Accounting forensics is a field of criminal science that utilizes principles of finance and accounting to look for evidence of criminal activities. Forensic accounting agents can be considered as “financial detectives” that work closely with law enforcement and investigative agencies in order to audit financial reports and connect suspected criminal activities with documentable financial evidence.
Fraud, money laundering, tax evasion and other crimes can often be substantiated through the expert analysis and findings of trained forensic accountants. Individuals who desire a career that is both exciting and predictable while using specialized skills in accounting will excel in this field.
What Does a Forensic Accountant Do?
A forensic accountant’s primary duties involve closely inspecting and analyzing financial documents. They are essentially looking for details, transactions or activities that “don’t add up,” either figuratively or literally. By examining such documents with an expert eye, they can discover inconsistencies in an individual’s accounting activities that indicate wrongdoing or illegal activity.
As an example, a transaction listed on a company ledger with an amount much smaller than the actual bank deposit could form the start of a “paper trail” that can eventually allow an investigative unit to allege fraud, embezzlement or other charges. Investigative pathways like these have allowed law enforcement to catch criminals when they cannot prosecute them by other means. Many criminals are so skilled at covering up evidence of physical crimes that the FBI and other law enforcement agencies have pursued a close examination of their financial records using highly-skilled accountants to find evidence of crimes.
Sophisticated Knowledge of Banking & Banking Systems
Because of the increasing sophistication of banking, accounting systems and data-sharing among computing systems, law enforcement agencies are demanding more trained, skilled forensic accountants to aid them in tracking intricate financial activities that sometimes move across multiple systems and through multiple countries. Forensic accountants can therefore benefit from having knowledge of how banking systems work as well as familiarity with common internal financial systems that a company or individual might use.
In addition to finding evidence, forensic accountants are likely to be filing reports summarizing their findings or explaining key discoveries that point towards criminal wrongdoing. Therefore, forensic accountants must have excellent compositional and communication skills. Some forensic accountants may even be required to present their findings in open court as an expert witness during criminal prosecution cases.
Typical Duties & Responsibilities
Although their duties may be similar, different forensic accounting positions entail a diverse range of job titles, credentials, bureaucratic structures and workplaces. Typical tasks involve:
- Cross-checking transaction data with balance sheet data
- Running analyses on financial reports looking for activities that correlate to suspicious activities or high-risk indicators
- Piecing together a profile of financial actions from a diverse array of documents that can include tax statements, income reports, balance sheets, accounts receivable statements, banking transactions and more
- Using investigation reports to indicate where to look for evidence of financial crimes
- Auditing statements, tax forms and other documents for evidence of suspicious or high-risk activities
- Discovering unreported income or debt through analyses of historical accounting documents
- Assembling findings into reports for investigators and prosecutors
- Analysis of company financial health and history before large transactions like mergers or buyouts take place
Forensic accountants with senior positions may add the following duties:
- Heading investigations and delegating tasks to teams according to activities that have the highest likelihood of uncovering criminal activities
- Suggesting investigative actions based on past behaviors or indicators
- Consulting with private or government agencies about strategies to uncover illegal activities more consistently
- Documenting comprehensive reports on individuals or corporations with a history of criminal activities
- Informing regulatory or internal policy changes that increase the chances of crime discovery and decrease the risk of illegitimate financial activity
Where Does a Forensic Accountant Work?
Accounting forensics departments are often found within government law enforcement agencies. Local, state and federal governments all tend to employ forensic accountants to aid in investigations. For example, around 15 percent of the FBI’s agent forces consist of special agent accountants, according to their website. The FBI also employs untold numbers of non-agent forensic accountants and outside consultants to aid in their investigations.
In addition to government law enforcement, some regulatory agencies such as the Securities and Exchange Commission (SEC) may employ forensic accountants to audit commercial sector activities or investigate specific actors.
Employment in the Private Sector
Private sector employment is also possible. Some companies, especially larger ones, have internal auditing departments to inspect financial transactions and documents as part of due diligence to analyze risk and uncover suspicious activities. Investment firms and financial institutions are especially prone to consulting forensic accountants during pending large transactions like a corporate buyout or merger.
Finally, some forensic accountants can run a private practice as a sort of “accounting detective for hire” or private investigator. This self-employed position allows job flexibility and can create a lucrative potential for consultations and limited investigations.
Forensic Accountant Salaries & Job Outlook
Actual figures on forensic accounting salaries can be hard to come by since the Bureau of Labor Statistics (BLS) compiles forensic accounting employee data along with other accountants and financial auditors. According to a 2014 BLS report, the average annual salary within the accounting industry as a whole was $73, 670.
The highest salaries for accounting positions were in security and commodity contracts intermediation/brokerage, the federal executive branch, and securities and commodity exchanges at $95, 970, $93,430 and $90,430, respectively.
States with the highest level of employment for accountants were, in order, California, Texas, New York, Florida and Pennsylvania. Of these, New York had the highest average salary at $89,850. The District of Columbia (Washington, D.C.) had the highest concentration of accountants followed by Colorado, New York, Delaware and Massachusetts.
In 2013, CNN Money listed “Forensic Accountant” as one of their top 100 careers in America. Their data stated that the median pay for the position was $103,000 with a top reported salary of $146,000.
Additional Careers in Law Enforcement
Consider these additional careers in law enforcement.
Crime Scene Investigator