For some farfetched reason, accounting has been deemed as an uninspiring profession. There is a big chance that those who see this career as a dreary job imagine bookkeeping as mainly crunching the numbers and making sure that column A should match column B at the end of the day. Of course, this is not true at all.
Nonetheless, there is a colorful part of accounting that is very interesting as it mixes all the aspects of accounting with Criminal Law, Technology and a lot of Psychology. You may not have heard it before, but there exists an enthralling and grueling part of accounting called Forensic Accounting.
What is Forensic Accounting?
The integration of the academics of accounting, auditing, and investigative skills yields the specialty known as Forensic Accounting.
It provides the stakeholders (businessman; accountant; lawyer) an accounting analysis that is suitable to the court which will form the basis for discussion, debate, and ultimately a dispute resolution. Forensic Accounting encompasses both Litigation Support and Investigative Accounting.
If you are new to the term, you might picture private investigators in a crime scene holding calculators instead of cameras or magnifying lenses. Perhaps you might imagine a bookkeeper wearing gloves while studying a ledger. Well, that’s all but the figurative idea behind Forensic Accounting. While it’s not about studying a crime scene or a corpse in detective clothes and all that jazz, it’s all about interpreting and supplying the proper data to study a criminal case in finance and accounting.
The term “forensic” means “relating to courts of justice or public disputes” or “suitable for use in a court of law”. Forensic accounting involves the use of accounting expertise in court and litigation cases, fraud investigation, claims and dispute resolution, and other areas that involve legal matters. Unlike the popularly dramatic forensic setting that focuses on extraction of DNA and bullet trajectory calculation, forensic accounting deals with financial and corporate crimes such as fraud.
What Do Forensic Accountants Actually Do?
The recent cases of fraud and finance-related crimes, a need for the deterrence and detection of these fraud cases has become widespread and highly intensified. This is the reason forensic accounting continues to gain a rapidly increasing popularity in the world of business and finance.
Also, in the advent of technology, many types of accounting fraud have come from the rising cloud-based computing. Although a great number of online accounting service providers such as Xero Software and Quickbooks Online are already on high alert in terms of digital security, delinquents can still think of ways on how to commit financial crimes.
Basically, forensic accountants have two major types of responsibilities: Investigation and Litigation Support.
Investigation involves the examination of potential and actual evidences that could suggest the existence of fraudulent activities and the pertinent information associated with them. This includes witness statements, documents and data (bookkeeping ledgers, receipts, etc.), “real” evidence (such as sample construction materials from a road site), and demonstrative evidence such as photos, charts and graphs.
On the other hand, the Litigation Support part of Forensic Accounting urges forensic accountants to provide legal assistance – the type inclined to the calculation or estimation of economic damages and related issues – in a given case. Forensic accountants can also act as expert witnesses in courtrooms where they can provide valuable points that should be useful in deciding over cases regarding financial fraud.
A Forensic accountant is often hired to analyze, interpret, summarize and present complex financial and business related issues. With their expertise, they can translate raw data to a language that other people can comprehend; all to make it in a manner which is both understandable to a courtroom (for example) and properly supported that a jury can evaluate.
According to ForensicAccounting.com, A Forensic Accountant is often involved in the following:
- Investigating and analyzing financial evidences
- Developing computerized applications to assist in the analysis and presentation of financial evidence;
- Communicating their findings in the form of reports, exhibits and collections of documents; and
- Assisting in legal proceedings, including testifying in court as an expert witness and preparing visual aids to support trial evidence.
In order to properly perform all of these services, a Forensic Accountant should be familiar with legal concepts and procedures. This means that Forensic Accountants should have a specialization in certain concepts of political science. In addition, a Forensic Accountant must be able to identify the concept of “substance over form” – which is a common technique in financial legal management – when dealing with an issue or case.
Forensic accountants are also highly skilled in the ins and outs of most fraud schemes. They are usually hired to lead investigative works and provide recommendations to mitigate the likelihood of fraud activities from occurring. Forensic accountants can also work with incidents of negligence, bankruptcy, contracts, and other cases that involve recovery of damages.
How Does Someone Become a Forensic Accountant?
Because of the increasing popularity of this field, many schools now offer degrees and training programs related to forensic accounting. The first thing that you should do, if you wish to become a forensic accountant, is to finish a bachelor’s degree in Accounting. Forensic accounting courses are usually offered as a Master’s degree.
Then, you have to look for Forensic Accounting Certification programs. Accounting certifications in this field can help you establish your value and recognition in the society. Holding a certification proves that you are qualified to perform services in such field. This will help you get hired by firms and kickstart your career as a forensic accountant.
To add flavor to Forensic Accountants, these certifications available for recognition almost globally (although the certification itself is not available in all parts of the world):
Certified in Financial Forensics (CFF). This certification is granted by the American Institute of Certified Public Accountants (AICPA) to Certified Public Accountants (CPAs) who have developed expertise in the forensic accounting field. This is an additional accreditation you may wish to consider in addition to having a CPA license.
Certified Forensic Accountant (Cr.FA). The American College of Forensic Examiners
International (ACFEI) grants the Cr.FA credential also to CPAs who meet their certification requirements.
Certified Fraud Examiner (CFE). The CFE is a globally recognized professional designation for individuals who specialize in fraud prevention, detection and deterrence. It is offered by the Association of Fraud Examiners (ACFE). CFEs exhibit proficiency and professional excellence in performing services to uncover fraud and implement internal controls and systems to prevent them from occurring.
Can People Make a Good Living out of Forensic Accounting?
Yes. Forensic accounting is one of the fastest growing careers today, and may probably be the fastest in the accountancy profession.
More often than not, forensic accountants are hired by public and private employers who have a big business and are in dire need of their valued services. For instance, government agencies hire FAs to assist them in solving financial irregularities within their government accounting system. Sometimes, even the research and academe sector also demand for the FA’s expertise in the investigative field of accounting.
Having even just a background in the forensic accounting department makes accountants have a wider pool in the accounting horizon in general. It adds a lot of value in the qualification of an accountant that is useful especially to those who are in the management level positions and advisory departments.
According to AccountingVerse.com, the average salary of forensic accountants in the US is around $75,000 with many earning more than $100,000 annually. “Six-digit annual salary is not uncommon in this type of specialization. The starting salary of forensic accountants ranges from $30,000 to $60,000 per annum,” they added.