Fraud Investigations

As accountants we all know how outsiders view our profession. They picture someone sitting at a desk for nine hours a day with a calculator and pocket protector posting debits and credits to a general ledger journal. While this Fraud Accountinggeneralization does not accurately reflect the day-to-day job of most accountants, we cannot argue with the fact that the real work within the profession is not exactly “thrilling” to most outsiders. However, next time someone makes a joke about the accounting profession, you can ask them if they know who the person was that finally took down the famous mobster Al Capone. Yes, it really was an accountant! While prosecutors failed to bring enough evidence to convict Capone on racketeering charges, an Internal Revenue Service forensic accountant conducted a fraud investigation case against Capone and was able to build enough evidence against him for tax evasion which led to his eventual arrest and conviction. 

Fraud investigations are the inspection and detection of criminal activity involving money. Accounting fraud is usually discovered by a forensic accountant. “Forensic” meaning “suitable for a court of law” is the basis of the forensic accounting profession. Forensic accountants work on cases to identify claims of financial fraud and professional negligence. Typically they will specialize in certain areas such as: tax evasion, financial negligence, insurance fraud, royalty audits, securities fraud, bankruptcy, and money laundering. It is not the job of the forensic accountant to determine if a fraudulent activity has taken place, they are hired to “follow the money” and provide answers about the “who”, “what”, “where”, “when”, “why”, and “how” of the fraud investigation to help determine if financial negligence or a criminal act has been committed.

Many large accounting firms have forensic accounting divisions which work on fraud investigation cases. If a company suspects fraud or theft within their own organization, they can hire these experts to investigate the money trail. Today, around 15% of the FBI agents are qualified as “special agent accountants.” These agents work on the large-scale corporate fraud cases and other complex financial schemes. They gather financial documents and other pieces of evidence with other agents and prosecutors to prepare search warrants and affidavits. Forensic accountants are often called upon to give expert testimony in court cases involving fraud.

A bachelor’s degree in accountancy with business law credits and an applicable certification such as the CPA (certified public accountant), CFF (certified financial forensics) or the CFE (certified fraud examiner) is a strong educational background for someone who is interested in becoming a forensic accountant. Many forensic accountants begin their careers in the public accounting or industry field working as CPAs. Forensic accountants with little experience typically start earning around $60,000 a year but the most experienced and talented ones can earn over $150,000 per year.

Working as a forensic accountant on fraud investigations can be an exciting, fulfilling, and rewarding career path. With all of the new and complicated financial compliance, the job opportunities for forensic accountants will continue to grow in both the private and public sectors.