What is Forensic Accounting?
Forensic Accounting is an art of investigation over accounting records, books, financial statements, and all financial-related records and documentation. The result of forensic accounting is mostly used for legal work and for resolving conflict. It is just like the evidence or proof which comes after the investigation.
This job requires highly technical and experience skills in accounting, investigation, and legal work. that’s is the reason for forensic accounting to become more attractive and highly paid.
The forensic accounting investigation covers certain areas, which include fraud, crime, insurance claims, and a dispute among shareholders. The investigation and verification are normally done to the company’s financial statements, management accounts, and other related documents, data, and information related to the subject matter being investigated.
Key Factors of Forensic Accounting
- it is a combination of accounting and investigative techniques used to discover financial crimes.
- The functional area of accounting is to explain the nature of a financial crime to the courts.
- Forensic accounting entails the use of tracing funds, asset identification, asset recovery, and due diligence reviews
- It is used by the insurance industry to establish damages from claims.
Types of Forensic Accounting
- Calculation of economic damages
- Calculation of the value of a business
- Detection of fraud
- Insolvency legal support
- Investigation of computerized accounting records
- Money laundering investigations
- Professional negligence claims
- Reconstruction of accounting records
- Royalty audits
How to Become a Forensic Accountant
There is a broad range of career options that exist for accountants who want to get into forensic accounting. Depending on the client being represented and the nature of the trial, the work and responsibility can be distinctly different.
The types of activities performed by these specialized accountants include investigating fraud, quantifying damages, valuing a company, or assessing tax bills.
Career paths into the position can vary, but they typically require several years of traditional audit experience at a public accounting firm. There are various professional certifications require that accountants ;
- Chartered Financial Analyst® (CFA®) certification
- Certified Public Accountant (CPA) certification
- Chartered Alternative Investment Analyst (CAIA®) designation
- Certified Financial Planner® (CFP®) designation
- Financial Risk Manager (FRM®) certification
Special skills required for a forensic accountant:
- Ability to speak in court as an expert witness
- Must have knowledge of all types of fraud
- Knowledge of rules of evidence
- Knowledge of auditing techniques
- Ability to search through accounting records