For many of us, the term “forensic” conjures up images of television crime dramas like Law & Order and CSI. In fact, forensic accounting does have something in common with the work done by crime scene experts depicted on those shows. The evidence gained through forensic accounting must be both rigorous and objective enough to stand up under the scrutiny of a court of law.
Although this highly specialized area of accounting employs traditional accounting methods and tools, it is focused on gathering verifiable evidence. This is because professionals in this field are hired in anticipation that their work will be reviewed and contested by adversaries. Some even specialize in testifying in court proceedings.
There are two common reasons a forensic accountant may be hired. One is when an objective valuation is required, and the second is when there is a need to verify accountability.
Forensic accounting in valuation cases
There are many occasions in which parties may need to employ forensic accounting techniques to determine the objective value of a set of business or personal assets. These include legal proceedings such as bankruptcy, divorce or probate cases. Objective valuations are also a critical component of the due diligence requirements to conduct certain business transactions such as mergers and acquisitions, insurance underwriting, and financial investments.
Using forensics to determine accountability
This area of forensic accounting focuses on the need to investigate or rule out possible financial deception. Accountants who specialize in this area may be asked to scrutinize accounting records to determine if embezzlement, value manipulation or money laundering has occurred. Another significant area of criminal activity which often requires forensic accounting is tax evasion.
If the accountant’s work reveals facts that indicate fraud, they use evidence from the accounting records to help determine who is responsible for the deceit. They are also often charged with determining the financial impact of these types of deception, as well as the damages resulting from assertions of breach of contract, negligence, or other similar claims.
Careers in forensic accounting
Many professionals who specialize in this field work at accounting firms, but there are a variety of other opportunities to explore. This rapidly expanding industry offers staff positions in entities such as banks, insurance companies, law firms, and other large corporate environments. Others may find interesting work at law enforcement agencies and in the public legal system.
Forensic accountants may increase their marketability and value to potential employers through both experience and specialization. While the starting pay for forensic accountants is good at around $50,000 per year, the potential skyrockets when the accountant gains expertise in intricate subject areas such as global market valuations, in-depth knowledge of a particular industry, or geographic specialization.
If current trends are any indication, this is a field with the potential for continued long-term viability and growth. Governments around the world are focused on fighting corruption and terrorism, and business entities will always need expert advice to protect their interests and those of their shareholders. It is difficult to imagine a world in which one could not thrive as an expert in the field of forensic accounting.
First Look at Forensic Accountants
Forensic accounts are an incredibly important piece of business, accounting, and law. These professionals work hard to ensure that financial aspects of business finance are easily read and analyzed for various reasons – depending on their role. As an accountant within this field, professionals may have varying job duties depending on what branch of service they are employed by and their overall goal within those positions.
Some of the most common forensic accountants work for businesses or accounting agencies that provide protective services to their clients. These professionals may work daily to ensure that transactions are taking place as authorized, taxes are fully accounted for, and reports are generated in a way that is easily interpreted by those that review them.
In other branches of forensic accounting, accountants may work to secure information from individuals or organizations that are performing internal audits or even during the course of a criminal or fraud investigation.
The most interested components of this field include the use of technology and the legal system. As a forensic accountant, you could be called upon to analyze financial records and provide expertise during a trail heard by the court. Your knowledge of accounting can sometimes contribute during the pursuit of justice, making jobs within the legal system a possibility for your career.
All in all, this fascinating field has depth beyond what could be expected in traditional forms of accounting. People that are interested in this field can potentially find careers in many diverse areas such as law enforcement, government agencies, legal teams, and even for large corporations. Our team of educational experts has provided this information to help you make the right decision for your future.
2 Main Areas of Focus
Forensic accounting can play a vital role during accusations of fraud, misuse of funds, and other legal matters involving money. Professionals in this field can become a key piece to the legal puzzle by providing expertise during an investigation as well as during litigation phases of a court case. Read more below to learn about how accountants within this field can affect the outcome of these cases.
Whenever a report has been filed, there are certain steps that need to take place to ensure that proper evidence is gathered and all relevant information is collected in a meaningful and lawful way. Forensic accountants may step in at this point and review financial records, tax records, and other financial documents to ensure that all information is provided for review. It is at this stage that forensic accountants may be able to identify possible evidence that may be used to either prosecute or exonerate suspects.
During degree programs for forensic accounting, students are taught to properly collect and organize evidence in a way that promotes accuracy. The reports that are collected from forensic accountants can be submitted as evidence during a trial, which can contribute to the second area of focus – litigation support. During this phase of investigations, the information and evidence is used in a court setting in an effort to bring justice to those that have mishandled funds.
Litigation support and investigations are the 2 main areas of focus for upcoming professionals in forensic accounting. The knowledge and skills that can be gained during educational programs can promote proper handling of evidence, accurate reporting, and the delivery of justice for those that have fallen victim to financial crimes. Students that take an interest in these areas may be a great fit for the field of forensic accounting.
Knowledge and Skills Needed for Forensic Accounting
Financial fraud can encompass many different aspects of business and government. As a professional in this field, it is important to have a well-rounded knowledge of the different types of fraud that are common within society. Having knowledge within these different areas can help promote success within your career and assist you with being more efficient at identifying and taking action against these behaviors. Some of the common skills and knowledge needed for the field of forensic accounting are listed below for your review.
- Locating assets that are hidden or protected
- Financial information and data analysis
- Wire transfer fraud
- Bankruptcy fraud
- Check kiting
- Insurance fraud
- Money laundering
- Computer applications (preferably financial)
- General and advanced accounting
- Accounting ethics and laws
- Credit and bank fraud
- Embezzlement and other white collar fraud
Forensic Accounting in the Media
In recent news, a big name organization was under fire for accounting irregularities within their company. Those identified as responsible for fraud included a chairman of the organization and a financial auditing company that acted as a contracting agency for financial bookkeeping.
The irregularities within this organization had previously been identified, but covered up by those responsible for reporting it. Issues such as this one are costing companies millions of dollars and preventing prosperity for employees and shareholders alike. The outcome of fraud within this organization has caused a drastic drop in share purchases, which could result in failure of the company as a whole.
While seemingly far-fetched, it is more common than ever to see stories such as this one in the news. Large-scale organizations are entrusting their finances into the hands of many people, which can sometimes end in regret. In some cases, more than one person may be responsible for the fraud, which can lead to even more severe outcomes for organizations that do not provide proper preventative measures. With the added convenience of online and digital transfers, money siphoning and embezzlement are commons themes within the areas of financial fraud.
Unfortunately, instances of mishandled money and accounting fraud are common in today’s media. White collar executives and trusted accountants alike have become suspects in fraud activities within top organizations across the country.
The increased attention to these happenings may be the leading reason why more and more people are drawn to this highly investigative field. As more companies move rely on forensic accountants to assist in both prevention and investigation of financial fraud, this field may see even more of an increase in popularity over the next decade. If you have the desire to work against fraud and provide helpful insight during the investigation process, this is definitely a field for you to consider.