What Is A Forensic Accountant? Role And Responsibilities

If you enjoy puzzles and have a knack for solving problems, you might consider becoming a forensic accountant. The field of forensic accounting merges finance and investigation as these accountants read between the lines to search for fraud, hidden assets and other financial wrongdoing.

Forensic accountants must maintain independence and integrity while thoroughly analyzing various situations. They must then prepare reports and assist in litigation as needed.

To become a forensic accountant, you’ll need to earn a college degree. Most employers also prefer a professional certification such as the Certified Fraud Examiner (CFE) distinction.

What Do Forensic Accountants Do?

Forensic accounting combines investigation and auditing skills. These accountants investigate the finances of businesses and individuals to search for fraud, embezzlement and other illegal activity.

The two main aspects of forensic accounting are investigation and litigation support. During the investigation stage, forensic accountants search through financial documents and other materials to identify potential criminal activity.

Forensic accountants create reports and presentations to help two parties litigate without going to court. If the parties do end up in court, the forensic accountant may have to testify as a witness. Forensic accountants should be comfortable in courtroom environments and be familiar with court proceedings.

Forensic accounting is related to fraud auditing, but forensic accounting occurs after an incident. Fraud auditors proactively attempt to prevent wrongdoing, and forensic accountants are responsible for uncovering illegal acts that have already occurred.

Where Do Forensic Accountants Work?

If you’d like to become a forensic accountant, you can find work in several industries. Many accountants work at public accounting firms, which may have specialized forensic accounting divisions. Forensic accountants can also work with government or law enforcement agencies, lawyers, insurance companies and banks.

Four major areas employ forensic accountants: fraud and financial investigations, family law, business valuation and economic damages. Forensic accountants can be helpful during family legal matters, too. In a divorce, for example, a forensic accountant can identify ownership of financial property—or find hidden assets.

When business owners want an objective look at their financial position, they might call in a forensic accountant. Business valuations usually occur during company mergers, sales and other expansions. Forensic accountants can also identify lost value for both businesses and individuals.

How Much Does a Forensic Accountant Make?

Becoming a forensic accountant is a good avenue for anyone looking to make steady money.

The U.S. Bureau of Labor Statistics (BLS) places accountants and auditors in the same category. The median wage for these workers was $77,250 as of May 2021, compared to $45,760 for all workers. The highest-paid accountants and auditors earn more than $128,970, according to the BLS.

Earning a certification can increase your salary potential. Forensic accountants who hold the CFE credential earn 17% more than their non-certified peers, according to a 2022 report by the Association of Certified Fraud Examiners (ACFE). The report states that CFE certificate-holders made a median wage of $106,000 in 2022.

Economic demand for accountants and auditors is projected to increase by 6% from 2021 to 2031, according to the BLS. This is on pace with the average projected growth for all occupations nationwide.

How to Become a Forensic Accountant

The first step in becoming a forensic accountant is earning a college degree. Once you have some work experience, you can choose to specialize and earn a certification in forensic accounting. This can be a costly process, but it can pay off in earning potential.

Forensic Accountant Education Requirements

Accountants should have at least a bachelor’s degree in accounting, finance or a similar subject. A master’s in accounting is often helpful as well, and some schools offer master’s degrees in forensic accounting for those seeking to advance or focus their education.

Criminal justice or law enforcement education can be helpful in this career path as well, according to the ACFE. You’ll need to be familiar with the legal system and courtroom proceedings, so consider taking electives or online courses to bolster your resume.

Earn Certified Fraud Examiner (CFE) Certification

Many employers prefer CFE-certified candidates. CFE certification involves ACFE membership and passing an exam. We’ll explore the CFE credentialing process in more detail in the next section.

Consider Earning CPA Licensure

The Certified Public Accountant (CPA) licensing process is relatively costly and time-consuming, but this designation is helpful for any accounting career. To become a CPA, you must earn a college degree, gain professional experience and pass the Uniform CPA Examination®.

CFE Certification Process

To earn the CFE credential, you first need to become a member of the ACFE. Discounted student memberships are available for $25, and regular memberships cost $195 annually.

Exam Fees

If you’re a senior in an undergraduate program or a graduate student, you also qualify for a discounted CFE exam package. The $399 fee includes the CFE exam prep course, the exam application fee and one year of CFE membership once you pass. Otherwise, standard ACFE members pay around $1,200 for the prep course and exam.

ACFE Points System

The ACFE offers a few options for exam prep, both in-person and online. You can enroll in a four-day review course, or study at your own pace with materials sold by the ACFE. The organization also advertises a 90-day challenge with monthly study guides and weekly check-ins.

To qualify for the exam, you need to have 40 points in the ACFE’s system—equal to four years of college. Once you pass, you need to complete an additional 10 points and two years of fraud-related work experience. You could earn those 10 points by completing another professional distinction such as the CPA certification.

Exam Fees

The CFE exam itself costs $450. It covers four areas: financial transactions and fraud schemes, fraud prevention and deterrence, law and investigation. You can take it online or in person, and you must pass each section with a score of at least 75%.

Maintaining Certification

Once you’ve earned the CFE certification, you need to maintain it. CFEs must maintain their certification by paying annual dues and completing continued education.

CPA Licensing Process

The first step to becoming a CPA is determining eligibility.

CPA Qualifications

CPAs must be licensed by their state, and each state has its own education requirements for CPAs, so be sure to confirm the guidelines in the state where you plan to practice. The National Association of State Boards of Accountancy lists licensing requirements by state.

CPA Exam

The CPA exam consists of four sections, which candidates must pass within 18 months. Topics include auditing, business concepts, financial accounting, reporting and regulation, among others. The exam is challenging: In 2022, pass rates for all sections of exam were between 45.3% and 60.7%, according to the Association of International Certified Professional Accountants (AICPA).

Once you pass, you need to apply for CPA licensure in your state and maintain the credential through continued education.

Certified in Financial Forensics® (CFF) Credential

If you’ve achieved CPA licensure, you can go on to complete AICPA’s CFF credential. This is open to CPAs who want to demonstrate their skills in fraud detection, digital forensics, bankruptcy, investigations and related topics.

The CFF exam consists of two multiple-choice sections, each of which takes two hours. To obtain the credential, you’ll need to provide proof that you meet the professional work requirements and complete an application.

Frequently Asked Questions (FAQs) About Forensic Accountants

How long does it take to become a forensic accountant?

It takes several years to become a forensic accountant. First, you need to get a bachelor’s or master’s degree. Earning a professional certification—such as the CFE credential, which requires two years of fraud-related work experience—adds more time to the career path. The overall career path in this case might take six to eight years.

What should I major in to be a forensic accountant?

The ACFE recommends earning a degree in accounting, finance or a similar subject. Some universities offer master’s degrees in forensic accounting. It’s also helpful to get additional education in law enforcement or criminal justice.

Are forensic accountants in demand?

Employment of accountants and auditors is expected to increase by 6% from 2021 to 2031, according to the BLS. This amounts to 136,400 openings per year over that period. In comparison, the BLS projects a 5% growth across all fields from 2021 to 2031.

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The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

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