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Who Is A Forensic Accountant? What Do They Do?
Forensic accounting entails investigating fraud, money laundering, embezzlement, and so forth.
18:42 22 November 2022
Money often leaves a trail, and ensuring that the funds are utilized correctly is essential to running a business. It is in such a context that forensic accounting comes into the picture. Simply put, forensic accounting is a specialized domain of accounting and a rather challenging one. It entails investigating fraud, money laundering, embezzlement, and so forth by analyzing financial records and transactions, tracing assets, and much more.
Thus, drawing from the above definition of forensic accounting, we can define a forensic accountant as a person adept at 'following' money. They deal with accounting, auditing, and undertaking investigations and are tasked with the responsibility of scrutinizing the finances of an enterprise or an individual and asking the burning questions of why a particular sum of money was spent in the first place.
In recent times, we can witness the scope and relevance of forensic accounting increasing exponentially. The main reason for such rapid growth is the mushrooming of new businesses and enterprises the world over. For instance, in 2010, the number of new business applications was 2.50 million; fast forward to 2020, and the figure rose by 75 percent to 4.38 million. Thus, such a monumental increase in enterprises also galvanizes the need for forensic accountants who investigate funds and delegate on pressing financial matters.
TWO COMPONENTS OF FORENSIC ACCOUNTING
Before gauging the contemporary relevance of forensic accounting, and the skills required to become a top-tier forensic accountant, let us quickly glance at the two components that make up the profession –
- Litigation Support – A forensic accountant measures the damages experienced by different parties embroiled in legal disputes. The forensic accountant helps settle conflicts, even before it reaches the courtroom. Furthermore, if a case goes to court, a forensic accountant can stand as an expert witness.
- Investigative Accounting or Fact Finding – A forensic accountant must determine if illegal matters, such as embezzlement, felony, or other discrepancies, have occurred in a specific situation.
CONTEMPORARY RELEVANCE OF FORENSIC ACCOUNTING: A BRIEF OVERVIEW
The massive influence that forensic accounting has in the contemporary financial scenario is relatively new. It was only after the 1940s that forensic accounting was formally defined as a streamlined profession. Frank Wilson, who worked as a CPA for the US Internal Revenue Service and investigated the infamous gangster Al Capone's transactions, is credited with Forensic Accounting's origin in the 1930s.
Nowadays forensic accountants are hired to determine whether businesses or individuals are engaged in fraud or financial manipulation of any sort. In addition, they are expected to analyze data to gauge where the money has gone and how to regain its possession. As a result, law enforcement agencies, such as the FBI, Interpol, and IRS, and big companies' fraud investigation units, often resort to highly skilled forensic accountants to uncover and analyze evidence used for solving and prosecuting financial crimes.
In addition, we can also see legal teams seeking the assistance of forensic accountants to act as expert witnesses for their cases. Thus, the time is ripe to venture into forensic accountancy and make a lucrative and rewarding career. The first step in doing so, as we all know, is building the perfect forensic accounting resume.
HOW TO BECOME A FORENSIC ACCOUNTANT
To begin with, no formal licensing is needed to become a forensic accountant. However, you need to earn a bachelor's or master's degree in accounting. You must first qualify as an accountant, apply for entry-level jobs, and then work for four to six years to gain specialization or competency as a forensic accountant. In the meantime, you can also enroll in specialized forensic accounting classes, find relevant internships, and work on related projects. Such ancillary skills will shine bright on your resume, compelling the recruiter to select you for the next round.
Some of the indispensable skills required to become a top-tier forensic accountant are –
- Interviewing skills
- Analytical abilities
- Creative thinking
- Problem-solving abilities
- Attention to detail
- Technical know-how
So, there we have it, a crisp overview of who a forensic accountant is and what their roles and responsibilities are. The future of forensic accounting is bright, and if you have contemplated dabbling into this specific field of accounting, then kudos to you. But, of course, the foolproof way to land your dream job in any firm is to create a forensic accounting resume that stands out, is carefully drafted, and highlights your best qualities.