How Do I Become a Financial Forensics Investigator?

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If you’re under the impression that accounting is a “boring” career path, think again. Forensic financial investigators investigate terrorism, financial fraud, money laundering and other criminal activity, all using the tools of financial reporting and data analytics. If you want to become a financial forensics investigator, you will need a college education, work experience and professional certification.

forensic investigations is an advertising-supported site. Featured or trusted partner programs and all school search, finder, or match results are for schools that compensate us. This compensation does not influence our school rankings, resource guides, or other editorially-independent information published on this site.

What Is a Forensic Financial Investigator?

At the intersection of accounting and criminal investigation is the field of forensic financial investigation.

Accounting is the practice of collecting, measuring, analyzing and generating reports pertaining to financial data. Criminal investigation is the application of investigative methods to find and study facts that pertain to criminal activity. Work in the field of forensic financial investigation utilizes accounting methods and accounting and auditing systems to identify and prove financial crime.

The titles “financial forensics investigator” and “forensic accountant” are often used interchangeably. What’s important to know is that forensic work in finance and accounting involves the court, criminal justice or legal system in some way – typically pertaining to either anticipated litigation or criminal charges or ongoing legal action of some kind.

What Crimes Can Financial Investigations Identify?

A company’s financial statements can tell trained accountants and investigators a lot about any possible fraud or other financial crime that may be occurring. In particular, forensic auditors who do their due diligence may identify discrepancies in an organization’s financial statements and financial transactions that suggest the risk of fraud, theft, money laundering or other illegal activity.

Some of the crimes that can be uncovered by financial forensics investigations include:

  • Fraud, which encompasses any sort of criminal deception perpetrated for monetary gain
  • Bribery and corruption, which include fraudulent or otherwise dishonest behavior by authority figures and people in power in response to receiving money, gifts or other rewards for their actions
  • Money laundering, the processing and transferring of money arising out of criminal or illicit activities for the purpose of hiding the illegal sources of the income
  • Embezzlement or misappropriation of funds, a form of theft in which a person involved in the organization steals its money for unauthorized personal use or gain

Financial forensics investigators use a variety of tools in their investigations, including techniques of data analytics and digital forensics.

financial forensics investigator

The Role of Accounting and Auditing Systems in Financial Forensics

Financial forensic investigations aren’t undertaken entirely by examining financial statements line-by-line. Technology plays a significant role in financial forensics investigation services.

Forensic accountants and other investigators who have experience using accounting information systems can help companies design accounting systems that can be used to manage fraud risk and identify potential indications of fraud or discrepancies. Accounting information systems are the systems and structures used for the purposes of gathering, storing, organizing, managing, analyzing and reporting financial data.

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Where Do Forensic Financial Investigators Work?

Forensic financial investigators may work for any industry or employer that has a need to perform investigations of this nature.

Forensic Accounting Jobs in Government Agencies

Naturally, law enforcement agencies and other government agencies may hire financial forensics investigators to catch the perpetrators of white-collar crimes, including money laundering, tax fraud or evasion, bribery and corruption.

For example, under the Foreign Corrupt Practices Act, it is illegal for a United States citizen or company to bribe a foreign politician for the purpose of securing a business advantage, according to the Department of Justice. The U.S. Securities and Exchange Commission (SEC) and the Department of Justice jointly enforce this law.

Aside from the SEC, some of the federal government organizations that employ forensic financial investigators include the Federal Bureau of Investigations (FBI), the Central Intelligence Agency (CIA) and the Internal Revenue Service (IRS). Forensic investigators also find work in state and local police departments and state attorney general offices.

Private-Sector Jobs in Financial Forensic Investigations

You might think that the private sector wouldn’t have much need for fraud investigation and accounting services, but in fact, that’s not true. Financial institutions and banks, as well as insurance companies, may rely on financial accountants to identify fraud that costs the company money.

Forensic Investigator Roles in Banks and Insurance Companies

Identifying fraudulent activities when they first happen – or at least, as early as possible – is important. Putting methods in place to prevent fraud in the first place is even better. Forensic auditors and investigators who work for banks and insurance companies may be brought in to assess organizations’ vulnerability to fraud.

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The findings established by an investigator’s financial auditing skills may help shape the processes by which financial institutions flag potentially fraudulent activities on their customers’ cards or the policies insurance companies put in place to ensure that claimed recovery activities in an insurance claim are legitimate.

Financial Investigations Work in the Legal Industry

The investigative skills of an experienced financial accountant are also prized in legal firms. The litigation support that a forensic accounting professional can provide may be valuable for legal matters that range from business and personal disputes to personal injury claims, royalty audits, bankruptcy claims and other legal matters.

Forensic Work in Accounting Firms and In-House Auditing Departments

Many financial forensics investigators work for accounting firms that provide fraud and forensic accounting services to large organizations and middle-market companies. Other investigators in this field are employed directly by banks, insurance companies, financial companies and other organizations that need to routinely undertake financial investigations.

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Whether they work in-house in an organization or on a consulting basis as an employee of an accounting or auditing firm, forensic accountants and financial investigators provide oversight to the company, reduce risk and loss and otherwise fulfill trusted advisor roles for their clients.

forensic financial investigations

Preparing for a Forensic Accounting Career

Do you have what it takes to analyze financial data for clues pertaining to fraud and other illegal activities? If you want to provide forensic services, whether for banks or accounting firms or as part of a government agency, you’re going to need a college education that includes accounting coursework, as well as professional work experience and professional credentials in the field of accounting.

