Forensic Accounting Information
Financial crimes are as numerous as the petty and violent crimes publicized in the nightly news. Forensic accounting incorporates auditing and investigative procedures to uncover hidden financial and accounting crimes. In this context, the word "forensic" refers to legal proceedings. Forensic accounting procedures allow the findings to be introduced as evidence in criminal or civil cases.
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Definition
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The job of the forensic accountant is half accounting and half auditing. You must first examine the potential problem from an accountant's perspective to determine the potential risk factors, then backtrack using auditing skills. Forensic accountants can determine the absence of deception. Their investigative accounting skills sometimes exonerate companies of wrongdoing. Many transactions that appear to be illegal or illicit may be deemed legal when examined closer. Litigation support is another fundamental skill of good forensic accountants, who may be called as expert witnesses.
CFE Certification
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Forensic accountants can earn several different certifications. The most common is the Certified Fraud Examiner (CFE). An accountant earns this certification through work experience in addition to educational and exam requirements. The CFE certification process prepares an accountant for a career in forensic accounting. CFEs have proven proficiency in fraud detection and prevention. Companies that employee CFEs and publicize this fact are less likely to be defrauded. Accountants with the CFE certification work for major corporations, the US government and consulting firms.
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Financial Crimes
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Forensic accountants help to detect many different kinds of financial crimes such as insurance fraud, white-collar financial fraud, personal injury fraud and vendor fraud. Company employees perpetrate most of the financial crimes committed in the US. Many larger US corporations have systems in place to detect fraud, and employ forensic accountants to conduct internal forensic audits. Company purchase cards (P-Cards), credit cards and expense accounts are always likely opportunities to commit fraud. Vendor fraud, a popular form of financial crime, involves a company employee paying invoices to vendors who have provided neither real products nor services to the company. The fraudulent payments are then distributed amongst the perpetrators.
Proactive Approach
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A proactive approach to financial fraud costs companies much less than a reactive approach. Some companies bring in forensic accountants to test the company's internal controls processes and determine the weak points. Then the company can make appropriate corrections before fraud occurs. However, no matter how good your internal controls are, someone will always find a way around them. Keeping your company safe and secure from white-collar criminals is an ongoing struggle.
CPA Firms and Forensic Accounting
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Most larger national and international accounting firms offer forensic accounting services. Many smaller regional firms offer these services as well. The forensic accounting engagement usually occurs after a fraud has already occurred, an expensive and time-consuming process. The same firms offer proactive internal controls engagements as well. In addition to CPA firms, risk consulting firms often offer fraud detection and litigation support. One non-CPA firm that offers forensic accounting services to their clients is Marsh USA, a Fortune 500 insurance brokerage firm. Marsh USA offers forensic accounting to detect insurance claim fraud and litigation support for any litigation resulting from the fraud itself.
Job Outlook
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The Federal Bureau of Labor Statistics expects forensic accounting careers to increase through the year 2014---good news for the accounting sector. In 2006, the average starting salary for a forensic accountant in the US was approximately $52,000. As the field continues to grow, more colleges and universities offer specialty accounting educations. One university known for its forensic accounting program is Florida Atlantic University (see Resources below).
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