By DeVry University
April 17, 2023
8 min read
April 17, 2023
8 min read
Forensic accounting is a specialized area of accounting where auditing and investigative skills and techniques are used to examine the finances and financial reports of individuals or organizations.
In this article, we’ll conduct an investigation of our own, answering the question “what is forensic accounting?” and uncovering more about what forensic accountants do, where they work, their education and certifications plus some the skills required to become one.
Bookkeeping investigations: Forensic accountants comb through accounting records and transactions to discover unethical actions like kickbacks, embezzlement or misappropriation of funds.
Due diligence contracts: Taking ethical, legal and regulatory factors into account, forensic accountants conduct background checks of all parties involved in contractual agreements and screen for signs of identity fraud or other financial abuse.
Litigation support: In this area, forensic accountants may collect financial information related to either a criminal or civil case and provide materials to legal professionals for use in hearings, trials and arbitration.
Trial testimony: Forensic accountants may be asked to testify in court to explain their findings.
Insurance claim investigations: These investigations usually involve the use of financial records and legal documents, which forensic accountants may be called upon to obtain.
Generally Accepted Accounting Principles: Thorough familiarity with GAAP enables financial investigators to spot instances where these principles have been ignored or intentionally misused.
Generally Accepted Auditing Standards: Forensic accountants apply GAAS, a set of standardized guidelines created by the Auditing Standards Board of the AICPA, to uncover tax evasion, misrepresentation, embezzlement and other financial crimes. GAAS ensures the accuracy, consistency and verifiability of financial auditors’ reports.
Knowledge of tax law: Because many forensic accountants focus on tax fraud or tax evasion, they need to possess a strong understanding of relevant tax laws.
Familiarity with financial reporting requirements: In the corporate world, intentionally inaccurate financial statements are a common form of accounting fraud. Forensic accountants need to be familiar with reporting requirements so they can identify and investigate unusual reporting practices.
Attention to detail: This type of accounting involves the careful examination of financial records to detect discrepancies or irregularities. Forensic accountants must have a talent for paying attention to the small details to find what’s missing or what’s been altered.
Creative problem-solving: Forensic accountants must be able to respond quickly to changes in the investigations they are part of, as the discovery of new evidence can cause an investigation to take various twists and turns.
Interviewing skills: Forensic accountants have to investigate people as well as financial records, so they may be required to interview persons of interest in civil or criminal investigations. Knowing how to ask the right questions and evaluate responses is an important skill.
Communication skills: Forensic accountants must be able to communicate effectively in both oral and written forms as they work with law enforcement and regulatory agencies or testify in court as a knowledgeable witness.
Government: Government agencies like the Internal Revenue Service (IRS), Federal Bureau of Investigation (FBI), Drug Enforcement Agency (DEA) and some state and local authorities may hire forensic accountants to investigate criminal activity and security threats. In these roles, they typically trace the sources of financial support for criminal organizations.
Law firms: When involved in civil or criminal litigation, law firms may hire forensic accountants on a contract basis or as staff members. Here the forensic specialists are typically tasked with determining financial damages, assessing the value of assets and finding evidence of wrongdoing.
Financial institutions: Banks, insurance companies and accounting firms all hire forensic accounting professionals. In accounting firms, they typically work in advisory departments, but some larger firms may have separate forensic accounting divisions. In banks and insurance companies, forensic accountants assess insurance claims, review documents and detect fraud or non-compliance with laws.
Risk Consulting: Risk management consultants are used by large businesses to protect their financial interests and reduce potential losses. Companies may conduct independent reviews of each other’s finances prior to finalizing a merger or acquisition. Or, a company may want to conduct an independent assessment of its own financial records and want advice on how to navigate an inquiry by a regulatory agency.
CPA: Certified Public Accounts (CPAs) are licensed by their states’ Board of Accountancy. CPA candidates must pass a national exam and meet other state-mandated requirements, and complete at least 150 semester hours of college coursework. All states use the 4-part Uniform CPA Examination from the AICPA.
CFF certification: The Certified in Financial Forensics credential is also issued by the AICPA. To be eligible for this certification, candidates must have a valid CPA license, pass the CFF exam, attest to the minimum business experience and professional development requirements and be a member of AICPA in good standing.
CFE certification: Issued by the Association of Certified Fraud Examiners, the Certified Fraud Examiner (CFE) certification verifies knowledge of complex financial transactions, understanding of investigative techniques, the ability to resolve allegations of fraud and the ability to design effective anti-fraud programs.
CFA certification: Issued by the American Board of Forensic Accounting, the Certified Forensic Accountant credential assesses CPAs’ knowledge and competence in forensic accounting and covers forensic accounting, fraud, litigation services, cyber security for accountants and valuations.
1 Most state boards of accountancy require 150 credit hours of post-secondary education in order to sit for the CPA exam. As this program is less than 150 credit hours, this program alone does not meet the minimum coursework requirements to sit for the CPA exam. Students interested in sitting for the CPA exam should check their state’s requirements. Credits and degrees earned from this institution do not automatically qualify the holder to participate in professional licensing exams to practice certain professions. Persons interested in practicing a regulated profession must contact the appropriate state regulatory agency for their field of interest. DeVry is not able to recommend graduates for professional licensure in any state. New York students should contact the NYSED Office of Professions regarding professional licensure.
†Credits and degrees earned from this institution do not automatically qualify the holder to participate in professional licensing exams to practice certain professions. Persons interested in practicing a regulated profession must contact the appropriate state regulatory agency for their field of interest. For instance, typically 150 credit hours or education are required to meet state regulatory agency education requirements for CPA licensure. Coursework may qualify for credit towards the State Board of Accountancy requirements. However, it is the student’s responsibility to contact the state board of accountancy for the jurisdiction in which they are applying to determine whether they have completed the appropriate credit hours and coursework to qualify to take the CPA exam. Employees of DeVry University and its Keller Graduate School of Management are not in a position to determine an individual’s eligibility to take the CPA exam or satisfy licensing. New York students should contact the NYSED Office of Professions regarding professional licensure.
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In New York, DeVry University operates as DeVry College of New York. DeVry University is accredited by The Higher Learning Commission (HLC), www.hlcommission.org. The University’s Keller Graduate School of Management is included in this accreditation. DeVry is certified to operate by the State Council of Higher Education for Virginia. Arlington Campus: 1400 Crystal Dr., Ste. 120, Arlington, VA 22202. DeVry University is authorized for operation as a postsecondary educational institution by the Tennessee Higher Education Commission, www.tn.gov/thec. Naperville Campus: 1200 E. Diehl Rd., Naperville, IL 60563. Unresolved complaints may be reported to the Illinois Board of Higher Education through the online compliant system https://complaints.ibhe.org/. View DeVry University’s complaint process https://www.devry.edu/compliance/student-complaint-procedure.html Program availability varies by location. In site-based programs, students will be required to take a substantial amount of coursework online to complete their program.
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