funds already recovered from a co-defendant (double recovery); the judge's application of "criminal lifestyle" assumptions under section 10 of POCA 2002 inflated the benefit figure; and fresh evidence demonstrated the defendant had no hidden assets.

The Court of Appeal quashed the Confiscation Order and remitted the case for fresh proceedings. The benefit figure was upheld, but fresh evidence regarding the "available amount" had to be properly considered. 2 Hare Court described the judgment as proof that "a finding of 'hidden assets' can lead to serious injustice" where the forensic analysis is incomplete.

The significance for forensic accountants is twofold. Confiscation orders are not unchallengeable, and fresh forensic evidence can be case-determinative. A forensic accountant retained to review the prosecution's POCA calculations might have identified these issues at the original hearing.

POCA Enforcement Trends

POCA confiscation orders recovered £347.4 million in 2023/24, a 12% year-on-year increase. Three trends are relevant to forensic accounting practice.

Asset tracing technology is becoming more sophisticated. Enforcement agencies use advanced data analytics to trace financial flows across jurisdictions and corporate structures. Defence forensic accountants must match this capability to verify the prosecution's tracing methodology.

International cooperation is expanding. Cross-border asset recovery through mutual legal assistance treaties means overseas assets are increasingly reachable. Forensic accountants working on POCA cases must be prepared to analyse financial data from multiple jurisdictions.

Professional enablers are in the crosshairs. Solicitors and accountants who fail to conduct proper due diligence face personal criminal liability under the Money Laundering Regulations 2017. Enforcement against non-compliant professionals is increasing.

What Forensic Accountants Do in These Cases

Fraud prevention assessments. The forensic accountant reviews internal controls against the six statutory principles and produces a gap analysis with recommendations. This work should be conducted before a fraud occurs. Organisations that wait until they are under investigation have lost the opportunity to rely on the defence.

Corporate investigation support. Where a company discovers potential fraud, the forensic accountant quantifies the fraud, identifies perpetrators through financial flow analysis, preserves admissible evidence, and advises on the strength of the "reasonable procedures" defence before any SFO referral.

POCA defence work. Following Taktouk, solicitors should routinely instruct forensic accountants to review prosecution POCA calculations: verifying the benefit calculation, assessing the "available amount," identifying double-counting, and preparing fresh evidence where "hidden assets" assumptions are rebuttable.

Expert witness testimony. In fraud trials and POCA confiscation hearings, forensic accountants provide expert evidence on financial flows, benefit calculations, and asset tracing. The expert must present analysis accessibly, with schedules, flow diagrams, and narrative explanations that a non-specialist can follow, while maintaining the rigour expected under CPR Part 35.

Practical Guidance for Solicitors

For corporate clients above the ECCTA thresholds: Instruct a forensic accountant to conduct a fraud prevention assessment now. The assessment should be privileged if conducted under legal advice privilege (instruct through the solicitor). The forensic accountant can review existing frameworks or design "reasonable procedures" from scratch.

For internal investigations: Do not self-report to the SFO until a forensic accountant has assessed the scale and scope of the fraud. The SFO's guidance creates a "qualified promise" of a Deferred Prosecution Agreement for prompt self-disclosure, but "prompt" disclosure of incomplete information is worse than slightly delayed disclosure of a comprehensive picture.

For POCA confiscation defence: Instruct a forensic accountant to review the prosecution's calculations at the earliest opportunity. Taktouk shows that errors can be identified and challenged, but evidence must be prepared to a standard that satisfies the Court of Appeal.

On professional enabler risk: Ensure your firm's anti-money laundering procedures are current. Document your decision-making on elevated-risk clients. The SFO's focus on professional enablers means that "I didn't know" is no longer adequate where warning signs were visible.

Forensic accounting is no longer a niche specialism for exceptional cases. It is becoming a standard component of corporate compliance, criminal defence, and financial crime advisory work.

If you need forensic accounting support for a fraud investigation, POCA defence, or corporate compliance assessment, contact Jack Ross or call 0161 832 4451.

Last updated: March 2026