A person employed as a forensic accountant is responsible for the finances of a person or company that can be held legally responsible for an action. Legal review is an important aspect of what is accounting in today’s business world given the incidence of lawsuits and legal liability that can go along with nearly any product or service. As such, it is crucial to hire one or more forensic accountants in order to have the skills needed for objective verification of legal environments or codes.
A forensic accountant professional is thorough and detailed to the point where he or she is capable of providing a finding with regards to accounts and inventories that would stand in a court of law (or another type of judicial process). It’s one of the main types of accountants.
WHAT IS THE PROCESS THAT A FORENSIC ACCOUNTANT USES?
As the name suggests, these professionals use exact scientific methods in order to come to their conclusions or opinions. When information is entered into the physical or digital records of an accounting system or program, it creates variation in the process of finances. This variation may be nothing more than a statistical blip, such as a minute increase in profit percentage or a fall of worker payroll, but is enough data for a legal conclusion.
A forensic accountant is capable of going through the phenomena that are introduced into these finance records and coming to an explanation about cause and effect. This is the meat of what is accounting at the forensic level — looking for the small clues that cause the deception or masking of information and then the aftershocks that ripple through an accounting system.
WHAT COULD THIS BE USED FOR?
Often times the chief employer of forensic accountants tend to be members of federal justice organizations. The US Department of Justice utilizes these accountants to look through the records of known or suspected criminals. These can be companies that
- -Employ illegal aliens
- -Hide or manipulate information about profits
- -Engage in unauthorized business procedures like smuggling or price-fixing
- -Deal in narcotics or prostitution
- -Pay employees under the table to prevent taxation
In all of these circumstances, it is important to be able to sift through large quantities of financial information in order to come to the necessary conclusions about changes and variation in the fiscal data.
HOW MUCH DOES A FORENSIC ACCOUNTANT MAKE?
With a median CPA salary of approximately fifty-five thousand dollars per year, this field of business represents a strong (and continually growing) career choice. A forensic accountant who is promoted or selected to the position of Chief Financial Officer can expect that salary to double. While staff accountants tend to make less money, senior fellows and senior tax accountants can expect to earn five to ten thousand dollars more per year.
Management positions are, as in the case of any other business, more rewarding than that of general staff, often earning seventy to eighty thousand dollars per year. These figures are expected to increase through the next decade, offering fiscal certainty in an uncertain economic climate for those who choose to become a forensic accountant.
Forensic Accountants played a huge role in investigating the high-profile corporate accounting scandals of the early 2000s. The evidence they uncovered led to the downfall of a several unscrupulous industry giants, making this among the most exciting of accounting careers.
Forensic accountants investigate and interpret bankruptcies, contract disputes, securities fraud, embezzlement, as well as other potentially criminal financial transactions, like money laundering.
There is a diverse number of employment choices for Forensic Accountants including law firms, insurance companies and government agencies like the Federal Bureau of Investigation (FBI) or the Internal Revenue Service (IRS).
Forensic accounting at Glance
Forensic accountants must have advanced knowledge of accounting, finance, the law and investigative techniques because they use these tools to determine if the activity they are investigating is illegal.
Many forensic accountants enjoy the opportunity to work closely with lawyers and law enforcement personnel during investigations. Forensic accountants also frequently appear as expert witnesses during trials.
Most forensic accountants have an accounting degree, though to become experts in their field they must also take specialized, college-level courses that focus on relevant topics like auditing and fraud. Forensic accounting also frequently requires attaining the certification of Certified Public Accountant (CPA).
A good forensic accountant should be curious, persistent, creative, organized and confident while being able to practice discretion and exercise sound professional judgment. Can you communicate clearly and concisely? Are you good with minute details and seeing things within the big picture? A career in forensic accounting may be the right path for you.