Forensic accounting may sound like a job of thorough auditing, but it involves much more. It not only requires accounting knowledge and skills but also investigative abilities and legal knowledge beyond tax laws.
Certainly, forensic accountants painstakingly audit financial records — but not for the same purposes as internal or external auditors who examine and evaluate financial statements and account books to assess accounting systems for performance, validity and reliability of financial controls.
What Forensic Accountants Do
Forensic accountants work in two broad legal areas: investigation and litigation support.
Forensic accountants who provide investigative services may work for private or public clients or employers. By applying knowledge of accounting and auditing principles, practices, standards and tax laws, as well as investigative techniques, they examine financial records and audit accounting books. They seek clues and evidence of financial crimes such as embezzlement, fraudulent bookkeeping, money laundering, securities fraud and tax evasion.
Forensic accountants who provide litigation support services perform research to produce information and reports about losses, judgments and awards from torts, which are intentional or accidental actions that cause harm and financial loss to a person or entity, such as a business. They may also work with attorneys to decide the amount of damages to offer litigants to avoid trials.
Knowledge and Skills Employers Seek in Forensic Accountants
Employers are looking for forensic accountants with a wide range of knowledge and skills. Professionals in the field should be well versed in the following areas:
- Accounting system applications
- Asset misappropriation
- Bankruptcy, contract and procurement, credit card, financial statement, securities and telemarketing fraud
- Generally Accepted Accounting Principles (GAAP)
- Generally Accepted Auditing Standards (GAAS)
- Insurance claims
- Legal system and procedures
- Tax law
- White-collar crime
Professionals should also be able to effectively do the following in their role:
- Analyze evidence integrity, financial data and regression information
- Apply accounting principles and procedures as well as tax law knowledge
- Assess losses and potential damage awards as well as conduct internal/external investigations
- Audit internal/external financial documents
- Gather forensic intelligence
- Locate hidden assets and trace illicit funds
- Research and write in relevant business formats, especially reports
- Testify as an expert witness
- Work with law enforcement officers and agencies
Being an effective forensic accountant does not require just hard skills and industry knowledge. Professionals should also have crucial soft skills such as analytical thinking, detail oriented-ness, integrity, objectivity, independence and credibility.
Acquiring Needed Knowledge and Skills
For most forensic accounting jobs, you will need a bachelor's or master's degree in accounting, forensic accounting, finance or a related field.
If you already have a degree but lack knowledge or skills, you may want to consider earning a master's degree such as the online Master of Business Administration in Forensic Accounting from the University of North Carolina at Pembroke. The program offers a number of courses, including foundation courses for students with no accounting background or those who need refreshers.
These descriptions include the courses' knowledge and skills focuses for a forensic accounting career.
- Foundations of Financial and Managerial Accounting [ACC 5010] covers basic accounting concepts, including evaluating transactions, preparing and analyzing financial statements.
- Foundations of Finance [FIN 5010] covers required accounting knowledge such as financial statement analysis and how to use technology such as financial calculators, Internet research applications and digital spreadsheet modeling.
- Foundations of Business Statistics [DSC 5050] teaches desired knowledge and skills such as regression analysis.
- Quantitative Methods [DSC 5100] is a core course of intermediate-level statistics that expands on foundational statistics, including regression analysis and information technology applications.
The following concentration courses provide career-specific knowledge and skills for forensic accounting:
- Fraud Examination [ACC 5550] explores aspects of occupational fraud such as investigative techniques, detection and prevention.
- Forensic Accounting [ACC 5551] teaches legal and technical knowledge for litigation services such as determining and modeling economic damages and awards and other litigation services accountants provide.
- Legal Issues for Managers [BLAW 5280] teaches legal processes of various business transactions and the commercial law environment in which those transactions are negotiated and executed. Expected learning outcomes include enhanced analytical, communication and negotiation skills, as well as developing knowledge of areas of law that play integral parts in management decisions.
- Forensic Analytics [ACC 5553] explores case studies to learn technology-based techniques for fraud detection in organizations. Techniques will include numerical and text data analysis.
If you're interested in taking your accounting skills and knowledge beyond balance sheets and IRS regulations, consider earning an MBA in forensic accounting to gain skills employers seek.
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