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For many people, the term forensics conjures up images of dead bodies and crime scene investigations. The world of forensic accounting is much cleaner, although it serves an equally important purpose in the field of financial reporting. Forensic accountants act like financial detectives and may be involved in a number of different activities, including defining insurance payments, computing settlements or calculating royalty benefits, based on existing paperwork.
What is Forensic Accounting?
Typically forensic accountants are involved in financial disputes that have been taken to the legal system. Their goal is to go through existing financial records to provide support for parties involved in a legal dispute. A forensic accountant may be called on in the case of suspected embezzlement or corporate fraud in order to pour through mountains of financial records in order to determine whether or not fraud occurred. They may also work to determine how much an injured person is owed in an insurance settlement based on existing financial records. In fact, it's said that a forensic accountant was the one who finally brought down legendary gangster Al Capone!
In order to work as a forensic accountant, you'll typically need to hold a bachelor's or master's degree in accounting, as well as a Certified Public Accountant (CPA) credential. Larger accounting firms or law offices may hire accountants to work specifically as forensics accountants, while accountants employed by smaller firms may be required to handle these situations as part of a larger workload. Governmental organizations like the FBI and CIA also hire forensic accountants to work on cases where back taxes are owed, or to determine when payments from government programs are owed.
Typically, forensic accountants earn between $30,000-$60,000/year in entry-level positions, but can quickly move into six figure salaries with experience on the job. Forensic accountants with several years on the job may earn as much as $125,000-$150,000/year. However, the tradeoff for this high paycheck may come in the form of longer working hours. Forensic accountants who are involved in high profile cases may need to work as many as 50-60 hours a week or more in order to adequately prepare to testify in a legal trial.
Successful forensic accountants must be extremely detail oriented, patient with complicated financial statements and knowledgeable about both legal and accounting practices. Although reading through financial statements can be tedious and time consuming, accuracy is imperative for forensic accountants. Since forensic accountants may be required to testify as witnesses in legal trials, they must also be composed and able to simplify complicated financial matters for the judge and members of the jury.
If you are interested in pursuing a career as a forensic accountant, the first step is to pursue a bachelor's degree in accounting and obtain your CPA designation. This isn't an easy process – typically, only 10-20% of test takers pass the exam on their first try. Once you pass your exam and gain a few years of experience in the field, you may want to pursue additional certification as either a Certified Forensic Accountant (CrFA) or a Certified Fraud Examiner (CFE). Both of these dedications will help you to earn a higher salary and advance in the field of forensic accounting.
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