Forensic accounting, also called fraud examination accounting used in a court case to show the process and procedures that a forensic accountant underwent in order to investigate suspected fraud in a business or other monetary transaction. Over the years, businesses have lost literally billions of dollars to various forms of accounting fraud from employee theft to embezzlement. Thus, there is a big need for people trained in forensic accounting.
Forensic accounting is very important to a business if they suspect that some sort of fraud is going on. Being able to detect possible fraud, or other misuse of company funds, is vital to ensuring the business is successful. A forensic accountant will investigate the financial records to make sure there are no issues and then work with the business to prevent fraud if they find it. They do this by educating the business on techniques to prevent future incidents of fraud. They also use their expertise to expose any other kinds of illegal actions such as money laundering, embezzlement, or other kinds of mismanagement of money from company funds.
Forensic accounting is much more than just being trained in things like accounting, taxes, and auditing techniques. A forensic accountant has to know how to be a detective as well in order to do their job properly. This job field is in high demand because, sadly, monetary fraud in a business is not uncommon. Forensic accounting consists of two categories: litigation support and investigation and dispute resolution. Someone going into this field can either specialize in one of these or in both.
Litigation Support in Forensic Accounting:
Litigation support in forensic accounting is actually presenting and interpreting the facts in a fraud case. The forensic accountant must be able to show how much money the company lost in damages, as well as try to get the situation resolved prior to it going to court. He will work to collect evidence, look through applicable paperwork, assess and identify the likely loss areas, attend the discovery phase of a court case, review all related documents for the case, help with negotiations and settlements, and report on the pros and cons of the positions being taken by both parties.
Investigation and dispute resolution:
Investigation and dispute resolution is done to find out how issues such as theft by employees, securities or insurance fraud, or identity theft have occurred. Plus, they will recommend to the company affected how to keep these things from happening in the future. A forensic accountant also works to help the company figure out the best ways to both get the lost assets returned, as well as to put measures into place to prevent it.
Forensic Accountants in High Demand in the Work Force
Forensic accounting positions are excellent jobs, as there is a high demand for their services. They are highly valuable in saving the business money by helping to identify and prevent fraud, as well as acting as an expert witness in the case of a fraud case that goes to court. Another reason that forensic accounting positions are so highly valued is due to a problem that happened 2001 to 2005 when several companies were found to have disclosed fraudulent financial statements. This in turn caused the companies to have to declare bankruptcy, which then spurred the federal government to enact new business and accounting laws. One of these new laws was the Sarbanes-Oxley Act of 2002, which makes a business chief executive officer and the chief financial officer directly accountable for their company’s financial statement. In fact, if anything is found to be fraudulent, they could be fined or go to prison, thus they have a big incentive to ensure these financial documents are correct. Another thing that caused a big need for forensic accountantsis the United Kingdom Institute of Certified Public Accountants, as well as the Association of Certified Fraud Examiners stressing that companies needed to be trained and educated in preventing, detecting and prosecuting any type of monetary fraud. Since the incidents in 2002, the field of forensic accounting has grown tremendously and the outlook for employment is considered to be good in the future with potential six figure salaries in some of the bigger companies.
Where can you work as a forensic accountant?
Several top organizations have forensic accountants on their payroll. These include the Federal Bureau of Investigation, the Internal Revenue Service, NAFA, Association of Certified Fraud Examiners, Forths forensic accountants as well as most law firms, accounting firms, tax firms, department and other stores, police or fire departments, local and state government agencies, etc. Their jobs are very involved and as a forensic accountant, you could find yourself investigating everything from a spouse trying to hide assets in a divorce case to money laundering by suspected terrorists. The bottom line is that the field of forensic accounting is vital to the business world and if you are interested in becoming a forensic accountant, there are college programs to pursue so that you can join in the never ending fight against monetary and other fraud.