UK-WIDE: An Introduction to Forensic Accounting
The world of forensic accounting, once considered a narrow specialism, continues to expand. Forensic accountants now work across a wide array of practice areas including dispute resolution, financial investigations, asset tracing and compliance reviews. Their primary purpose? To bring clarity to complex financial situations. To do so successfully requires a particular combination of technical expertise, analytical rigour, intellectual curiosity and a healthy dose of commercial nous.
This broad skill set results in a remarkably varied client base. Forensic accountants work alongside litigators, specialist arbitration lawyers, corporate staff, regulators, law enforcement officers, and government employees. Cutting across most instructions is the need to establish facts, support legal strategy, and optimise outcomes. Sometimes independent, other times partisan; the forensic accountant must shape their analyses and tailor their conclusions with the end user squarely in mind.
Despite this diversity, the industry is not immune to political, economic and technological disruption. As the wider world of professional services adapts to change, the contentious world in which forensic accountants operate also continues to develop at a pace. The remainder of this article comments on the topics and trends set to shape this corner of the UK professional services industry in the coming 12 months.
A Shifting Economic Landscape
The UK economy continues to navigate a fragile recovery. While inflation has eased from its peak and interest rates are beginning to decline, the aftershocks of recent economic turbulence are still being felt. Businesses are grappling with margin pressure, supply chain instability, and cautious investor sentiment.
On the wider global stage, tariffs and trade tensions dominate the news. The resurgence of protectionist policies and geopolitical uncertainty, particularly around China, the United States, and the ongoing Russia-Ukraine conflict, are disrupting cross-border deals and inflating operational costs.
The 2025 AlixPartners Disruption Index found that senior management in many of the world’s largest corporates see supply chain volatility as a primary concern as we progress through 2025 and into 2026. Similar challenges loom around the effective use of capital. In regions where the economic landscape seems to shift on a weekly basis, merger and acquisition risk profiles remain volatile, impacting pricing, terms and completion rates.
The potential fallout? A rise in financial disputes as distressed transactions unfold and allegations of contractual breach emerge. In the UK, high-growth sectors such as AI, energy transition, and healthcare innovation are attracting significant capital, particularly from private equity. These active areas of the deal market will likely trigger a wave of disputes. Look for issues around earn-out mechanisms; environmental, social and governance (ESG) compliance; and AI-related due diligence.
Fraud and Sanctions: A Growing Investigative Burden
Fraud remains the most reported crime in England and Wales, accounting for around 40% of all offences. The complexity of higher-value schemes involving digital assets, offshore structures and encrypted communications has driven demand for forensic expertise in asset-tracing, financial investigations and litigation support.
Sanctions enforcement is also intensifying. The Russia-Ukraine conflict has reshaped the global sanctions regime, with the UK’s Office of Financial Sanctions Implementation expanding its capacity and capabilities last year. We are seeing increased engagements ranging from asset-tracing in multibillion-dollar frauds to sanctions-related investigations for European banks.
In parallel, the UK is moving to regulate crypto-assets more comprehensively. This shift is expected to increase demand for forensic support in compliance reviews, fraud investigations, and regulatory inquiries involving digital currencies and decentralised finance platforms.
Fraud in International Arbitration: A Renewed Focus
In October 2023, the UK High Court handed down judgment in Federal Republic of Nigeria v Process & Industrial Developments Limited (PID). This was a case brought to court with the aim of setting aside an award of around USD6.6 billion (plus interest) successfully won by PID in arbitration. Nigeria challenged the award on the basis that both the original commercial contract and the arbitration process itself were tainted by bribery, corruption and perjury.
Justice Knowles CBE found in Nigeria’s favour, setting aside the award in its entirety. At the heart of the case was not only a corrupt multibillion-dollar contract, but also bribery of certain members of the legal team involved in the arbitration. False evidence was given both in written statements and in front of the tribunal. In a somewhat scathing end note, Justice Knowles commented that many of those involved in the original case were driven by greed and prepared to use corruption to meet their own ends.
Justice Knowles’ findings remain a point of discussion among the arbitration community (lawyers and forensic accountants alike). The International Chamber of Commerce recently released its Red Flags Document to guide the identification and assessment of corruption and dishonesty in arbitration proceedings. As the volume of disputes settled via international arbitration continues to expand, we can expect renewed focus on detecting and evaluating signs of potential fraud within the arbitration process.
Legal Shifts: Corporate Accountability Reimagined
A landmark legal development in 2025 is the introduction of the “failure to prevent fraud” offence under the Economic Crime and Corporate Transparency Act. In force from 1 September 2025, this new corporate offence holds large organisations criminally liable if an associated person commits fraud for the benefit of the business.
The legislation is expected to drive a cultural shift in governance. Organisations must demonstrate that they had reasonable fraud prevention measures in place at the time of the offence. Forensic accountants will play a critical role in helping firms assess fraud risks, implement controls, and respond to investigations. This intersects with other regulatory developments, such as the Financial Conduct Authority’s anti-greenwashing rules, which came into force in 2024.
AI: A Double-Edged Sword
AI is reshaping the UK business landscape at a pace, offering transformative potential but also complex new risks. From automating customer service to enhancing predictive analytics, AI is helping organisations become more agile, efficient and responsive. Yet, as adoption accelerates, so too do the challenges, ranging from regulatory uncertainty to the opacity of algorithmic decision-making.
AI-related disputes are rising across the UK and Europe. Key drivers include flawed due diligence, speculative valuations, and compliance challenges under emerging regulations like the EU AI Act. This legislation introduces a tiered risk framework for AI systems, reshaping deal terms and exposing acquirers to penalties if a target’s AI is later deemed high risk or non-compliant.
AI is also transforming the forensic profession. Teams are integrating AI-powered tools into their workflows, enabling faster analysis of complex data. Generative AI is being used not only to review vast data sets and documents, but also to visualise timelines and fact patterns, enhancing the clarity and impact of expert evidence. While these tools offer significant benefits, they also require new governance models to address issues such as data quality, transparency, and regulatory compliance.
Summary
As we advance through 2025, the UK is navigating a landscape defined by disruption, economic uncertainty, regulatory reform, and a surge in complex litigation, arbitration and investigations. The forensic accounting industry will remain central to helping clients manage risk, resolve conflict, and restore trust.
The work of the forensic accountant goes beyond numbers; it is about assurance in an increasingly uncertain world.