Forensic Accounting: Investigating Fraud & Financial Crime | [Your Company Name]

Forensic accounting is the investigation of fraud or financial manipulationTop Accounting ScandalsThe last two decades saw some of the worst accounting scandals in history. Billions of dollars were lost as a result of these financial disasters. In this by performing extremely detailed research and analysis of financial information. Forensic accountants are often hired to prepare for litigation related to insurance claims, insolvency, divorces, embezzlement, fraud, skimmingSkimming FraudSkimming fraud is a type of white-collar crime that involves taking the cash of a business prior to entering it into the accounting system., and any type of financial theft.

Preparing for Litigation

You might have heard the phrase “forensic evidence” before, which simply means evidence that is able to be presented in a court of law. Hence, forensic accounting is a term to describe an analysis of financial informationAnalysis of Financial StatementsHow to perform Analysis of Financial Statements. This guide will teach you to perform financial statement analysis of the income statement, that can be used to support a case in a court of law.

The process of digging through all of a company’s or individual’s financial information can take months or even years and requires a team of specialized accountants that act like detectives trying to solve a mystery.

Typically, an accounting firm will be engaged by a client either looking to defend themselves, or one looking to prosecute someone. Most medium- to large-sized firms have a forensic accounting department, which may consist of various forensic auditors.

Types of Forensic Accounting

There are various types of forensic auditing that can take place, and they are typically grouped by the types of legal proceedings that they fall under. Below are some of the most common examples:

• Financial theft (customers, employees, or outsiders)
• Securities fraud
• BankruptcyBankruptcyBankruptcy is the legal status of a human or a non-human entity (a firm or a government agency) that is unable to repay its outstanding debts
• Defaulting on debt
• Economic damages (various types of lawsuits to recover damages)
• M&A related lawsuits
• Tax evasion or fraud
• Corporate valuation disputes
• Professional negligence claims
• Money laundering
• Privacy information
• Divorce proceedings

Forensic Accounting Careers

There is a broad range of career options that exist for accountants who want to get into forensic accounting. Depending on the client being represented and the nature of the trial, the work and responsibility can be distinctly different. For example, working on a personal divorce versus the Enron scandal would be vastly different.

The types of activities performed by these specialized accountants include investigating fraud, quantifying damages, valuing a company, or assessing tax bills.

Career paths into the position can vary, but they typically require several years of traditional audit experience at a public accounting firm. There are various professional accreditationsTop Finance CertificationsList of the top finance certifications. Get an overview of the best financial certifications for professionals around the world working in the finance industry that accountants can obtain to further a career in forensic accounting.

1. Chartered Financial Analyst® (CFA®) certification
2. Certified Public Accountant (CPA) certification
3. Chartered Alternative Investment Analyst (CAIA®) designation
4. Certified Financial Planner® (CFP®) designation
5. Financial Risk Manager (FRM®) certification
6. Financial Modeling & Valuation Analyst (FMVA)®Become a Certified Financial Modeling & Valuation Analyst (FMVA)®CFI's Financial Modeling and Valuation Analyst (FMVA)® certification will help you gain the confidence you need in your finance career. Enroll today! certification

Additional Resources

Thank you for reading this CFI guide to forensic accounting, what it is, and the important function it serves it the legal system. CFI’s mission is to help you advance your career, and with that goal in mind, these additional CFI resources will be a big help:

• Accounting EthicsAccounting EthicsAccounting ethics is an important topic because, as accountants, we are the key personnel who access the financial information of individuals
• Audited Financial StatementsAudited Financial StatementsPublic companies are obligated by law to ensure that their financial statements are audited by a registered CPA. The purpose of the
• Cash LarcenyCash LarcenyCash larceny refers to the act of stealing cash that has already been recorded in the books of accounts during a specific period. This fraud is perpetrated
• Analysis of Financial StatementsAnalysis of Financial StatementsHow to perform Analysis of Financial Statements. This guide will teach you to perform financial statement analysis of the income statement,