Financial forensics combines criminal investigation skills with financial auditing skills to identify financial criminal activity coming from within or outside of an organization. It may be used in prevention, detection and recovery activities to investigate terrorism and other criminal activity, provide oversight to private-sector and government organizations, and assess organizations’ vulnerability to fraudulent activities.
Financial forensics is similar to forensic accounting, which utilizes accounting, auditing and investigative skills to analyze a company’s financial statements for possible fraud in conjunction with anticipated or ongoing legal action. Forensic accountants may also work with government agencies, including tax authorities, to recover illegally obtained funds or help prosecute money laundering. Forensic accountants can also help companies design accounting and auditing systems to manage and reduce risk.
Forensic accountants, also referred to as forensic auditors or investigative auditors, often have to give expert evidence at the eventual trial. All of the larger accounting firms, as well as many medium-sized and boutique firms, as well as various Police and Government agencies have specialist forensic accounting departments. Within these groups, there may be further sub-specializations: some forensic accountants may, for example, just specialize in insurance claims, personal injury claims, fraud,construction, or royalty audits.
To become a forensic accountant, you must be a Certified Public Accountant (CPA). In the United States, additional courses are required to obtain a designation as a Certified Fraud Examiner (CFE) from the Association of Certified Fraud Examiners. Most forensic accountants start their careers as accountants, working in an auditing firm. They obtain the additional certification while completing a wide range of audit tasks, expanding their role and experience. Someone who investigates this type of fraud must be meticulous, detail-focused and very accurate.
Most forensic accounting positions require applicants to have bachelor’s degrees. A bachelor’s degree in financial forensics will prepare students to detect, investigate, and resolve instances of financial fraud and crime. Students will also be trained to prepare and interpret financial statements, by completing additional coursework in finance, management, mathematics, criminal justice, and law. Graduates of a financial forensics bachelor’s degree program, with at least two years of relevant experience, will be eligible to sit for the CFE or Certified Financial Forensic Accountant (CFFA) exams.
A typical bachelor’s level program involves courses in:
- Financial Accounting and Reporting- general accounting standards
- Auditing and Internal Controls- conducting due diligence to address control gaps and ensure compliance
- Ethical Standards & Regulatory Compliance- evaluate financial transactions and reports to ensure data integrity
- Fraud Examination- observe suspect interviews and interrogations
- Electronic Discovery- identify effective, evidence-preserving data recovery methods and electronic discovery techniques
- Fraud Reporting & Litigation- conduct research and analyses associated with suspected fraud
- Forensic Psychology- deals with the marriage of psychology and the justice system
- Cybercrime- combines law enforcement with computer science
A master’s degree with a focus on business administration, ethics or fraud management is an option for students interested in policy or leadership roles in fraud investigation. Some programs allow students to combine a master’s degree and graduate certificate program (for instance, a Master of Business Administration degree might be earned along with a certificate in forensic accounting).
It’s difficult to ascertain a median income for the field of financial forensics. The US Bureau of Labor Statistics (BLS) lists the category of accountants and auditors at $63,550 as of 2012. Private detective and investigators are another category on the BLS site that reports their median salary as $45,740 with a high school diploma. PayScale.com lists the national average for forensic accountants at $67,000.