When you ask people to give you a list of exciting careers, accounting is never near the top. The accounting career field tend to draw the sedentary folks: steady, analytical types who value security above all else. You're basically there to keep the wheels of business turning; a plumber directing the flow of money instead of water.
However, the growing shape of the global business market and the scandals wracking the business world has heightened the increasing need for a rare breed of accountant; the forensic accountant is either an internal or external auditor who is approached in order to investigate the scene of a fraud, bankruptcy, securities scandal, or other conflicted situation and prepare a report identifying what happened. It is called a forensic function primarily because it's results can be used in a court of law.
What's the job like?
There are actually many scenarios in which a forensic accountant may be needed: disputes and litigation, insurance claims, personal injury claims, construction audits, insurance fraud, fraud audit, or Wall Street scandals are some of the specialties in this field. Most accounting firms have a cabinet of forensic accounting specialists. These people are sent in the after of a fraud to assess if the numbers in the books reflect reality, and if not, then identify what's really going on.
A forensic accountant does not have the luxury of being able to disregard anything that does not happen on a spreadheet. They have to take the big picture into account, dealing with the whole reality of the business situation. A forensic accounting procedure will typically include investigating and analyzing financial evidence, using computerized applications to present the financial evidence, delivering the findings in the form of reports, collecting and exhibiting documents, and perhaps testifying in court as an expert witness. In addition to knowledge of accounting, a forensic accountant must also be familiar with legal concepts and procedures.
The two sides of forensic accounting – investigation and litigation support, break down into several smaller steps:
In the investigation, you may review the situation and suggest possible courses of action, assist with the protection and recovery of assets, and work hand-in-hand with private investigators, forensic document examiners, and consultants. People may lie. The books may be cooked. Keep your eyes open!
During litigation support, you may be liable for providing the documentation necessary to support or refute a claim, presenting the initial assessment of the case identifying areas of loss, assisting with the examination for discovery, reviewing the testimony, reviewing the opposing expert's report, and assist with the settlement discussions and negotiations. Attorneys and witnesses may contradict you. You might have to keep digging deeper into a cover-up. Most of all, you will have to convince one judge and twelve jurors that you're the right person to be testifying about the case.
By no means are forensic accountants bound to an office or a courtroom. There are a wide range of industries which retain the services of a forensic accountant. Matrimonial disputes, in which a divorce proceeding needs mediation to verify the state of disputed assets, is one area you might not expect. Other scenarios may be investigating claims of business negligence, or personal injury claims.
Business economic loss investigations may cover expropriations, product liability claims, trademark and patent infringements and losses stemming from a breach of a non-competition agreement. The growing technology industry is an example of an expanding need for services relating to product liability claims and patent infringements. It's easy to show whether or not a car's flaws could lead to an accident, but how would you prove that the bugs in a computer operating system led to the loss of assets when the business which used it was hacked? It's easy to show that a competitor copied your patented design for your camera, but how exactly do you defend a patent on a cursor?
A forensic accountant combines the skills of a record-keeper, paralegal, and a detective rolled into one. To be good at it, you have to have a good dose of curiosity, persistence, creativity, and discretion. You'll need sound professional judgment and confidence that you know your job so well that your knowledge and discoveries will stand up under cross-examination. Companies will live or die and defenders may go to prison based on the work that you do, so you are challenged to be at your best. It is the most challenging of accounting practitioners.
Some facts about Business Fraud Detection:
Small businesses are the most vulnerable to occupational fraud and abuse. Larger businesses will have a broad number of employees preventing losses and performing internal audits, while smaller companies are more trusting of their own employees.
Surprisingly, the average fraud at a small company nets more money than the average fraud at a large company! This is due to the fact that there are fewer people watching and less control over who has access to the bookkeeping. Put yourself in the place of a start-up entrepreneur: Starting your own business already requires you to work so hard that you might as well be three people already. You will not have the time to check up on every action of everyone you hire when your business is small. You have no choice but to start out with a grateful of people you trust, and hope you can go on trusting them!
Companies with fraud hotlines or other ways to report anonymous tips tend to cut their fraud losses by a flat fifty percent. And more frauds are unmarked by anonymous tips than any other source. As a fraud investigation accountant, you may have to rely on the occasional "deep throat". If you have someone tipping you off to a shady practice, you will need to be sure that the information is detailed enough to give you a good lead.
Losses due to an employed perpetrator aged 50 and above are usually much higher than the losses caused by an employee in their 20's or 30's. This is obviously considering that older employees have obtained a higher level of trust and responsibility within a company. In addition, an employee near retirement payments that they have less risk, since they may be out the door by the time their fraud is discovered.