Alarming sums of money are stolen from businesses each year by trusted employees. It is estimated that in 2008, at least $6 Billion will be lost by businesses as a result of fraudulent activities. Surprisingly, smaller companies suffer the majority of the losses. This is due to their lack of funds to implement preventative procedures in concert with a generally stronger trust and more personal relationship with employees. In order to prosecute those responsible for these crimes, it is important to understand the path leading to the fraud.
Forensic accounting is a rapidly expanding field involving careful investigative work, in depth financial analysis and an understanding of the legal system. Forensic accountants must think on their feet and work side-by-side with law enforcement personnel in order to solve the puzzles surrounding fraud cases. Frequently they are required to testify in court as expert witnesses and provide key evidence leading to convictions. Evidence is gathered from books and other records including computers, hard drives, and email correspondence and computer records. It is then carefully traced back to where the problem first began. Forensic accountants act as detectives, lawyers, CPA’s and scientists. These professionals often have highly developed deductive reasoning skills, familiarity with legal procedures, good writing skills and excellent public speaking skills. They have the responsibility of convincing a judge and jury that the evidence they have gathered is solid. Forensic accounting played a large role in convicting Al Capone for tax evasion. It also figured prominently in exposing the Enron and WorldCom scandals.
As technology improves and the amount of money stolen from companies and corporations grows, the demand for forensic accountants has grown rapidly. Considered to be one of the fastest growing accounting jobs, it is predicted that this profession will be among the top twenty in the next few years. Schools have begun to offer programs in this field to help meet the strong and ever increasing demand for forensic accountants.
In the computer age, fraud comes in many forms. It is much easier for criminals to embezzle money without detection. This is why forensic accountants typically need advanced computer knowledge. They must be able to extract evidence from computer hard drives. Business owners look to forensic accountants to help implement preventative measures. Many businesses hire these professionals to examine documents and computers regularly so that the chances of a serious problem are minimized. Forensic accountants also find employment in police departments, law firms and governmental agencies such as the FBI and the IRS.
While working for a law firm, there are a variety of legal disputes that a forensic accountant may assist in. In divorce cases, assistance is needed in dividing assets. Disputed assets are often investigated behind the scenes in order to determine the most equitable way to split them as well as determine if both parties are credible. Forensic accountants also assist lawyers in bankruptcy cases. Evidence is gathered to ensure that there is no suspicious financial activity surrounding the case. Copywriting and patent infringement, insurance fraud, personal injury, and construction audits are among the kinds of cases that forensic accountants are often called upon to investigate. Police departments hire forensic accountants for many of the same reasons, especially to gather evidence for prosecution that will stand up in court.
Forensic accounting professionals express a high level of job satisfaction. The profession typically offers excellent compensation ($100K+/year) and the investigative work is very intellectually challenging. There is always something new and exciting to work on every day. It is clearly extremely rewarding to be able to identify those responsible for stealing millions of dollars and in some cases for saving businesses.
Until more educational institutions start offering forensic accounting programs, employers often look for Certified Public Accountants, who are certified in Fraud Examination to fill forensic accounting positions. It is preferred that the job candidates have accounting experience and a good knowledge of the law along with strong computer science, writing and investigative skills. Background checks and reference checks are also necessary to ensure that new employees have a clear criminal record and a good reputation in the community.
Forensic accountants are vital to the survival of both large and small companies. There will always be new work to do as technology advances. People with an interest in accounting and detective work who are inspired to identify criminal activity and therefore prevent business failures should consider this as a career option.
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