Forensic accounting is also known as forensic auditing or investigation. Because of the increase in fraud cases over the past decades, this is one of the most popular areas of growth in the field of accounting. Not only do law enforcement agencies employ forensic accountants as part of criminal investigations, but such organizations as insurers, banks, corporations and law firms also use them as well, as part of gathering evidence for situations that have moved to litigation or other stages in the dispute process. Forensic accounting takes several different forms, such as looking into the records that are a part of claims for insurance companies, or looking into instances of securities fraud, or tracking down evidence for claims of personal injury.
In order to work as a forensic accountant, it is generally necessary to have a bachelor’s degree in accounting, at a minimum. Also, a professional certification is a requirement for many companies, and this certification can take one of two forms: either a license as a certified public accountant (CPA) or certified fraud examiner (CFE).
People who want to become forensic accountants generally need sharp investigative abilities, and also need considerable computer skills, because so many companies maintain databases in disk storage. An ability to comb through pages and pages of spreadsheets and find evidence that skilled in-house accountants have worked to conceal is a must. Also, some forensic accountants then must go into mediation rooms to assist with the discussions that go along with resolving disputes. In many instances, forensic accountants go to court and provide testimony in the role of an expert witness, and they will also listen to testimony that comes from witnesses on the other side of a case and assist the lawyer with devising questions for cross-examination. Particularly hostile cases can involve situations where breach of contract has led to litigation, or when divorcing couples are arguing over the division of assets.
Finding fraud is an increasingly significant profession from the government’s perspective as well, particularly in finding out whether or not a company (or an individual) is hiding taxable income. For this reason, the Internal Revenue Service has a number of forensic accountants on staff to provide assistance with combing through records under audit. Because the FBI and even the CIA can take an interest in different instances of fraud, they also both retain forensic accountants, both on staff and on a contract basis, to provide services for them, as embezzlement and money laundering are crimes that both require forensic accounting to prove.
Although they can be expensive, forensic accountants can pay for themselves in terms of recovered cost savings. Even small businesses that have an embezzler in their midst can end up losing hundreds of thousands of dollars – and smaller businesses tend to have fewer controls in place, making fraud more of a risk. In larger organizations, forensic accountants can also bring in major savings by identifying areas of waste and potential fraud by vendors and providers.
For those who are interested in becoming forensic accountants, requesting projects in accounting classes that will develop the skills mentioned in this essay will help build experience and confidence in areas of investigation that can be difficult and unwieldy. This is a profession that, in times of recession or growth, will have plenty of opportunities.
