What Is A Forensic Accountant?
A forensic accountant, sometimes known as a certified fraud examiner, focuses on examining personal and business accounts to help uncover white collar crimes such as embezzlement and fraud.
Forensic accountants are certified public accountants (CPAs) who specialize in analyzing complicated financial information and uncovering irregularities in accounts which suggest criminal activity.
They have two skill sets, combining a knowledge of accounting and finances with investigative skills and legal knowledge. They are essentially financial detectives, collecting and presenting evidence as experts in accounting and financial records.
The role is high in demand as white collar crime and fraud is on the rise, and they are employed by a range of public law enforcement services, law firms and private companies. Forensic Accountants can also work as consultants for hire when required by private companies.
Job Description and Common Tasks
Forensic accountants lead or take part in investigations which involve scrutinization of financial activity. This includes reviewing contracts, financial statements, account records, email communication and business transactions. In-depth audits of complicated audits then must be translated into information which can be easily explained and understood within a court setting.
They are specialists in uncovering a wide range of crimes, from money laundering, insurance fraud, embezzlement and accepting bribes. Time is spent discovering, analyzing and then reporting evidence of financial criminal activity. They may also need to calculate the economic costs of the activity for both criminal prosecutions and civil suits.
Forensic accountants are often needed to turn their findings into reports of evidence for criminal investigators and present evidence in court as an expert witness.
They must also stay up-to-date on financial technology as criminals become more sophisticated and fraud can grow harder to detect.
Day-to-day tasks include:
- Conducting forensic auditing of accounts and financial records.
- Identifying and analyzing financial discrepancies or unusual activity.
- Preparing testimony and evidence as an expert witness in court.
- Locating hidden assets for seizure or recovery.
- Analyzing financial data on behalf of private companies to identify employee theft and other fraudulent activities.
- Due diligence reviews and investigations.
- Reviewing accounts during bankruptcy proceedings.
How to Become a Forensic Accountant
The majority of forensic accountants gain experience through a general accounting role. A majority of a year’s experience is generally required before an accountant should look into becoming a forensic accountant. It also helps to hold specific experience in investigating evidence of crimes such as credit card fraud or bogus insurance claims.
The minimum educational requirement for a forensic accountant is a bachelor’s degree in either accounting or a related subject. A masters with a focus on criminal or fraud investigation will help forensic accountants considerably in starting their careers.
All forensic accountants must hold become a licensed Certified Public Accountant (CPA), and pass the Uniform CPA Examination.
A range of institutions and companies hire forensic accountants, with each position holding unique requirements for the role. Public roles often require specialized training. For example, forensic accountants hired by the FBI will then have six weeks of legal training before starting their role.
Pros and Cons of Being A Forensic Accountant
Forensic accountant’s can’t just be good with numbers, but also need need advanced communication skills in order to clearly present testimony as an expert witness, which involves explaining complicated processes in a straightforward manner.
Pros of Being A Forensic Accountant
Forensic accounting jobs are often paid very well. The double skill set of both accountancy and legal knowledge means forensic accountants are well compensated for their work. According to Payscale, the average pay for a forensic accountant is $66,000, with entry level roles starting at $40,000. Those with over 20 years experience earn an average of $100,000
Increased regulation at both the state and federal level means that forensic accountants are in high demand. The Bureau of Labour Statistics predicts that demand for accountants overall will increase by 6% in the decade 2018 – 2028, and that increase is likely to be higher in specialised forensic accounting roles.
Forensic accountant roles can be incredibly varied, and are often involves high stakes investigations into interesting activities such as major fraud alongside supporting businesses with financial investigations during mergers or contract signings.
Cons of Being A Forensic Accountant
Forensic financial investigations can move slowly, which can lead to some frustrating moments in the role. Testimony put together may not be needed until months later, and forensic accountants will often find themselves needing to refresh themselves on slow moving cases with many moving parts
As the demand for forensic accountants is so high, the role can be stressful and demanding. You may be leading several high-stakes investigations which require an intense amount of attention to detail, and demand a review of a large amount of data
As Big Data and other technologies are applied to accountancy, a forensic accountant role requires staying informed of criminal techniques. Constant education and training is required to ensure your work remains high quality and current
Who Employs Forensic Accountants?
Law enforcement agencies who employ forensic accountants include the Federal Bureau of Investigation (FBI), the United States Secret Service, and state and local police forces.
The ‘big four’ accounting firms are also big employers of forensic accountant specialists. Large corporations and law firms may have in-house forensic accountants, or use those forensic accountants who have established their own consultancies. Financial institutions such as banks, insurance companies and investment firms also employ forensic accountants to review financial records for them and their clients.