Financial forensics is an exciting career field that combines the investigative work of forensics with the practices of accounting. It is used to detect fraud in order to gather evidence and bring criminals to justice. What follows is an overview of this field and what it entails.
What They Investigate
Financial forensics is also known as forensic accounting. Professionals in this field analyze financial records of both individuals and corporations to find evidence of criminal wrongdoing that can be admissible in a court of law. They investigate cases of tax fraud, money laundering and other financial criminal activity. They can also become involved in family law cases to assess items such as child or spousal support payments. Financial forensic investigators do not always investigate money relating to criminal activity. They also work to determine the value of a business based on its accounting records as well as gathering and determining information regarding a bankruptcy.
The Main Steps Of Financial Forensics Analysis
Financial forensics usually does not step in until the aftermath of a crime. The steps occur as follows: data collection, data preparation, data analysis and reporting. A forensic accountant collects data related to the case they are working. They then organize and prepare the data so it can be properly analyzed. The forensic accountant goes though that data carefully to look for any irregularities or evidence of fraud. They also may simply be checking to ensure a company’s financial situation is dire enough to warrant bankruptcy, find that it is and issue their seal of approval. Finally, they report their analysis to whomever requested it. They must have the ability to put complex financial information in simple terms for others, such as lawyers, members of a jury and other investigators, to understand.
Professionals in the financial forensics field are required to have a bachelor’s degree in accounting as well as be a Certified Public Accountant (CPA). Forensic accountants can be certified by the Certified Forensic Accountant (CRFAC) program of the American Board of Forensic Accounting. Forensic accountants must have solid knowledge of the audit process, financial systems, business administration, techniques for analyzing data for fraud detection and more. They must be detail-oriented, good with numbers, have strong critical thinking skills and be skilled at picking irregularities out of a pattern.
Increasingly, financial forensic investigators are being called upon to perform preventative work by designing systems and procedures for both private companies and the government to limit fraud. They can act as financial fraud prevention advisors to company owners as well as government officials. Businesses of all sizes and types are vulnerable to financial fraud, especially ones without adequate safeguards in place. Forensic accountants offer risk assessment as well as prevention services to help companies create a culture of fraud awareness. Forensic accountants who have previously worked with a company can be very useful if that company ever experiences fraud, because the forensic accountants will be familiar with the business’s systems and perhaps know where to look to uncover the fraud faster.
This is a possible career option for accountants, especially after they have some experience working as an auditor or have a background in fraud management. Financial forensics plays an important role in uncovering financial fraud and helping the victims of it.