Forensic Accounting
Forensic accounting involves interpreting and investigating white-collar crimes, such as contract disputes and bankruptcies, securities fraud and embezzlement, and other financial transactions that may include criminal activity. Forensic accountants determine whether an activity is legal based on their knowledge of accounting and finance, their familiarity with the law, and their honed investigative techniques. Many work closely with lawyers and law enforcement personnel during investigations and sometimes appear as expert witnesses in courts of law.
Daily Tasks
In the past, companies called upon the expertise of forensic accountants after a fraud was committed. Nowadays, however, business owners are turning to forensic accountants with greater frequency in the aftermath of recent corporate scandals for “fraud checkups.” To perform this task, forensic accountants:
- Analyze financial statements
- Inspect documents and records
- Conduct interviews with individuals who may know about the suspected fraud
Some forensic accountants are engaged in public practice, while others work in the private sector. The Federal Bureau of Investigation, the Internal Revenue Service, insurance companies, and banks are among the largest employers of forensic accountants. Attorneys sometimes hire forensic accountants to investigate the finances of a criminal suspect.
Education & Training
Recent graduates without extensive experience in the field may work under the supervision of an experienced accountant. After gaining experience, however, he or she will enjoy greater independence along with the opportunity for advancement.
Forensic accountants must fulfill the educational requirements to become an accountant before pursuing the specialized education needed to become a forensic accountant. Accountants are generally required to complete at least a bachelor's degree in accounting or a related field. Some employers prefer applicants with a master's degree in accounting or a business degree with a concentration in accounting.
In general, most forensic accountants hold postsecondary degrees in accounting and complete specialized training in forensic accounting. Many professionals go on to obtain a Certified Public Accountant (CPA) or Fraud Examiner certification.
Salary & Job Outlook
The median annual salary of a forensic accountant is approximately $60,000, with the middle half earning between approximately $46,000 and $78,000 per year. The highest 10 percent can earn more than $102,000 annually.
After the passage of the Sarbanes-Oxley Act, it is now a requirement that CEOs state that their company's financial statements accurately represent the financial position of his or her firm's operations. As a result, public companies are likely to offer increased employment opportunities for qualified forensic accountants in order to comply with the demand for more accurate reporting.
According to the U.S. Bureau of Labor Statistics, employment opportunity for accountants is expected to grow by 22 percent through 2018, a significantly more rapid rate than the average for all occupations. It is projected that a total of 279,000 jobs will arise over the next decade.
Characteristics of a Successful Forensic Accountant
Successful forensic accountants possess knowledge of investigative techniques, fraud schemes, and the law. The profession requires confidence, creativity, curiosity, discretion, organization, persistence, and sound professional judgment. If you have an aptitude for working with numbers, and enjoy combining it with investigative work, consider forensic accounting as a professional career.
Article Resources:
U.S. Bureau of Labor Statistics: Accountants and Auditors
Forensic Accounting Information
Journal of Forensic Accounting: What is Forensic Accounting