Forensic accountants are financial detectives who audit, investigate and determine the accuracy of financial reports and documents, usually related to anticipated or ongoing legal actions.
Their job is to identify suspicious financial data, which is usually used to investigate white-collar crimes such as securities fraud and corruption. White-collar crime is a non-violent crime committed to obtain economic benefits, usually involving individuals or enterprises of various sizes.
Forensic accountants can work for companies, non-profit organizations, government and law enforcement agencies, estates, or individuals.
- Forensic accountants are financial detectives who audit, investigate and determine the accuracy of financial reports and documents, usually related to anticipated or ongoing legal actions.
- Their job is to identify problematic financial data, which is often used to investigate white-collar crimes such as securities fraud and corruption.
- Forensic accountants can work for companies, non-profit organizations, government and law enforcement agencies, estates, or individuals.
- Forensic accountants can also help organizations establish or improve their risk management and risk reduction procedures through customized design of accounting and auditing systems.
- Forensic accountants are usually also certified public accountants and certified fraud examiners (CFE).
Forensic Accounting: Overview
It’s not just about crime outright. Forensic accountants can help organizations establish or improve their risk management and risk reduction procedures through customized design of accounting and auditing systems.
As a function of due diligence and investment analysis, they can advise on various planned financial transactions, including mergers and acquisitions, venture capital investments, the purchase of corporate bonds, commercial paper and stocks, and bankruptcy procedures.
From suspicious behavior to outright fraud
In many cases, they may find some suspicious records designed to cover up financial problems. But they may also find evidence of outright criminal behavior.
The uncovered criminal activities may include fraud, corruption, money laundering, concealment of debts, concealment of assets, or other fraudulent activities. Forensic accountants may be required to testify as expert witnesses in criminal and civil proceedings and appear in pretrial testimony.
Follow the money
In addition to their work in the commercial sector and investigating personal assets for legitimate purposes, forensic accountants can also inspect criminal enterprises to recover illegally obtained funds or track money laundering activities.
In government confiscation of assets in organized crime cases or tax cases against individuals or companies, the work of forensic accountants is crucial.
Forensic accountants may work closely with law enforcement officials and lawyers during investigations, and are sometimes required to appear in court as expert witnesses during trials.
Forensic accountants are usually also certified public accountants and certified fraud examiners (CFE). CFE has received extensive training in preventing and deterring fraud. A CFE who does not have at least two years of professional experience in a field directly or indirectly related to detecting or deterring fraud may be required to pass the CFE exam.
Candidates taking the exam must also obtain at least a total of 40 points for passing the exam before taking the exam. The Association of Certified Fraud Examiners, which awards CFE certificates, has established a points system that can award credits for education, professional affiliation, and experience.
Topics covered by the CFE exam include investigative techniques, financial transactions, criminology and ethics, and legal elements of fraud.
Other requirements for CFE certification include:
- Become an associate member of ACFE with a good reputation
- Noble character
- Agree to abide by the Charter and Code of Professional Ethics of the Association of Registered Fraud Examiners
The CFE certification is recognized globally, and potential employers will look for it when hiring forensic accountants.
Requirements for forensic accountants
Both forensic accountants and CFE must have a comprehensive understanding of all aspects of business information and financial reporting, including:
- A balance sheet showing the company’s assets, liabilities, and net equity at the time of the report
- Profit and loss statement, which reports the company’s profit and loss during the reporting period
- A statement of retained earnings that reports dividends paid and other items included or included in earnings. These data may also be included in the balance sheet.
- The cash flow statement shows the cash flow into the company (inflow) and the outflow company (outflow). Cash equivalents also appear in the cash flow statement.
The information reported in these documents must comply with Generally Accepted Accounting Principles (GAAP), which set out accounting rules and procedures.
Become a forensic accountant
Forensic accountants usually need to have a bachelor’s degree in accounting or related fields. Obtaining a master’s degree in accounting or any business science can increase employment opportunities and career development.
Many colleges and universities offer forensic accounting courses through online education programs.
Job opportunities, career path and salary
The accounting profession can be profitable. In May 2020, the average salary of an accountant was $73,560.
Salary depends on experience, years of experience, and the type and size of the entity. Small businesses pay less than large companies, and non-profit organizations may pay less than for-profit organizations.
Location is an important factor in salary grade. Salaries in major cities will be higher than the national average, as will the cost of living.
Newer regulations, such as those introduced through the Sarbanes-Oxley Act in 2002, have created many opportunities in this area. The bill strengthened the company’s accounting and reporting standards.
Potential employment sites include law enforcement, state and local governments, and federal agencies, including the Internal Revenue Service (IRS), the U.S. Department of Defense, the Government Accountability Office, the Federal Bureau of Investigation (FBI), and the Central Intelligence Agency (CIA).
They are also in demand by businesses of all sizes, financial services industries, and non-profit sectors. The Forensic Accounting website lists information about potential job opportunities and can be a useful resource for future forensic accountants.
Discover answers to frequently asked questions about forensic accounting career
Is there a demand for forensic accountants?
According to data from the US Bureau of Labor Statistics, in the ten years ending in 2029, job opportunities for forensic science and technology personnel are expected to increase by about 15%, and job opportunities for accountants are expected to increase by about 5% during the same period.
How much does a forensic accountant make?
According to the US Bureau of Labor Statistics, the average salary of an accountant in May 2020 was $73,560. The US Bureau of Labor Statistics does not specifically track the salaries of forensic accountants. As with similar occupations, your annual income depends on your experience, the number of years you have been in that occupation, and the type and size of the entity.
How many years does it take to become a forensic accountant?
Most forensic accountants need a bachelor’s degree to be considered for entry-level positions. It takes about four years to obtain a bachelor’s degree. To obtain any additional certification, it usually takes at least an additional year. If you want to become a forensic accountant, it is reasonable to estimate that it will take four to six years.
What does a forensic accountant do for the FBI?
Forensic accountants working for the FBI may have many different responsibilities. Generally speaking, any investigation bureau case involving financial wrongdoing (including the investigation of terrorists, spies, and criminals) falls within the scope of the duties of a forensic accountant. Forensic accountants contribute to the FBI’s intelligence cycle and testify on their findings in court.
The role of a forensic accountant is to identify suspicious financial data, which is usually used to investigate white-collar crimes such as securities fraud and corruption.
If you are good at numbers and love finance, and you are looking for a career in criminology, a career as a forensic accountant may be a good choice. It requires a unique set of skills, and the prospect of exposing corruption, corruption, and white-collar crime can be very attractive to some people.