What is forensic accounting?
In a business world where the line that separates a successful company from an unprofitable one is very thin, financial fraud is sometimes a reality. This is where a forensic accountant steps in. Such an expert needs to have a mix of skills in accounting, auditing, investigations, and statistics – to name just a few – to shed light on unfair business behaviors.
There are many situations when a forensic accountant’s expertise is needed – from litigations to court testimonies, insurance claims investigations, checking regulation compliance, or even divorce proceedings.
What do forensic accountants do?
Simply put, forensic accountants document financial issues, identify frauds, prevent monetary problems and violations of the law. To do that, they must have an ideal blend of skills and know-how that includes, but is not limited to, investigation abilities, strong communication skills, attention to details, substantial accounting expertise, and top analytical competence.
Forensic accountants can work as freelancers or be part of an in-house team in larger organizations. Either way, they must deploy their puzzle-solving abilities and make use of a high level of skepticism to investigate sensitive data and identify financial crimes accurately. Deductions, tenacity, thorough dedication, and critical thinking play a crucial role in a forensic accountant’s success.
About a bachelor’s degree in forensic accounting
If you want to start a career in forensic accounting, you should at least hold a bachelor’s degree in accounting (B.A.). This usually takes 4 years or 120 credit hours to earn, and it qualifies you for entry-level positions in the field. It’d be preferable to enroll in as many specialized forensic accounting classes as you can during your studies. Here are some examples of such courses:
Auditing classes revolve around financial statements and how to evaluate them properly to detect discrepancies or embezzlement.
Evidence gathering and interviewing techniques
Students learn the ABC of financial interrogation from face-to-face investigation techniques to using accounting software to detect frauds.
Why pursue a master’s in forensic accounting?
If you want to dive deeper into forensic accounting and become an expert in the field, earning a master’s degree (M.A.) in forensic accounting may be the right choice for you. Numerous companies look to employ personnel, who already hold a master’s degree, in positions that require advanced skills and specialist know-how.
It usually takes about 2 years to earn your master’s degree in forensic accounting. During this period, you can consider enrolling in internship programs to gain hands-on experience and prove your abilities to future employers, along with gaining specialist knowledge from courses such as:
These classes focus on the most efficient investigation techniques in civil matters – from divorce cases to employee financial misconduct.
Courses focus on the most appropriate analysis techniques to investigate data from electronic devices and gather evidence used in law courts.
Risk and compliance management
Students learn how to assess legal compliance and identify financial risks that may threaten business organizations, thus preventing irregularities and reinforcing integrity.
The advantages of becoming certified
Certified Public Accountants (CPA) can become Certified Forensic Accountants (CRFAC) after at least 2 years of forensic accounting experience. They also have to meet other criteria, as suggested by the American Board of Forensic Accounting (ABFA). Any CPA who would like to have a career as a forensic accountant must hold a bachelor’s or a master’s degree in accounting and should be an active member of ABFA.
Additionally, it’s mandatory to take a forensic accounting course before an ABFA exam. After passing the CRFAC exam successfully, a candidate gets the Certified Forensic Accountant credential from ABFA, which gives them access to new opportunities for development in forensic accounting and better career options.
How to become a Certified Fraud Examiner (CFE)
It’s mandatory to have a Certified Fraud Examiner (CFE) credential to join various businesses, government agencies, or law-enforcing institutions. As a CFE, besides having superior career opportunities, you could end up earning considerably more than other forensic accountants who don’t have this credential.
The first step towards becoming a Certified Fraud Examiner is to be a member of the Association of Certified Fraud Examiners (ACFE) – one of the largest professional organizations of forensic experts in the world, headquartered in Austin, Texas.
Requirements for CFE certification
As an applicant for CFE certification, you must hold at least a B.A. in accounting. It’s also recommended to have at least 2 years of professional experience in fields related to fraud investigations, financial crimes, or even criminology, auditing, and sociology. Additionally, you must show your adherence to the AFCE Code of Ethics and prove that you are a dedicated professional with very high integrity standards.
