It's a hot year for forensic accounting.

Experts say demands are rising for the practice niche, particularly when it comes to routing out fraudsters in the workplace. The increase, they say, stems from more fraud being committed in a down economy.

In other words, fingers get stickier when the economy dries up.

Forensic-accounting work at Dansa & D'Arata LLP in Buffalo has increased 10 percent in the past 12 to 18 months, according to CPA David D'Arata, co-managing partner. The reason? Financial stress triggered by the latest recession.

"People are desperate and just plain stealing, while larger companies are really looking at their costs more accurately than they have in years past," D'Arata said. "So things are coming out of the woodwork and (companies) are saying, ‘How did this get so high?' "

Obviously, the jump in forensic accounting isn't limited to Western New York. A national survey conducted this year by the Association for Certified Fraud Examiners indicates that workplace embezzlement in particular is rising, while overall acts of fraud are expected to increase well into next year. The survey, which polled 500-plus certified fraud examiners, suggests that layoffs are leaving gaps in companies' internal control systems, thus allowing more opportunity for employees to commit some act of fraud.

CPA Jake Renick, a certified fraud examiner and chair of the state Society of CPAs' litigation-services committee, said he too has noticed a spike in fraud-related forensic accounting, especially in the areas of bank and mortgage fraud, while other aspects of the niche - such as divorce, partnership and stockholder disputes - have declined.

"In that area, there's been a fall-off in work," said Renick, a managing director at NachmanHaysBrownstein Inc., which works with financially troubled companies. "I believe that is because there's not that much money around to bring a lawsuit. It's a very expensive process, and you have to bring in forensic accountants - and each side has to bring in their own. In today's economy, we're just not seeing very much of that."

While D'Arata's firm is getting more forensic-accounting work in general, Tronconi Segarra & Associates LLP reports an increase in requests for such work from non-current clients who suspect that employees are committing fraud, partner Mark Ferm said.

"We're certainly seeing an increase (in forensic accounting) due to the economy as people's personal budgets are strained, whether it's due to a spouse losing a job or a decrease in pay," he said. "So we have lots of work coming from outside our current client base. They need accounting experts to help with litigious matters."

Few local fraud cases are prosecuted, mostly because "businesses do not want to look sloppy to the public," D'Arata said. Instead, perpetrators typically strike up a deal to repay the money and leave their posts, he said.

There have been some high-profile fraud cases locally this year. Certified fraud examiner Timothy McPoland, CPA and partner at Freed Maxick & Battaglia CPAs PC, played a key role in a case that involved the Rev. F. Norman Sullivan of the former Most Holy Redeemer Catholic Church in Cheektowaga, who pleaded guilty earlier this year to third-degree grand larceny. An intense review of records by McPoland showed that Sullivan pilfered more than $200,000 from the collection plate over the course of several years.

McPoland said he's noticed a general uptick in forensic-accounting work for five years, but it's become fairly steady during the recession.

"With the downturn in the economy over the last year or two, all of that is contributing to the need for people to find ways to get additional money in the door to pay bills," said McPoland, who often works with the Erie County district attorney's and state attorney general's offices. "When you have a downturn in the economy, when there's less cash coming in the door, it's a little bit harder to conceal it if you're stealing money."

And while the recession may be showing signs of slowing down, that doesn't mean forensic-accounting requests will diminish, Ferm said. Instead, the work could pick in the next year as companies notice unusual activity that began earlier.

"I think what generally happens is, when the economy goes bad and folks start to feel financially pinched, it takes a while for them to think, ‘Gee, maybe I can get extra money from stealing,' " he said. "So it takes a little bit of time for someone to actually find (the fraud). It's kind of a lag."

Fraud in the workplace

• Amount of loss: U.S. organizations lose 7 percent of annual revenues to fraud, which amounts to $994 billion nationwide in fraud losses.
• Hit the most: Industries affected most often by fraud schemes include banking and financial services, government and health care
• Who done it? Twenty-nine percent of frauds in the report were committed by accounting-department employees, while 18 percent were committed by executives or upper management.