Exploring Options in Forensic Accounting
Messmer, Max, The National Public Accountant
Forensic accounting, which has always been part of the accounting landscape, recently moved into the spotlight in the wake of news-making corporate financial scandals. Professionals skilled in preventing fraud and uncovering deceptive accounting practices are in strong demand as companies respond to closer scrutiny of their financial activities by shareholders and government agencies.
Many accounting firms are adding forensic accounting practices to their operations, and many accountants are seizing the opportunity for a dynamic new career path. Sixty percent of the top 100 accounting firms are expanding their forensic and fraud services, according to Accounting Today. In addition, the Association of Fraud Examiners estimates that businesses lost $600 billion last year to occupational fraud, which should lead to more opportunities in forensic accounting.
This specialty is more subjective than auditing and accountants often develop their own techniques for uncovering fraud. They reach conclusions based on the evidence they gather and are frequently required to back up their assertions in court. This can be a rewarding career for professionals with a knack for solving puzzles.
Those working in this field are part accountant, part detective and part legal expert. Forensic accountants are credited with putting Al Capone behind bars on charges of tax evasion.
Unlike other accounting specialties, there is no traditional career path for forensic accountants. Many hold a bachelor's degree in business administration or accounting and have backgrounds in auditing or law enforcement. Forensic accountants frequently are certified public accountants (CPAs) who learn the practice through hands-on work. While not always required, specialized accreditations are available, the most common being certified fraud examiner (CFE).
To be successful, forensic accountants must have analytical abilities, strong written and verbal communication skills, a creative mind-set and business acumen. They must be able to interview and elicit information from potentially uncooperative people and possess a strong amount of skepticism.
Technical expertise is essential. Forensic accountants need to be familiar with a variety of information systems and financial applications to mine data effectively and apply it to the fraud-detection process.
Specialty Areas in Forensic Accounting
Forensic accountants are able to apply their skills to a number of interesting and diverse projects. The most common include:
Fraud investigation and prevention. Forensic accountants are hired to determine whether there has been any criminal activity associated with a company's financial records. They look for everything from overvaluation of inventory and improper capitalization of expenses to misstatement of earnings and embezzlement.
Forensic accountants may be asked to develop fraud-prevention strategies for companies. They evaluate whether it's possible to compromise a particular financial system, taking note of weaknesses in internal controls and procedures.
Business transaction analysis. Organizations also hire forensic accountants for guidance when evaluating potential business transactions. These professionals can assess a company's true worth during a merger or acquisition, ensuring a purchaser is knowledgeable about a target firm's financial situation and value. …