Whether developed as an internal role or outsourced, many organizations are becoming more and more strategic with combating financial fraud by proactively engaging forensic accountants. For organizations first exploring this level of accountancy, the question is not just how, but when to implement this service. In this article, we lay out several instances that can help determine if it is time to explore an engagement with a forensic accountant.

1. While there are some bachelor’s programs in forensic accounting, pursuing a degree in a related discipline such as accounting, business, or finance may be advisable.
2. The information provided in this article is for informational purposes only and is not intended to substitute for obtaining tax, accounting, or financial advice from a professional accountant.
3. Even before the Great Recession—the era of subprime mortgages, inflated corporate bonuses, and economic nepotism—forensic accounting had entered the scene to combat the WorldCom and Enron scandals.

If your business has experienced financial ambiguity, potential fraud, or instability, then you may benefit from considering the services of a forensic accountant. Forensic accountants thoroughly investigate financial cases to find problems, solutions, and, if necessary, to bring justice to those who have been robbed or wronged. If you think you may be in such a position, a forensic accountant could be the answer for your business.

Forensic Accountants: What Are They, and Should You Hire One?

Forensic accounting is utilized in litigation when quantification of damages is needed. Parties involved in legal disputes use the findings of a forensic accountant to resolve disputes via settlements or court decisions, such as compensation or benefit disputes. The forensic accountant may be utilized as an expert witness if the dispute escalates to a court decision. There are many duties that forensic accountants take on for their clients, and these are critical to the function of security and overall financial health. A recent study found that accountants are considered the most important professional to small business owners – ranking above attorneys, bankers, and insurance agents.

Forensic accounting blends auditing, accounting, and investigatory skills to assess financial documents. Forensic accountants often review accounting systems and practices related to criminal and legal investigations. To identify a high-quality forensic accounting program you should research an institution’s accreditation status, required coursework, faculty and teaching practices to ensure they are up-to-date with real-world job requirements. You should also make sure how to hire a forensic accountant that the program you pursue completes the prerequisites for the CPA exam in your state if you plan to become a licensed accountant. For example, the University of Pennsylvania (UPenn) provides a top-notch undergraduate program in accounting through its famous Wharton School of Business. UPenn’s bachelor’s degree in accounting is competitive and prestigious and offers advanced instruction in financial accounting, tax planning and administration, and corporate valuation.

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Lawyers and law firms often bring in financial investigators on a contract basis to assist with particular cases. Some firms specialize in legal matters related to financial disputes and fraud investigations. These organizations sometimes hire forensic accountants as full-time staff members.

As more and more buyers store credit details online, more opportunities for fraud can occur. Along with the growth of online payment fraud, sadly, employee fraud continues to effect many small businesses. It is often discovered that a trusted employee turns out to be untrustworthy.

Career in Forensic Accounting Spotlight: Jessica L. Hollobaugh, CPA/ABV, CFE

Other firms specialize in forensic accounting, auditing, and financial investigations. Forensic accountants act as financial detectives, examining questionable financial data, investigating fraud, and aiding in civil and criminal investigations. In short, forensic accountants are Certified Public Accountants (CPAs) who are professionally trained to identify and rectify cases of fraud and financial instability within an entity. Forensic accountants are CPAs first who pursued further education, specified training, and a certification examination.

No matter how small, every unjustly obtained asset should be returned to the organization, and a forensic accountant is often required. Although fraud is not the only situation in which a forensic accountant would be beneficial, fraud is one of the more prevalent catalysts for hiring a forensic accountant. These questions shed light on a situation where your business would greatly benefit from a forensic accountant. A forensic accountant can be very helpful when there’s a financial conflict or some confusion. They can also help with business valuations when a business is joint community property, or if the business is owned by one partner but has community interest. And a forensic accountant can also determine the community interest of a separate property – and whether requests for reimbursements or credits are legitimate.

By waiting, you also forego the valuable services your expert can provide during discovery by identifying needed documents or preparing you to depose a witness or opposing expert. Such service early in the process can actually save you or your client money by making the discovery process more effective. Practicing accountants in any https://adprun.net/ specialty must have the Certified Public Accountant (CPA) credential. Although the specific requirements for this test vary by state, most states require 150 hours of experience before one can sit for the CPA exam. The additional required hours can be earned either in a master’s degree program or a post-baccalaureate internship.

We understand that theft and fraud pose a serious threat to your business. When fraudulent activity occurs, piecing together what transpired requires careful reconstruction and detailed analysis. We are here to guide you through this process and to help ensure you are able to get back on your feet.

According to Payscale, these professionals earned an average annual salary of $70,760 as of January 2022. Government organizations including taxation, revenue, and law enforcement agencies hire many forensic accountants. Such agencies include the IRS, the Department of the Treasury, the FBI, and the Drug Enforcement Agency.

Forensic accountant salary benchmarks

Some days you might be crunching numbers, some days you might be conducting interviews, and on other days, you might be reviewing documents. Keep in mind that there are numerous areas where you may require forensic assistance. In some cases, you may need an expert with very specific industry experience, such as valuing a construction company or a commercial feedlot. The accountant’s tasks include tracing funds, asset identification, asset recovery, and due diligence reviews.