The obvious answer to the captioned question is a degree in accounting. A degree in the major might be your best choice, although there are other considerations. First, we need to establish what forensic accounting is. Forensic applies to any investigative technique used in the detection of a crime. In this case, investigators employ accounting principles to ascertain if a person(s) or entity has committed an illegal activity.
Accounting forensics is similar and sometimes used interchangeably with financial forensics. The latter is an audit of finances and their reports in the investigation of criminal activity. Companies specializing in financial forensics advertise as using accounting and auditing skills in the investigative process. These companies investigate money laundering, racketeering, improper tax returns, and illegal investment schemes. The forensic accounting firm generally expands its repertoire into business valuations, tax services, patents, accounting malpractice, shareholder disputes, and other economic damages.
Before you can tackle the forensic aspect of the profession, you need to be knowledgeable in accounting. A bachelor’s degree in accounting or forensic accounting is the place to start. The latter will offer more courses in investigative methods in addition to accounting-related subjects, namely auditing principles, financial accounting, income taxation, and corporate finance.
A Bachelor of Science in Accounting & Forensics covers financial and managerial accounting, business law, computer applications, and communications in the core requirements. Some of the classes involve computer technology used in the detection and assessment of accounting irregularities.
The following are examples of courses you can expect in a forensic accounting undergraduate program.
Financial Accounting: Teaches the accounting principles involved in measuring and reporting financial data.
Managerial Accounting: You learn about the preparation of detailed financial reports to present to various levels of management and shareholders. The reported data helps management make decisions regarding profit structures, budgeting, and marketing.
Cost Accounting: The focus is on labor, materials, overhead, expenses, and other details in running a business. All of the costs associated with manufacturing or providing service also assist managers in making informed decisions to improve profitability.
Financial Statement Analysis: It is beneficial to know how to decipher a financial report. You should become familiar with an income statement versus a balance sheet. What is a statement of cash flow? You examine a statement of retained earnings. This document includes the repurchase of company shares, dividends, and investments.
Forensic Accounting: Learn investigative techniques to detect and prevent accounting fraud, employee embezzlement, stock frauds, and related economic losses. Your knowledge of financial statements will allow you to recognize misrepresentations and areas of possible accounting scams.
Once you have graduated with a degree in finance, accounting, or forensic accounting, your education must continue. To work in forensic accounting, you should have a Certified Public Accountant (CPA). The CPA to accounting is like the Bar exam for law school graduates. You can work without one in forensics. However, those with a CPA will have more job opportunities, higher salary, and earn the prestige of adding the CPA initials after your name.
The U.S. Bureau of Labor Statistics (BLS) reports the median wage of Accountants and Auditors at $69,350, as of May 2017. The BLS bases the figure on a bachelor’s degree, and many have a CPA.
Information from the National Association of Colleges and Employers states that a CPA had an average income of $73,800 in 2018.
Earning a CPA is a challenging endeavor. You must complete a 150-semester hours’ program before you are eligible to sit for the exam. The typical bachelor’s program is 120 credits. Therefore, you must fill the deficit with additional hours. There are some schools whose accounting curriculum meets the 150-credits requirement. You could also pursue a master’s or take a double major to reach 150 hours of college study. Whichever school you choose, make sure the accounting degree has accreditation with the Association to Advance Collegiate Schools of Business (AACSB).
The American Institute of CPAs (AICPA) reported that 94% of forensic accountants have a CPA license.
In addition to the extra hours of schooling, you need one to two years of accounting experience. Each state has a list of eligibility criteria before you can apply for the examination that consists of four sections.
There are other certifications to enhance your credentials and career.
Certified Fraud Examiner
You can obtain your CFE through self-study or attend a four-day course offered by the Association of Certified Fraud Examiners (ACFE). You have to join the ACFE before applying for the coursework. You also need two years of fraud or related experience and a bachelor’s degree.
Certified Forensic Accountant (CRFAC)
Eligible candidates have a bachelor’s or master’s degree, and most have a CPA license from your respective State Board. You also require at least two years of accounting or auditing work. There are multiple steps to the process, one of which is membership with the American Board of Forensic Accounting.
Certified Professional Forensic Accountant
The certification is one of the top certifications for people working in the profession. It is available through the Institute of Certified Forensic Accountants. A UK online delivery system, Brentwood Open Learning College, offers the program.