The CFE Exam has 500 questions, covering 4 different sections: fraud prevention and deterrence, financial transactions and fraud schemes, investigation, and law. Each section includes 125 questions, with an average time limit of 75 seconds per item. You must complete the 4 sections in one month.
How long will your studies be?
It usually takes 4 years to earn a Bachelor of Science (B.S.) or B.A. in accounting. To dive deeper and get your M.A. in forensic accounting or fraud examination, you’ll have to study for 2 more years. Those who would like to specialize in specific forensic fields, do advanced research in accounting, or choose an academic career can enroll in Ph.D. programs – these usually take at least 4 years to complete.
Moreover, there are several certifications you may want to achieve to become either a certified public accountant (CPA), a certified fraud examiner (CFE), or a certified forensic financial analyst (CFFA). Depending on the certification, you may need to factor in some extra months of study as preparation for the relevant exams.
Tuition fees and salary expectations
According to the latest available data published by the National Center for Educational Statistics, in 2017-18 the average national tuition fees for a period of 4 years in the United States were around $35,000. The sum you would have to pay now depends on the academic institution you choose and the program you decide to join.
Although compensation and benefits can vary greatly depending on the career path you will choose, depending on the career path you choose, negotiations with your future employer, and the level of forensic accounting expertise you reach, there are still clear guidelines to approximate how much you can earn and thus have feasible salary expectations.
According to the US Bureau of Labor Statistics, the median pay for financial examiners in 2019 was $81,000. An auditor earner around $71,500, while median wages in federal government agencies for forensic accountants reached $121,000 last year. Alternatively, you can check these compensation ranges for forensic accountants taken from the ACFE Compensation Guide for Anti-Fraud Professionals.
Career options with a degree in forensic accounting
The career paths you can follow with a forensic accounting degree are diverse and depend on your interests, skills, and qualifications.
First, you can choose a financial consulting company and become a fraud and corruption investigator. For entry-level positions, you’ll need at least a B.A. in accounting, and 2 years of relevant work experience, together with a CPA licensure. You’ll analyze financial records, do interviews, perform fraud investigations, and check embezzlement claims. For mid-level roles, you’d need to have the CFE credentials, in addition to holding a master’s degree in the field.
Join law companies and accounting firms
If your goal is to work for a law firm and conduct financial audits, you need at least 5 years of previous work experience in the field in a junior role. As an internal consultant, you may also provide jargon and terminology guidance to explain complex financial terms to broader audiences. Professional expertise in litigations is also a plus.
In accounting firms, you may primarily work as an expert in charge of identifying frauds and collecting evidence through interviews and data analysis. Also, you would develop detailed reports to document financial losses. You’ll need to have a B.A. in accounting, great communication skills, and substantial audit or forensic accounting professional experience. Although it’s not mandatory to have CPA or CFE licensures for entry-level positions, these types of credentials are essential for mid-level roles and beyond.
Work in corporate security or governmental departments
Another career path you may want to follow is in corporate security as a risk management specialist. Such roles involve increased responsibilities that range from ensuring that your company is compliant with national or local laws and regulations to performing financial risk audits or protecting the company’s assets from various financial threats. You’ll also closely monitor any changes in law or taxation policies, and suggest changes to maintain the desired profitability level.
Another niche for forensic accountants is that of governmental agencies and departments. Working for several institutions such as IRS, CIA, or FBI doesn’t necessarily mean that you become an agent. There are many roles where the expertise of a forensic specialist is crucial. Among other duties, the job would imply working in close collaboration with prosecutors to identify frauds or compiling financial reports on impeachable individuals.
You may also be involved in interrogations to investigate illicit financial flaws and gather evidence for court testimonies. Besides having a B.A. in accounting, it is a big plus to have CPA and FCE credentials. In addition, it’s mandatory to pass a top-secret clearance that will grant you access to classified or sensitive information.