Forensic accounting combine an understanding of accounting principles with investigative techniques in order to analyze information that is suitable for use in a court of law. The major applications of forensic accounting include fraud investigations, negligence cases and insurance claims.
The primary focus of forensic accountant is data collection, data preparation, data analysis and reporting. They are also involved in Calculating and quantifying losses and economic damages, whether suffered through tort or breach of contract, Disagreements relating to company acquisitions, perhaps earn outs or breaches of warranties and Business valuation.
Forensic accounting includes the use of accounting auditing, and investigative skills to assist in legal matters. It consists of two major components. Litigations services that recognized the role of an accountant as an expert consultant, and investigative service that uses a forensic accountant’s skills and may require possible court room testimony. According to the definition developed by the Association of Institute of Certified Public Accountants (AICPA’s) forensic and litigation services committee, forensic accounting may involve the application of special skills in accounting, auditing, finance, quantitative methods, the law and research. It also involves quantitative skill to collect, analyze, and evaluate financial evidence, as well as the ability to interpret and communicate findings.
Forensic accountant Tasks
- Ensure compliance with state and federal regulations.
- Prepare reports and summary of findings.
- Research, analyze and compile account histories, financial documents and transactions.
- Utilize accounting principles, financial analysis and auditing knowledge to prepare for legal disputes or litigation.
Forensic accountants can be engaged in public practice or employed by insurance companies, banks, police forces, government agencies and other organizations.
Forensic accountant qualities:
- Specialist technical knowledge
- Highly developed investigative and analytical skills
- A broad perspective of the issues affecting disputes
- Experience in handling disputes and contentious problems
- An understanding of the related legal processes
- Ability to present findings and opinions with clarity and authority
- Experience in presenting evidence in Court
How to become a forensic accountant
If this is the career path you will want to follow, then the first thing you have to do is to get some education to learn the basics. You can do so by applying for a Bachelor’s degree in Accounting or Finance. Some schools even offer specific forensic accounting degrees. The more education you get the more leverage you will get in this field. You can apply for master’s degree or a take courses on law enforcement or criminal justice. Many companies encourage obtaining the Certified Fraud Examiner (CFE), Certified Public Accountant (CPA), and/or Chartered Accountant (CA).
The demand for experienced forensic accountants is on the rise as more and more law enforcement agencies at the local or federal level are prosecuting financial fraud and crime. If you want to fill this demand, you will need to start by earning your degree. Once you have a degree, and 1 to 3 years of experience in an accounting role, you can pursue a position in forensic accounting.
Starting salaries for accountants vary depending on the location, sector, size and type of firm. As a graduate entering the career you can expect to earn up to £24,024 plus. The average salary is £40,223 and this can rise up to £68,069.
Large accounting firms quite often have a forensic accounting department, however, there are also firms such as MDD Forensic Accountants that are dedicated to providing economic damage quantification and litigation support solely for forensic accounting matters.