THE MOST SECURE CAREER FOR THE FUTURE

Forensicaccounting financial investigative specialists work with financial information for the purpose of conveying complicated issues in a manner that others can easily understand. Publicly held companies are likely to see the necessity for forensic accounting as a part of a strong internal control effort to comply with governmental and market demands for accurate reporting. Forensic accountants who work for private companies help prevent and detect misuse of company resources.

Historically, forensic accountants who work in public practice were often called after owners suspected that fraud has been committed. Now, recent major corporate scandals have prompted business owners to turn to Forensic Accountants for proactive fraud checkups. The fraud these specialists are looking for is usually one of two general types: financial statement fraud or theft of assets (these two types can co-exist in the situation in which management has taken assets and misstated financial statements to cover up the defalcation). To uncover financial statement fraud, the forensic accountant often analyzes the financial statements by using ratio analysis and certain data-mining techniques such as Benford’s Law, a procedure used to determine the likelihoodthat data have been altered. Other procedures performed include inspection of documents and records and the conduct of interviews with persons who would have knowledge about any fraud that’s occurred.

The occupational fraud committed by employees usually involves the theft of assets. Embezzlement has been the most often committed fraud for the last 30 years. Employees may be involved in kickbackschemes, identity theft, or conversion of corporate assets for personal use. The forensic accountant couples observation of the suspected employees with physical examination of assets, invigilation, inspection of documents, and interviews of those involved. Experience on these types of engagements enables the forensic accountant to offer suggestions as to internal controls that owners could implement to reduce the likelihood of fraud.

At times, the forensic accountant may be hired by attorneys to investigate the financial trail of persons suspected of engaging in criminal activity. Information provided by the forensic accountant may be the most effective way of obtaining convictions. The forensic accountant may also be engaged by bankruptcy court when submitted financial information is suspect or if employees (including managers) are suspected of taking assets.

Divorce attorneys may call on forensic accountants to determine whether assets are being understated or liabilities are overstated. For example, a restaurant owner’s wife suspected that he was understating profits for the purpose of effecting alower martial settlement in a divorce action. The husband claimed that his restaurant was not as profitable as other restaurants in the areas because he prepared sandwiches using more meat than did other restaurant owners. The forensic accountant bought sandwiches at several randomly selected times and weighed the meat. He found that the average weight of meat used on the sandwiches equaled the weight used in other restaurants in the area – in other words, the husband wasn’t telling the truth.

In addition to these activities, forensic accountants may be asked to determine the amount of the loss sustained by victims, testify in court as an expert witness and assist in the preparation of visual aids and written summaries for use in court.

To be successful at this high level of super sleuthing, then, the forensic accountant needs knowledge of fraud schemes, investigation techniques, and the law to fulfill the expectations of his or her client or employer.