What is Forensic Accounting?

Forensic AccountingThe role of an accountant revolves around numbers, but the profession features a variety of specializations like forensic accounting, which is a job that appears in many companies including insurance agencies and banks, as well as state-run agencies like police departments and federal investigation teams. Forensic accountants provide essential services in many areas of business and government today, and it’s a specialization a future accountant may want to investigate.

What is a Forensic Accountant?

Forensic accounting is a diverse area of accounting because it requires that an accountant has experience in standard accounting, as well as the expertise to conduct investigations. The profession of forensic accounting has increased in value and visibility in the past decade as the need for due diligence and fraud prevention has grown within the financial sector. Many institutions of higher learning have started offering forensic accounting programs in addition to their standard accounting degrees.

The job of a forensic accountant will often include research designed to trace missing funds or locate hidden assets. The accountant will perform a forensic analysis of the accounting information and create a report based on those findings. In some cases, a forensic accountant may be called upon to testify in court for a civil or criminal trial or before a government agency.

Areas where a forensic accountant may seek work include banks where investigations in securities fraud, financial statement fraud, and bankruptcy fraud are common. Additionally, a forensic account may be called upon to trace illicit funds for a law enforcement agency or locate hidden assets for a criminal prosecution or civil matter like a civil suit brought against a company or its executives.

What Education & Skills Do Forensic Accounting Require?

The primary route to becoming a forensic accountant is via college and a bachelor’s degree in forensic accounting, finance, or a related field. Individuals who already have an accounting or related degree may enroll in a graduate program in forensic accounting. After graduation, a future forensic accountant may need to spend time in a mainstream accounting job before switching to specialized employment in forensic accounting.

As with any specialty within accounting, forensic accounting requires excellent number sense and mathematical abilities, but the profession also requires its accountants to utilize a variety of communication skills including interpersonal, verbal, and written communication. Forensic accounting also requires extreme attention to detail and the ability to approach problems with an analytical mind.

Forensic accounting is a specialty of accounting, but forensic accounting also offers specializations within the industry. Forensic accountants commonly work in financial statement misrepresentation and fraud prevention; however, the American Institute of CPAs (AICPA) reveals that forensic accountants with skills in valuable areas like computer forensic analysis are rare and in demand.

Experience Required of Forensic Accountants

According to the Association of Certified Fraud Examiners (ACFE), finding employment as a forensic accountant usually requires that the applicant already has experience in accounting. Some forensic accountants will work in general accounting or as a Certified Public Accountant for a few years before obtaining their certification as a Certified Fraud Examiner (CFE).

Related Resource: Chief Financial Officer

Individuals who enjoy working with numbers and also possess excellent analytical and investigative skills may thrive as a forensic accountant. Work in forensic accounting often requires specialized education or experience beyond the traditional education required of Certified Public Accountants (CPAs), but the profession offers an exciting career path for future accountants.