More than just numbers: Getting into forensic accounting

Did you know that if you become an accountant, you could be an expert witness in a major fraud scandal?

Forensic accounting is a specialty field in which certified public accountants (CPAs) use accounting and investigative skills to examine a company's or person’s financial records for criminal activity.

Forensic accountants track and analyze financial red flags and possible criminal activity using their investigative and accounting expertise, investigating "crimes against property," meaning nonviolent crimes to obtain property, money or other financial benefits.

A CPA with forensic accounting credentials can determine whether a crime (such as identity theft, securities fraud or insurance fraud) occurred and then evaluate the probability of criminal intent. Forensic accountants frequently assist government agencies or compliance teams of big companies and banking institutions in pinpointing useful evidence for the investigation and trial of financial crimes.

Rachel Hoy, an FBI supervisory forensic accountant with over 10 years of service, says that forensic accounting focuses on financial analysis, uncovering “where the money comes from and where it goes.” She enjoys putting all the pieces together. “[You’re] figuring out evidence to investigate the claims; [it’s] like a puzzle, and the work furthers the FBI mission to protect the American people and uphold the Constitution.”

Simply put, forensic accounting works by having qualified CPAs locate suspicious or criminal-like activities within financial records for use in criminal investigations or court.

A day in the life of a forensic accountant

Forensic accountants evaluate questionable financial data, identify fraud and assist in civil and felony investigations — think of them as financial inspectors.

“You have to look beyond the numbers to understand the context,” Hoy said, “[which means] conducting interviews, reviewing evidence, participating in search warrants, testifying in court and meeting with investigative teams.”

In most cases, forensic accountants follow an approach that involves examining, evaluating, balancing and recording. They thoroughly:

• Research a company's budgets, fiscal reports and financial structure
• Inspect and verify the company's financial documents, including earnings and spending
• Ensure that all figures match and remain in compliance
• Describe their findings in a report

“No two days are alike,” said Hoy. When solving the puzzle, “numbers are not [always] black and white. A case can last months or years depending on the complexity of the scheme. New information can necessitate conducting additional analyses.”

How to become a forensic accountant

Becoming a forensic accountant requires a few years of studying and coursework. Typically, you’ll need to:

• 1. Earn a bachelor’s or master’s degree in accounting, finance, forensic accounting or a related field your career path requires
• 2. Study and pass the CPA Exam for licensure
• 3. Apply and pass examinations for credentials

While working through the education requirements, you should also seek to gain a couple of years of real-life accounting experience through practicums or internships.

A CPA with or without forensic accounting experience can earn a Certified in Financial Forensics (CFF) credential, showcasing a CPA's expertise and knowledge in several areas, including fraud detection, bankruptcy and insolvency, family law support, litigation support and more.

Forensic accounting careers involve gathering and analyzing financial data such as bank accounts, credit card statements, invoices and other documents to assist corporations or individuals in detecting financial misconduct.

But don't think you'll be in some boring corner with stacks of files and forms — forensic accountants do their jobs out in the field.

Five exciting career opportunities in forensic accounting

1. U.S. federal law enforcement and government organizations

Forensic accountants can work for law enforcement agencies like the FBI or CIA. They collaborate with investigative teams to examine the financial aspects of current cases and identify any actions or groups that require additional inspection.

2. Forensic accounting firms

Large accounting firms often include a forensic accounting section and work with other organizations to do audits, digital forensics and financial investigations. An accounting firm's forensic team may aid businesses involved in public lawsuits.

3. Security and risk management

Forensic accountants in risk management maintain financial compliance and security by developing prevention techniques to reinforce business policies and prevent fraud and theft. They operate in the financial industry, keeping up with changes in tax legislation, currency rates and other worldwide economic issues.

4. Financial consulting agencies

CPAs with forensic accounting backgrounds can operate within financial consulting firms, providing services to organizations that can benefit from receiving assistance as needed instead of hiring a full-time forensic accountant.

5. Law firms

Law firms use forensic accountants for support, dealing with internal financial concerns, conducting criminal audits and working with financial specialists to give testimony in court. This job requires strong communication skills since you must explain complex financial details in simple terms.

Forensic accounting is most useful in these five fields, and CPAs with forensic experience can find success working in any of them.

“If [you’re] curious, like to ask questions and follow the money, you’ll enjoy it,” Hoy said. She further describes her job as “a fascinating field of work; [it] leads to some great experiences and travel.”

Visit the Global Career Hub for job postings and tips for interviewing. You can also explore more information from AICPA & CIMA about how forensic accountants crack major fraud cases.