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Forensic Accounting: A Career Overview

By DeVry University

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.

What is Forensic Accounting?

Forensic accounting is a branch of general accounting that focuses on the review and assessment of financial documents, and sometimes the investigation of the people behind those documents. 

In short, forensic accounting is investigative accounting. As the use of the word “forensic” implies, this area of the accounting profession is utilized in conjunction with criminal investigations of fraud, embezzlement or civil litigation, requiring forensic accountants to prepare documents that will be used in court.

What Does a Forensic Accountant Do?

The field involves meticulous record-keeping and a range of investigative techniques. While other accountants or CPAs may be engaged primarily in the practice of preparing and filing financial reports and tax returns for their clients, forensic accountants examine financial information to try to uncover wrongdoing. 

Forensic accountants may work for insurance companies, financial institutions or law enforcement agencies looking for evidence of crimes such as embezzlement, employee theft, identity theft or insurance fraud. Their findings are typically used in court in criminal prosecution or civil litigation, in a trial or as the basis of bringing criminal charges against a company or individual.

Forensic Accountant Responsibilities

The duties and responsibilities of a forensic accountant will vary depending on the type of engagement they are hired for. Here are a few examples:

  • 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. 

Hard Skills for Forensic Accountants

Forensic accountants must have foundational knowledge of accounting and a familiarity with the principles, standards and laws regarding the review and auditing of financial records. The hard skills that enable them to accurately audit financial records in civil or criminal cases include:

    • 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. 

Soft Skills for Forensic Accountants

To be successful, forensic accountants and auditors need to possess interpersonal abilities, or soft skills, aside from their technical knowledge. Examples of soft skills that are useful in forensic accounting include:

    • 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.     

Where Do Forensic Accountants Work?

Forensic accounting careers can be found in various public and private-sector organizations, including:

    • 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.

Forensic Accounting Education and Certifications

If you want to prepare to pursue a career in forensic accounting, it’s important to know the minimum education requirements for this career path. Since forensic accounting is not considered an entry-level position, you may need to pursue an advanced degree and industry-recognized certifications or gain several years of industry experience.

Degrees for Forensic Accounting

The U.S. Bureau of Labor Statistics (BLS) states that accountants and auditors typically need a bachelor’s degree to pursue this occupation, but some employers may prefer candidates for forensic accounting roles have a graduate degree, such as a master’s degree in accounting or a business administration degree with an accounting concentration. At DeVry, our Bachelor’s Degree in Accounting can help you build a strong foundation in accounting and economics. Our knowledgeable professors will help you gain an understanding of business technology, laws and government regulations, as well as business management and administration skills. Coursework in this program include financial accounting, auditing, accounting information systems, critical thinking, federal income taxation and more. 

At DeVry, our online Master’s Degree in Accounting is designed for those who want to pursue an advanced degree and pursue their CPA credential. Our program includes Becker Professional Education’s CPA Exam preparation built right into the curriculum, so you can study for the CPA exam1 while earning your degree. Coursework in this program revolves around accounting theory and practices, accounting regulations and standards, advanced accounting studies, material needed to pursue professional licensure and more. Taught by faculty who are professionals in the accounting field, this program is designed to build on the skills you learned in your undergraduate program. 

Forensic Accounting Certifications

Your path towards a career as a forensic accountant typically involves pursuing certification as a CPA, which entails both certification and licensing. According to the American Institute of Certified Public Accountants (AICPA), forensic accounting involves the application of specialized knowledge and investigative skills possessed by CPAs. 

    • 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.  

Prepare to Pursue a Career in Forensic Accounting with DeVry

At DeVry, our online and hybrid accounting degree programs are designed with your career path – and your busy life – in mind. When you earn a degree or certificate at DeVry, you’re learning from faculty with real-world experience and exploring concepts that are relevant to today’s business world. Plus, several of our master’s programs can help you prepare to take the CPA exam. † 

Let’s talk about how we can help get you started toward your career goals in our next session. Classes start every 8 weeks.

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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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