Forensic Accounting Statistics

Forensic accountants are the crime dogs of the financial industry. It is their job to "take a bite out of crime." The crimes that forensic accountants hunt down are white-collar crimes. Examples of forensic accounting crimes are embezzlement, waste, theft and misrepresenting a company's financial statements. Forensic accountants are specialized witnesses in court cases. They investigate criminal activities involving money laundering, tax evasion, bribery, insurance claims, personal injury claims and any other financial activity that can be misrepresented by false accounting procedures. The statistics for forensic accounting support the need for qualified forensic accountants.

Statistics for the Increased Need for Forensic Accountants

The demand for accountants with a forensic specialty is increasing. Forensic accounting is more than just number crunching. It involves specialized investigative training. Forensic accountants must also acquire an additional license to be a certified financial examiner. According to a survey by the AICPA, 68 percent of members say their forensic practices have grown over the last year, citing the reasons as increases in financial statement fraud and compilation of economic damages.
The numbers representing the growth of company fraud are staggering. The International Federation of Accounting issued a statement in 1997 that fraud and white-collar crimes had reached the $400 billion mark for that year. In 2007, the estimate was $660 billion. This is in the United States alone. The average company loses about 6 percent of annual revenue to fraud.

Forensic Accountant's Red Flags

Red flags that forensic accountants look for when examining a company's financial statements are sudden increases in spending. Another warning sign could be a company whose expenses are up while the income is going down. If the cash flow is decreasing and the net income has increased, this is a sign that all is not what it should be with the company's financial statements.
Forensic accountants must look at the whole picture to determine a company's financial health. They spend many tedious hours investigating balance sheets, revenue and expense income, cash flow and earnings statements. As the incidence of financial fraud continues to grow, the need for qualified forensic accountants will also continue to grow.

Sarbanes-Oxley Act of 2002

The Sarbanes-Oxley Act of 2002 was named for Senator Paul Sarbanes and Representative Michael Oxley, who were the overseers of getting this legislation enacted. There are 11 different titles addressing the regulation of financial practices and how corporations are governed. Compliance is mandatory for all companies no matter their size. Companies are looking to accounting specialists to help them with this daunting task.

Growth in the Field of Forensic Accounting

Work opportunities in the field of forensic accounting are expanding. With the introduction of the Sarbanes-Oxley Act of 2002, companies must strengthen their accounting and internal financial systems. Some companies even have specialized forensic accounting departments. The Bureau of Labor Statistics Occupational Outlook Handbook calls for faster-than-average growth in this field over the next decade.

Training to Be a Forensic Accountant

Students interested in a forensic accounting career should start with a bachelor's degree majoring in accounting or forensic accounting. Another degree possibility you could pursue is a master's in accounting with licensure for a Certified Public Accountant.
A forensic accountant must also qualify as a Certified Fraud Examiner or Certified Financial Forensic Accountant, passing the CFE or CFFA exams. To be a candidate for these exams, you must have a bachelor's degree and two years of accounting experience.

Resources

• Forensic Accounting Careers
• National Organization of Forensic Accountants
• Sarbanes-Oxley Act of 2002