to Look for in a Forensic Accountant
- Detective, Accountant, Auditor or Attorney?
A Forensic Accountant
is indeed part investigator, part auditor, part attorney and part
accountant. A Forensic Accountant reviews evidence, conducts analyses,
interviews involved parties and draws conclusions. A Forensic Accountant
prepares each case as if it will result in litigation in the future.
Forensic Accountants are usually retained after an alleged fraud
has taken place to assess the extent of a fraud and to bring those
responsible to justice. Forensic Accounts are frequently called
upon to provide expert testimony on fraud and accounting-related
matters. Forensic Accountants can also be used to set up proactive
fraud prevention programs.
can trace their roots back to America’s Prohibition days.
Al Capone, one of the most famous gangsters of the 20th century
was prosecuted for tax evasion with the use of a Forensic Accountant
by the Internal Revenue Service. Today, Forensic Accountants in
their expanded role can be relied on to work on all types of cases
where having knowledge of accounting principles and investigations
has been applied to some of the biggest cases ever, including terrorism
and corporate fraud cases, especially in light of 9/11 and Enron.
A Forensic Accountant possesses the knowledge and expertise to interpret
financial statements or to work under circumstances where financial
information has been destroyed or tampered with, necessitating the
recreation of information to determine if inappropriate actions
have taken place.
Where can one
find a Forensic Accountant? Many accounting firms, both large and
small, have developed Forensic Accounting practices that serve a
wide variety of litigation and investigative needs. Many private
investigation firms have Forensic Accountants on staff. Governmental
entities, such as the IRS, Federal Bureau of Investigation and state
and local police departments, employ Forensic Accountants to address
law-enforcement needs. Likewise, many large corporations employ
Forensic Accountants to address legal and fraud-related issues internally.
Making the choice
of what type and what size of firm to hire requires many considerations.
The cost of each alternative must be considered carefully, relative
to the loss. The duration of the engagement must be factored into
the equation as well, to address the cost-benefit considerations.
The field of
Forensic Accounting has been around for a while, using other names
such as “Financial Investigations;” however, only a
few professional certifications address Forensic Accounting specifically.
Many professional organizations commingle Forensic Accounting along
with other titles and specialties involving fraud, auditing and
general accounting. When one chooses a Forensic Accountant, many
considerations must go into selecting the right person for the job.
In many cases, experience makes the difference between a good and
currently lacks the standardized methodologies and standardized
practices found in many other professions. Several of the key considerations
required to choose wisely the appropriate professional have been
requirements of Forensic Accountants
other professional fields, there are no experience requirements
necessary to call oneself a Forensic Accountant. When looking for
an experienced professional, the length of time someone has spent
conducting actual accounting and auditing engagements should be
strongly considered. However, accounting and auditing experience
is not necessarily enough to qualify one as a Forensic Accountant;
one must look at the professional experience of conducting investigations
as well. Experience conducting investigations can be gained in many
ways, including working in a forensic practice at an accounting
firm or working in a law-enforcement capacity. Academia can also
provide professionals who have conducted research into fraud-related
credentials of Forensic Accountants
are no educational standards for Forensic Accountants, there are
standards for other professionals, such as CPAs. When choosing a
professional Forensic Accountant, one should be guided by the same
professional standards used for other services be it accountant,
doctor, or attorney. Lack of education, however, should not be considered
solely as a disqualifying factor for a candidate. A candidate may
not have an advanced degree, but instead may have many years of
experience in auditing, accounting or investigations that makes
up for the lack of advanced educational credentials. When hiring
a professional from a large, well-known firm, it is highly likely
that the person’s educational credentials have been verified
and that he or she comes with the backing of the firm. When looking
at a candidate without backing of a large firm, a request to an
educational institution to verify educational credentials may provide
needed clarity to make and informed decision. Beware of diploma
mills issuing mail-order degrees when inquiring about educational
credentials of a Forensic Accountant
One of the most
effective ways to verify the credentials of a Forensic Accountant
is by checking the references that are provided The Internet is
another good source of information, as well as Google, Ask.com and
other search engines that offer thousands of sources of information
on all types of professionals. Individuals belonging to established
professional organizations may be confirmed as active members in
organizations themselves, there are several organizations that provide
accreditations to Forensic Accountants. Some of these organizations
have little or no education or experience requirements for their
members or established professional standards for their members
to follow. When inquiring about professional affiliations, one should
seek out the requirements to become a member and/or receive a professional
certification. For those organizations that lack satisfactory requirements,
it is important to remember that deceptive organizations and certifications
exist in every profession, including accounting and fraud investigations.
do you do when you find a Forensic Accountant?
When a likely
candidate has been identified, credentials have been satisfactorily
reviewed and the nature of the engagement has been described and
agreed-upon, a confidentiality agreement should be one of the first
orders of business, as well as determining the fees and anticipated
duration associated with the job. Investigations utilizing Forensic
Accountants can last for substantial periods of time, depending
on the depth and breadth of the case. Additionally, it is important
that the Forensic Accountant have not personal or economic ties
to the subject of the investigation. Forensic Accountants must be
objective, if he or she is to determine the facts in a fair and
equitable manner and to describe the results of the investigation
in an impartial manner.
Of course, examining the experience, education, and professional
affiliations/certifications of a potential candidate to conduct
a Forensic Accounting engagement does not guarantee success in picking
the right person or firm. However, doing so increases the probability
that the right person or firm will be matched to the job at hand.
Standardizing industry credentials has been the topic of much discussion.
Until such time that this is done, an educated consumer is a wise
CFE is a member of the Litigation Services Committee of the NYSSCPA.