Although most people can’t tell you what a forensic accountant does, they are one of the essential parts of our legal system. Forensic accountants are highly qualified and well trained in what they do, and if you are looking to find an accountant, you should aim for those who have the appropriate credentials and background.
What is Forensic Accounting?
Forensic accounting is a complex discipline that aims to root out white-collar crime, like fraud, breach of contracts, and embezzlement.
Like traditional accounting, the field focuses on facts and figures, but forensic accounting goes beyond just paper trails and examines the entire financial situation of a person or business.
Forensic accounting aims to provide information for use in court to determine whether a defendant is guilty of certain financial crimes.
What Does a Forensic Accountant Do?
Forensic accountants work within the field of forensic accounting to determine if an entity has committed a financial crime. These accountants will look over the financial records of a person or business and create a logical fact-driven story on why someone has accused the person or company of a financial crime.
Forensic accountants try to examine why a person would have financial statements that don’t add up correctly. The legal system tasks them with figuring out how a person has hidden illicit financial assets from the authorities.
In doing their duties, they may even search through social media to look for big purchases that the person made with money they were not supposed to have. Social media posts can often allow the forensic accountant to build a timeline of fraud and understand how a person spent illegal money.
Overall, forensic accountants’ primary duty is to assist the court system in finding facts for a case or giving their expertise to the jury in legal proceedings. For instance, forensic accountants may need to help determine the amount a person deserves in damages if a car accident has injured them, or they may assist with divorce or bankruptcy proceedings.
What Are the Duties of a Forensic Accountant?
The primary duties of forensic accountants are to search through financial documents and data to find inaccuracies, discrepancies, and illicit activity.
What Are the Most Important Responsibilities of a Forensic Accountant?
The two most important responsibilities of a forensic accountant are attending court hearings when needed and presenting all files and information about a specific case as accurately as possible.
Forensic Accountant for Litigation Support
Litigation support refers to how a forensic accountant may help out in a legal case by giving their expert opinion or using their investigative skills. The accountant will use financial documents to develop an amount that a person deserves in damages in a particular dispute.
Damages awarded to a person have to do with compensation for a wrong done to them through someone else’s recklessness, negligence, or an intentional act. Some cases are cut and dry, such as those proceedings that want to cover a person’s medical expenses for an injury they sustained. In contrast, others may be more difficult, such as cases that take mental anguish into account.
Forensic Accountant for Criminal Investigation
Forensic accountants may search for hidden assets, breach of contract, identity theft, and other financial-related aspects of crimes when examining evidence for litigation support.
Therefore, forensic accountants need to know how to perform many of the tasks that police, lawyers, and criminal investigators are responsible for in their duties, including collecting evidence, interviewing witnesses, and acting as expert witnesses.
To do their jobs well, forensic accountants should also know how to figure out who committed the fraud, how they accomplished it, how much they took, and how to prevent future fraud cases.
Forensic Accounting in the Insurance Industry
In the insurance industry, forensic accountants’ jobs mostly have to do with calculating damage and they rarely need to be the ones to find the source of the blame.
They look at economic conditions and historical data so they can calculate the loss. They usually work with either personal injury claims or business interruption claims.
Forensic Accounting Audit Procedures
There are three steps to the audit procedure in forensic accounting: investigation, reporting, and litigation.
The investigation is when the accountant looks for red flags that could indicate fraud. Reporting is the step where the accountant puts the case together, and they may tell the company involved how to prevent the same situation from happening again. Finally, litigation is the process of testifying in court.
What Education, Training and Experience is Needed?
Becoming a forensic accountant takes at least a few years for them to finish their degree and become accredited.
When beginning the path to becoming a forensic accountant, education should be your first step.
You will need a bachelor’s degree in accounting, finance, or another business-related category to work in the field. To really stand out from the crowd, you should get a master’s degree in accounting.
Depending on the school, you may also be able to get a degree in forensic accounting. Some schools that offer forensic accounting degrees include:
- Florida Atlantic University in Boca Raton, Florida
- Brigham Young University in Provo, Utah
- CUNY John Jay College of Criminal Justice in New York, New York
- University of Maryland Global Campus in Adelphi, Maryland
- Purdue University in Indianapolis, Indiana
Yet, whichever university you choose, you should look for classes in fraud examination and prevention, interviewing techniques, and general courses about fraud.
CPA and CFE
Once you have gotten your degree, you now should obtain two certifications: Certified Public Accountant (CPA) and Certified Fraud Examiner (CFE).
You do not need a CPA to be an accountant, but many jobs require that you have this credential. To get this state license, you need to check the requirements for your state before sitting down for the examination.
The CFE is also not required to begin your career as a forensic accountant, but having the license can open up many employment opportunities. The CFE will prove to employers that you know how to detect fraud, and you know how to resolve fraud allegations.
Getting a Job
Once you’ve gotten your education and certifications, you can then decide what field of forensic accounting you’d like to enter.
The most common places for forensic accountants to work are:
- The government
- Law firms
- Security companies
- Insurance agencies
In conclusion, a forensic accountant is part of the legal team in cases of fraud. They search for financial wrongdoing, analyze the facts, and then create a case and testify their findings in court to ensure the victim gets justice.
How to Become a Forensic Accountant
Becoming a forensic accountant isn’t easy, but the rewards can be huge.
1. Earn your Degree
Forensic accountants typically need to obtain a bachelor’s degree in either forensic accounting, accounting, or a related business field.
2. Take the CPA
The Certified Public Accountant (CPA) test certifies you as a public accountant in your state. You do not need to have this certification to be an accountant, but it will give you more job opportunities.
3. Take the CFE
The Certified Fraud Examiner (CFE) examination also isn’t necessary to become a forensic accountant. Still, you will have more job opportunities, and employers will most likely promote you faster if you have this certification to prove you know how to identify fraud.
4. Find a Job
There are many places that a forensic accountant can work. To find a job as a forensic accountant, you should first decide what type of forensic accounting you’d like to do. Once you have selected, you may need to start at a lower position and work your way up to the forensic accountant position as you gain experience.