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.
With a Little Detective Work You Can Learn How to Become a Forensic Accountant
Put on your detective hat and see how it fits if you want to become a forensic accountant. That’s because when you learn how to become a forensic accountant you are actually learning how to spot activities like fraud, embezzlement, money laundering and other intentional violations of federal and state laws and regulations. You could say you become a numbers detective!
Investigate, Interpret and Catch!
If you had to define forensic accounting in a few words, those words would be investigate, interpret and catch. You investigate accounting records and documents to look for signs of illegal activities or hidden assets. Then you will interpret the information you gather to determine if indeed a white collar crime has been committed or where the assets in question have been hidden. The final step is to catch the criminal or person being investigated by proving the facts.
Forensic accountants investigate a number of situations or events:
Securities fraud
Money laundering
Embezzlement
Theft
Organized crime
Insurance fraud
Kickbacks
Pyramid schemes
Contract fraud
Hidden assets
In fact, when you become a forensic accountant, you will spend a lot of your time looking beneath the surface of transactions to dig deep and track the flow of information, entries, data and calculations that indicate records are hiding information that should be uncovered. In addition, the job requires interviewing people at all levels of an organization, witnesses and even possible victims.
Logical Choices
When you become a certified forensic accountant, you will probably complete audits for law enforcement, bankruptcy or criminal attorneys, government agencies, financial or insurance organizations, or certified public accountants. You need to be the type of person who thinks logically and can organize information and evidence in a way that others can understand. You also need to have a natural curiosity, patience and tenacity.
Take a forensic accounting course and you will see that this field of study is a blend of accounting, auditing, and general business. You will read, analyze, sift, sort and search for answers in the context of a corporate or government setting.
Become an Investigative Expert
Forensic accountants possess a Bachelor’s or Masters Degree, but should also earn a couple of important certifications. One forensic accounting certification is Certified Fraud Examiner (CFE) and a second one is the Certified Forensic Accountant (CFA) designation.
A forensic accounting certificate proves you have the knowledge needed to do the job well. Using special investigative skills, your days at work will be spent doing an array of interesting jobs in financial, medical, accounting, insurance, governmental and engineering industries.
If you are looking for an exciting and interesting career that pays well while offering a variety of work then you should consider becoming a forensic accountant. You can use your best detective skills to provide litigation support or to investigate criminal matters. This is a rapidly growing industry too as the world gets more complex due to technology. This means there’s plenty of opportunities when you’re ready to get to work detecting!
The Qualifications of a Forensic Accountant are Exceptional!
When you look at the qualifications of a forensic accountant, it quickly becomes clear you need special training. As a forensic accountant you will deal with complex accounting issues like any accountant would be expected to handle. But many times you are working under unusual circumstances because the forensic accountant is searching for evidence of crimes like fraud or money laundering or seeking litigation supporting information.
In addition, the forensic accountant must also stay technically current because technology has made it possible for criminals to use sophisticated methods to hide illegal money transfers or to manipulate numbers. That is why forensic accounting training requires both a college degree and certification proving exceptional knowledge of forensic examinations of accounting records.
An Excellent Career Choice!
Forensic accountants spend time pouring through documents and entries, but they also must be good communicators. It is often necessary to interview anyone who can offer important information concerning the investigation. During your course of study, you will learn accounting, auditing and methods of obtaining expert testimony.
The forensic accountant works primarily in one of two areas. The first area is called litigation support which involves doing investigative work to determine realistic economic damages or to uncover other information needed to support a legal case. The second area is investigative accounting which focuses on uncovering illegal activities.
What credentials do you need to be a forensic accountant?
The first requirement is to earn a degree in accounting. You can earn a Bachelor’s Degree if working on an undergraduate degree. You can also continue your studies and earn a Master’s of Accounting in Forensic Accounting. There are colleges that specifically offer forensic accounting programs at the undergraduate and graduate levels.
The next step is to earn your CPA designation. To become a Certified Public Accountant requires passing a rigorous examination offered by your State Board of Accountancy. After passing the exam, you are then registered as a CPA and allowed to use the designation.
CPAs are required to earn continuing education credits each year to maintain their CPA designation.
Certifying You are an Expert
Obtaining certification as a forensic accountant is important for career success. The American College of Forensic Examiners International (ACFEI) offers online courses that teach specific subjects related to forensic accounting. Upon completion of the course, you are prepared to take the exam leading to the designation of Certified Forensic Accountant (Cr.FA). To take the exam, you must have worked as a forensic accountant and be able to submit professional references. This exam is not an entry level exam.
Each year you will be required to attend approved workshops and seminars covering topics on fraud examination, fraud prevention, fraud detection, and new technologies as related to computer forensics.
You may also earn certification as a Certified Fraud Examiner (CFE) through the Association of Certified Fraud Examiners (ACFE). You must have a degree in accounting, submit letters of recommendation, and successfully pass the CFE exam. The exam covers 4 areas which are Investigation Methods, Legal Elements of Fraud, Fraudulent Financial Transactions, and Fraud Prevention and Deterrence.
The ACEFI or the CFE are excellent resources for obtaining forensic accounting career information. As you can tell, forensic accountants are well trained experts. It’s a career you can be proud to claim!
Tally Up Great Income With Forensic Accountant Salaries
The forensic accounting field offers excellent salaries for all people including those just starting their careers. According to Payscale.com the average of forensic accountant salaries for those with 1 to 4 years of experience is almost $51,000 annually. The salary only increases as you gain more experience.
Forensic accounting is a challenging and interesting profession, so it’s particularly satisfying to know it also pays so well. The Department of Labor reports that the average salary for accountants and auditors is $67,430 as of May 2009, but forensic accounting is a specialty field so you stand an excellent chance of earning a salary higher than the average.
Follow the Money….
The forensic accountant often spends time tracing money back to its source. But when it comes to salaries, you can follow the money right back to a great salary. As mentioned, you don’t have to work decades either before earning an excellent salary.
Here are the average salaries based on the average number of years of experience per Payscale.com.
1 to 4 Years $50,995
5 to 9 years $66,460
10 to 19 years $84,331
20 years or more $83,497
You will notice that the people working more than 20 years have hit the top of the scale, but remember those older workers who have worked in the industry for 30 or 40 years began their careers at much lower salaries than are paid today. With the rapid growth in technology, the demand for forensic accountants is accelerating, and that is just one reason why salaries are propelling forward also.
If you want to earn an excellent salary and enjoy accounting work, then you can follow the money by earning a degree in forensic accounting and then earning your forensic accounting certifications. But it’s your own money you’ll be following!
Location Does Matter
Like most jobs, the state where you work does matter in terms of earning the maximum salaries. For example, Payscale.com reports that forensic accountants in California earn $95,000 annually while in Florida they earn an average salary of $50,849. New York is paying average salaries of $72,093 and Texas is paying $71,899.
The type of work you do also impacts the salary level. Senior forensic accountants earn an average of $57,808 while internal audit managers are earning $85,935 which is a significant difference.
In the final analysis though, any way you look at the salary picture the forensic accountant is paid well. So you can earn good money, enjoy a challenging career, and have the satisfaction of knowing you are doing important work.
Investigating Success!
The job prospects for forensic accountants are excellent. One of the reasons is the sophistication of technology has led to a sophistication in white collar crimes. It takes an expert forensic accountant to ferret out the web of transactions. Forensic accountants may investigate divorces, organized crime offenses, or corporate embezzlement using complex money transfers.
Not just anyone can handle this type of work, and that’s why the industry pays such an excellent salary!
