The Emergence of Forensic Accounting Programs in Higher Education

Article excerpt

AS THE DEMAND GROWS FOR PROFESSIONALS WITH FORENSIC ACCOUNTING SKILLS, SOME UNIVERSITIES ARE NOW OFFERING CERTIFICATE PROGRAMS, MASTER'S DEGREES, AND UNDERGRADUATE MAJORS/MINORS IN FORENSIC ACCOUNTING. A SURVEY EXAMINES THE TYPES AND LOCATIONS OF PROGRAMS OFFERED AS WELL AS OBSTACLES THAT IMPEDE OTHER UNIVERSITIES FROM OFFERING SIMILAR PROGRAMS.

In 2006, U.S. companies suffered an estimated $652 billion in losses from fraud, according to the Association of Certified Fraud Examiners (ACFE). (1) Because not all cases of fraud are discovered nor are all discovered frauds reported, any fraud statistic is an estimate. Regardless, national and international fraud surveys repeatedly report that the magnitude of the problem is significant. (2)

Because of the large amount of employee and management fraud, embezzlement, and other financial crimes occurring in today's society, accounting and auditing professionals must have appropriate forensic accounting training and skills to help prevent, detect, and investigate those crimes. Widely publicized corporate scandals such as Enron, WorldCom, and Adelphia have made the accounting profession and general public more aware of the prevalence and magnitude of fraud. Consequently, the demand for professionals who can help investigate these white-collar crimes has also increased.

Emerging regulations and professional pronouncements issued by a number of regulatory bodies--such as the U.S. Securities & Exchange Commission (SEC), Public Company Accounting Oversight Board (PCAOB), American Institute of Certified Public Accountants (AICPA), Financial Accounting Standards Board (FASB), and the Governmental Accounting Standards Board (GASB)--challenging businesses and government agencies to improve their corporate governance have also contributed to the increased demand for forensic accounting professionals. (3)

NEED FOR FORENSIC ACCOUNTING SKILLS

A major problem with the implementation of emerging regulations and pronouncements is that CPAs have neither the training nor the hands-on experience to tackle fraud examination and forensic accounting investigation assignments alone. (4) Leaders in the accounting profession have recognized that accounting students need fraud-specific education in order to be effective in the fight against fraud. Courses in financial accounting and auditing, for example, do not provide the type of training that accounting students--society's future accountants--need in order to understand fraud and its deterrence. Underscoring this point, Barry Melancon, president and CEO of the AICPA, asked accounting educators in 2002 to provide students with "the knowledge and skills to understand the fundamental characteristics of fraud, identify factors that may indicate it exists, and acquire enhanced interviewing techniques." (5)

To help address this deficiency in fraud-related education, researchers have published papers to help other educators develop fraud courses. (6) In 2002, the ACFE established an educational support program at the grassroots level that provided free pedagogical materials to help enable instructors at colleges and universities develop forensic accounting courses and programs. (7) This program was awarded the American Accounting Association's annual Innovation in Accounting Education award that year. Before that program was initiated, only 19 universities offered a separate fraud course. (8) There are now approximately 300 universities listed on the ACFE website as participating in the antifraud education partnership program. In addition to the ACFE materials, more fraud-related pedagogical materials are being developed and published. (9)

Offering a specific course on fraud for accounting students is an important step forward in the effort to educate future accountants so that they might be better equipped to prevent and detect fraud, but many universities have recognized the need to provide students with more fraud-related education beyond a specific course and are now offering programs in forensic accounting. …