1. Earn a Bachelor’s Degree

If you want to launch a career in investigating financial crimes, your first step is to pursue a bachelor’s degree. An undergraduate education in accounting will provide you with the skills to produce and analyze a company’s financial statements.

What to Expect From an Undergraduate Degree in Accounting

Undergraduate accounting degree programs typically consist of around 120 credits of college study. Most undergraduate degree programs in accounting can be completed in four years of full-time study, although it’s not unusual for students to take longer than four years to finish their undergraduate studies.

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An undergraduate degree in accounting curriculum that is accredited by AACSB International will prepare students to perform tasks like recording, analyzing and interpreting financial information, ensuring compliance of individuals and companies with tax policies and other relevant laws and implementing and maintaining internal controls and security. Most undergraduate degree in accounting programs include coursework in managerial accounting, cost accounting, tax accounting, auditing concepts, accounting information systems and intermediate through advanced levels of study in general accounting principles and practices.

RELATED: What Degree Do I Need to Be a Tax Accountant?

Fleshing out a student’s major coursework is a business core of courses in areas like operations management, finance, marketing, business law and business statistics.

Degree Options for Aspiring Forensic Accountants

Some schools offer more specialized majors that are fitting for a career in forensic financial investigations. For example, Embry-Riddle Aeronautical University offers a Bachelor of Science in Forensic Accounting and Fraud Examination, while Franklin University offers a Bachelor of Science in Business Forensics program. More specialized accounting, business and finance programs that pertain to forensics or criminal justice allow students to delve deeper into the development of criminal investigation skills used in financial forensic investigations.

forensic accounting

You need a solid foundation in accounting to become a financial forensics investigator. However, an accounting degree may not be required as long as you have completed enough accounting courses. Students who want to work in financial investigations may also consider majoring, double-majoring or minoring in a field like finance or criminal justice. If you don’t want to declare accounting as your major, you should make sure that you are taking at least enough courses in the subject to qualify for professional certifications in the accounting field.

2. Continue Your Education to Meet the CPA Certification’s 150-Credit Hour Requirement

Your best option if you want to work as a financial forensics investigator is to pursue a professional credential like the certified public accountant (CPA) designation. To do this, you will need more than the 120 credits of college coursework required for the typical bachelor’s degree. All states in the U.S. now require 150 credit hours of college coursework to qualify for the CPA credential, the American Institute of Certified Public Accountants (AICPA) reported.

Options for Acquiring 150 Credit Hours of Coursework

Students of accounting can meet the 150 credit hour requirement in numerous ways. They can earn a master’s degree, take additional credits in pursuit of a bachelor’s degree in more than one subject or take classes at the graduate or undergraduate level on a non-degree basis.

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Aspiring financial forensics investigators often use these additional credits to build expertise in both the criminal investigation side and the auditing and accounting side of the field. For example, if you majored in general accounting as an undergraduate, you might pursue a master’s degree in criminal justice. Another solid option is a degree in cybercrime, a field that integrates criminal justice practices and computer science to prepare students to work in areas like digital forensics and cyberattack incident response.

3. Gain Professional Experience

Before you can acquire professional certification, you typically need to meet a minimum work experience requirement. Different states set different experience requirements, but in most states, aspiring CPAs need at least two years of professional work experience in the field of public accounting.

This experience doesn’t have to pertain specifically to forensic accounting, although it may. Candidates who start their careers in entry-level forensic investigator roles have an advantage when it comes to moving up in the field of financial forensics investigation.

4. Pursue Professional Credentials and Certifications

Once candidates have met the educational and experience requirements for certification, they need to actually undertake the certification process. Part of that process usually involves taking some sort of certification exam.

5. Seek Out Roles in Fraud and Financial Investigations

If you haven’t done so already, now is the time to start tailoring your career toward the investigation of financial crime by seeking out roles in fraud investigation and forensic auditing.

Credentials for Forensic Accountants

If you want to work in the world of fraud investigation, having professional credentials is important for your potential for career advancement. Two popular credentials are the certified public accountant (CPA) designation and the Certified Fraud Examiner (CFE) credential.

Certified Public Accountants

CPA is the most widely known accounting credential in the world, according to the AICPA. This designation isn’t specific to fraud or forensic investigations but rather applies to all areas of public accounting. If you want to become a CPA, you need to pass the four-part CPA Exam, which includes sections pertaining to Auditing and Attestation, Business Environment and Concepts, Financial Accounting and Reporting and Regulation.

Certified Fraud Examiners

The Certified Fraud Examiner (CFE) credential is awarded by the Association of Certified Fraud Examiners. Like the CPA Exam, the CFE Exam encompasses questions from across four areas of content. In this case, the content areas assessed on the exam include Financial Transactions and Fraud Schemes, Law, Investigation and Fraud Prevention and Deterrence.

Is Financial Forensic Investigator the Right Career for You?

To be a good forensic accountant, you need a combination of strong investigative skills and the analytical thinking skills and detail-oriented nature needed to identify hard-to-find clues of wrongdoing hidden in financial data. Developing a strong knowledge of accounting principles and methods is essential, but you should also learn skills in data analytics and acquire knowledge of the legal system.