Every year, financial and economic crimes cost Americans billions of dollars, significantly impacting their financial well-being. The Federal Bureau of Investigation’s (FBI) forensic accountants investigate many of these crimes, which continue to expand given the growth in technology and complex financial regulations that result in more sophisticated financial schemes — all of which create challenging and intriguing career opportunities for forensic accountants.
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What Is Forensic Accounting?
Forensic accounting combines accounting, auditing and investigative skills to uncover evidence supporting the conviction of financial-crime perpetrators.
The Three Aspects of Forensic Accounting
The three aspects of forensic accounting are litigation support, investigation and dispute resolution. Litigation support is when the forensic accountant provides financial evidence to quantify the damage suffered by parties involved in a legal dispute. Investigation is when the forensic accountant identifies evidence of criminal matters, such as employee theft or insurance fraud. Dispute resolution is when the forensic accountant examines and interprets legal facts and evidence and testifies as an expert witness in court.
Accounting vs. Forensic Accounting
Forensic accounting refers to accounting suitable for use in a court of law. Unlike accountants, forensic accountants must know how to collect evidence of a financial crime, interview third-party witnesses and testify as an expert witness.
A forensic audit aims to discover who committed the fraud, how they did it, how much they stole and how to prevent it from occurring again in the future. It describes internal control weaknesses, alleged acts of malfeasance, and recommendations to address and resolve those weaknesses. Organizational management may use a forensic audit report to seek restitution or strengthen internal controls, law enforcement agencies may use it to file criminal charges, and the judiciary system may use it to prosecute fraud.
Applications and Careers in Forensic Accounting
Experienced forensic accountants’ skills are applicable across a variety of cases and settings. For example, forensic accountants employed by the FBI can expect to work on complex cases and investigate large financial schemes.
Forensic Accounting Applications
Forensic accounting has many applications. It can help to uncover hidden assets in divorce cases or handle civic matters, including breaches of contract, tort (a law that protects and compensates people who have been injured by the negligence, recklessness or intentional acts of wrongdoers) and breaches of warranty.
Forensic accounting can also determine the economic result of the breach of a nondisclosure agreement or a noncompete agreement. Furthermore, it can play an important role in the investigation of construction claims, product liability claims and trademark or patent infringements.
Forensic Accountant Career
A forensic accountant’s job responsibilities include conducting forensic research to trace funds and identify assets, analyzing financial data, preparing reports that summarize financial findings, preparing analytical data for litigation and testifying in court.
Individuals interested in becoming forensic accountants should start with earning a relevant degree, such as a bachelor’s or master’s in forensic accounting, accounting or a related field, and then consider licensing options, such as certified fraud examiner (CFE) or certified public accountant (CPA). Finally, they should hone critical forensic accounting skills, including reporting, objectivity, interpersonal communication and attention to detail.
Work Settings and Job Functions
Forensic accountants work in a variety of settings, such as public accounting firms’ forensic accounting divisions, consulting firms specializing in risk consulting, law offices, law enforcement agencies, insurance companies and financial institutions.
These professionals most commonly work as investigators or internal auditors for banking and financial services, educational institutions, government and public administration organizations, health care organizations and insurance companies.
Working with the FBI
Forensic accountants interested in working for the FBI must meet specific requirements. They must be able to understand the overall big picture of a legal case; create a financial picture of a case and communicate it internally and externally; identify suspicious transactions, entities or activities; and uncover potential leads significant to the investigative team. The FBI looks for accountants with professional experience in forensic accounting, government accounting, public accounting, financial services, litigation support and dispute services, and corporate accounting and internal auditing.
Salary and Job Growth
According to the 2020 ACFE Compensation Guide for Anti-Fraud Professionals, the median compensation for a certified fraud examiner (CFE) is $95,937. However, non-CFEs earn a median salary of $73,560. The U.S. Bureau of Labor Statistics projects a 4% growth in accounting (including forensic accounting) jobs, about 125,700 job openings each year, from 2019 to 2029.
Accountants Fighting Financial Crimes
As a detective is to crime, a forensic accountant is to financial crime. The clues are in the numbers, and the magnifying glass is a toolbox of advanced forensic accounting techniques. Forensic accountants are unsung heroes dedicated to supporting organizations’ health and nations’ economies.
Sources
Acams Today, “Forensic Accounting in the Fight Against Financial Crimes”
ACFE, 2020 Compensation Guide for Anti-Fraud Professionals
Bonadio, “Financial Audits vs. Forensic Accounting Audits”
FCPAS, What Is a Forensic Accountant?
Investopedia, Forensic Accounting
Tort Museum, What Is Tort Law?
Semantic Scholar, “Forensic Accounting and the Combating of Economic and Financial Crimes in Ghana”