What Is Forensic Accounting? How To Become a Forensic Accountant
There is a tendency to think of accounting professions as being quite dry. This isn’t necessarily the case. Forensic accounting is a rewarding and fascinating career path to take in the field. You’ll play a role in mitigating the negative impacts of fraud while flexing your investigative and accounting muscles.
Pursuing a master’s in business administration (MBA) degree in finance makes sense because of the wide range of career options it opens to you. Forensic accounting is certainly among these, as the curriculum gives you key insights into financial and business operations. If you have an interest in numbers, entrepreneurism, and criminology, you may find forensic accounting is the path for you.
Let’s take a closer look at what forensic accounting is and how you can pursue it as a career.
What Is a Forensic Accountant?
A forensic accountant specializes in investigating and auditing the finances of businesses and individuals. It’s the forensic accountant’s role to examine, analyze, and interpret the financial data before providing a report on the outcome.
It’s important to establish whether a career in forensic accounting is a good fit for you. Alongside the fascinating elements, there’s a significant amount of responsibility involved. So, it’s worth reviewing some key aspects of the role.
Forensic Accountant Daily Responsibilities
Here are some things forensic accountants do on a day-to-day basis:
- Collaborate With Investigators and Litigators
Being a forensic accountant sees you in a central role during criminal and private investigations. You’ll be collaborating closely with police, fraud investigators, and lawyers. Your relationships will help you to better understand the circumstances of a case and what evidence you’ll need to look for.
- Analyze Financial Evidence
Each case you work on is likely to be unique, with different types of evidence you’ll need to examine. This generally includes the close examination of financial records, spreadsheets, bank statements, and financial records.
- Produce Reports and Communicate Outcomes
Excellent communication is one of the primary duties of a forensic accountant. Businesses, careers, and even the freedom of individuals could rely upon your effective reporting of your analyses. In some cases, you’ll need to testify as an expert witness in legal proceedings.
- Develop Prevention Measures
Forensic accounting is useful for more than just investigating a crime. Fraud can have a significant widespread impact on businesses if it is left unaddressed. As such, your investigations could help to identify areas of vulnerability for companies. Part of your role can include providing advice to mitigate vulnerabilities and prevent future misconduct.
Where Do Forensic Accountants Work?
Many forensic accountants work in private practice. This allows the business to focus on serving a specific type of client. In most cases, your clientele is likely to be lawyers looking for experts to assist with litigation efforts. If you have entrepreneurial interests, you can start your own practice in a specialist area you are particularly passionate about.
You could also be a specialist within a wider organization. Financial consultancy companies and accounting firms often hire forensic accountants as an extension of their other services. This would usually see you investigating on behalf of corporations that suspect staff misconduct, or individuals facing audits.
Some government agencies keep forensic accountants on staff. Financial transactions play a huge role in investigations by the Federal Bureau of Investigation (FBI) and the Bureau of Alcohol, Tobacco, Firearms and Explosives (ATF). The Internal Revenue Service (IRS) also hires those with forensic accountancy skills to conduct investigations and audits. These positions can mean you spend time in the field alongside in-office analysis work.
Forensic Accountant Average Salary
According to the U.S. Bureau of Labor Statistics (BLS), the average salary for a forensic accountant is $73,560 per year. However, your earning potential can vary depending on the area of the sector you choose to operate in.
Becoming a Forensic Accountant
No matter what industry you want to enter, there is a well-established path to becoming a forensic accountant. This gives structure to your journey. However, it’s important to also recognize that — as with many rewarding careers — it is a challenging road. Nevertheless, with commitment and hard work, you can achieve success.
Find a Degree
- Bachelor’s (BA) Degree in Accounting
A BA in accounting is usually the minimum requirement to gain an entry-level position. This provides you with some key knowledge of how accounting records are kept and their relationship to business functions. However, building on a BA with an accredited MBA degree program in a relevant specialization tends to be more attractive to employers.
- General MBA
Forensic accountants need to understand how businesses interact with various types of finances. A general MBA program offers a broad overview of essential business elements. This includes studying cash-flow and asset management techniques. If you have ambitions to start your own practice, an MBA can also be instrumental in developing your business leadership skills.
- Finance MBA
Almost every aspect of your role as a forensic accountant requires an in-depth understanding of financial practices. Obtaining an MBA in finance gives you specialist skills and knowledge to navigate advanced investment strategies and dig deeper into records. The curriculum is designed to help you develop financial management expertise and understand complex financial mechanisms. It gives you significant advantages when investigating the actions of both individuals and large corporations.
Earn Your Certified Public Accountant Certificate (CPA)
The CPA certificate can be an important tool for a forensic accountant. This is because it requires you to have practical knowledge of auditing and attestation processes, financial reporting, and regulatory standards.
To gain a CPA certification, you need to meet education and experience standards, which are determined by your state’s board of accountancy. If you meet the eligibility requirements, you’ll then need to pass the CPA exam. To boost accessibility, the American Institute of Certified Public Accountants (AICPA) makes some educational scholarships available.
Become a Certified Fraud Examiner (CFE)
Becoming a CFE can bolster the investigative skills you need to be effective in the role. You may also find it makes you a more attractive recruitment candidate.
The qualification is awarded by the Association of Certified Fraud Examiners (ACFE). You’ll need to join the organization and establish your eligibility for the CFE exam. This usually requires a combination of formal degree attainment and at least two years of relevant professional experience.
Forensic Accounting Careers
You’ll find that attaining degrees and other qualifications relevant to forensic accounting opens up various opportunities. You’re not just limited to traditional forensic accountant roles.
Your options could include:
- Private, business, and government auditing;
- Management accounting;
- Financial security;
- Risk assessment and management;
- Corporate financial consultancy;
- Insurance investigation.
Forensic Accounting Skills
You’ll need an agile range of technical and soft skills to thrive as a forensic accountant. The key financial analysis abilities will be covered through your formal education, particularly if you take an MBA in finance. However, you’ll also need the following skills:
It’s useful to already have a natural attention to detail or take the time to develop this attribute. However, it’s worth seeking out internship opportunities with agencies or forensic accounting firms.
You need to be able to liaise with various parties during any investigation. There will also be times you need to explain technical financial concepts in layman’s terms. If you’re not already a skilled communicator, it’s essential to develop this attribute.
- Problem Solving
At the heart of every audit and investigation is a problem to be solved. You need to develop creative thinking skills to uncover the less-obvious evidence of misconduct. This will also help you identify and mitigate areas of financial vulnerability in business.
- Technology Use
There will be some businesses that still utilize paper accounts. However, most financial records are kept via accountancy software. You need experience in utilizing the popular platforms and performing analyses with them.
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