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What is Forensic Accounting?

February 27, 2023
magnifying glass looking at numbers for forensic accounting

When you hear the word "forensic", you might think of crime scene investigations or historical artifacts—finance and accounting are likely far off the list. But within corporations and government agencies, both big and small, forensic accountants are working hard to follow money trails and calculate costs to find the truth behind numbers.

Forensic accounting is an investigative process that’s used to examine an individual’s or a company’s financial records. Forensic accountants are certified public accountants (CPAs) who collect evidence of potential fraud and financial crime, often for civil and criminal investigations. With accounting and auditing skills and investigative savvy, forensic accountants are the Sherlock Holmes of the financial world, providing important information that can be used as legal evidence in court.1

Do you enjoy intrigue and solving mysteries, but also have a knack for working in numbers and statistics? Forensic accounting may be the perfect career choice for you. Keep reading to learn about this fascinating field, and how to prepare yourself to succeed as a forensic accountant.

What Do Forensic Accountants Do?

Forensic accounting professionals are experts in solving financial puzzles for businesses; government and law enforcement agencies; nonprofit organizations; estates and sometimes individuals. Their main goal is to find the truth in a situation in which fraud or financial foul play is suspected.2

As a forensic accountant, you’ll examine balance sheets, income statements, dividend reports, cash flow statements and other complex financial transactions to find any evidence of wrongdoing. In this line of work, you might also conduct interviews with those accused of financial misconduct. You will be ‘following the money,’ so to speak, and may be employed to research a criminal enterprise to track down illicit proceeds or money laundering activity. Other criminal enterprises that you may be asked to investigate include bribery, theft, trademark and patent infringements, securities fraud, embezzlement and concealment of debt or assets.3,4

Forensic Accounting at Work

Wherever a deeper analysis of financial transactions is required, you’ll find forensic accountants. There are three key areas of forensic accounting: criminal investigations, litigation support and insurance.5

Criminal Investigations

During a criminal investigation, law enforcement will rely on a forensic accounting specialist to help determine if a crime was committed and if there was criminal intent. This includes everything from employee theft and insurance fraud to high-level organized crime, such as securities fraud and money laundering. Using their keen investigative skills and accounting knowledge, a forensic accountant might also look at whether a company falsified its financial statements or if someone was guilty of identity theft.5

Litigation Support

Forensic accounting is frequently used in legal cases to help resolve disputes in court decisions or settlements, or to determine the value of a person or company’s losses. In these cases, the accountant may be called on to testify in court as an expert witness.5,1 This courtroom experience and knowledge of legal proceedings puts a forensic accountant in a different class from a standard accountant.6

A forensic accounting expert may be hired for a wide range of investigations—divorces, company bankruptcies, financial statement fraud, asset misappropriations, contract disputes, shareholder disputes, damage calculations and internal inquiries.2 During a divorce proceeding, for example, a forensic accountant may be brought in to look for hidden assets.6

Insurance Claims

The insurance industry depends on forensic accountants to quantify the damage from automobile accidents, medical malpractice lawsuits and other claims.1 They understand insurance contracts and can perform comprehensive financial and accounting analysis.

Professionals in the field of forensic accounting can also present their evidence, findings and expert opinions in court. They may work with various types of insurance claims, such as business interruption, property claims, company liability and incidents due to theft, fraud or employee misconduct.7

Forensic Accountant Career Paths

Since there is a greater public awareness of fraud in public organizations and the business sector now than ever before, the need for forensic accountants and specifically a certified fraud examiner, has intensified.8 With expertise in forensic accounting, there are many career possibilities. You can work at a public accounting firm or a company that specializes in financial and risk consulting. You can also work with lawyers and law enforcement agencies, financial institutions, insurance companies or government organizations.

Due to security leaks and rising identity theft, major corporations now have fraud investigation units who look to forensic accounting professionals to help uncover and analyze evidence to solve and prosecute financial crimes. Corporations regularly employ forensic accountants in their internal financial, audit, global investigation and compliance departments. In the crime-fighting capacity, you might even find yourself working with a law enforcement agency such as the Internal Revenue Service (IRS) or Federal Bureau of Investigation (FBI), and with legal teams.9

If you prefer more variety within the field, you could train to become a fraud and forensic accounting consultant. This way, you can work independently or as part of a consulting firm to offer forensic accounting services to all types of organizations and industries.

Forensic Accounting Salaries

Forensic accounting is not only an interesting career, but also a lucrative one. According to PayScale in February 2023, the average annual salary for a forensic accountant is $71,318.10 Compensation may vary according to your location. For example, in Washington, D.C., which is the highest-paying city for forensic accountants nationwide, you can earn between $73,525 and $94,366 a year.11,12

Want to work with the FBI specifically? A forensic accountant is one of the agency’s most sought-out professionals. In this role, you will research and follow money that’s funneled or laundered by international spies, terrorists and other criminals.13 As for potential earnings, the median salary of a forensic accountant working for the FBI is $90,686.14

Fight Financial Crime, Now and in the Future

If you're looking to break out of your day-to-day role but still use your accounting knowledge for good, financial accounting can be a great next step. In the Yeshiva University (YU) Sy Syms School of Business online Master of Science in Accounting program, you can take specialized classes in forensic accounting, as well as advanced auditing, federal income tax, governmental and not-for-profit accounting and more. Electives include financial statement analysis and accounting data visualization and analysis.

Ranked #4 in Best Colleges for Accounting and Finance in New York, YU Sy Syms is located in the heart of New York’s global financial hub.15 Our convenient AACSB-accredited online program is a New York State certified public accountant (CPA) Licensure Qualifying Registered Program and contributes to the 150-credit hour requirement for CPA licensure in most states, including New York.

  1. Retrieved on February 13, 2023, from investopedia.com/terms/f/forensicaccounting.asp
  2. Retrieved on February 13, 2023, from americanbar.org/groups/litigation/committees/family-law/practice/2019/what-is-a-forensic-accountant/
  3. Retrieved on February 13, 2023, from roberthalf.com/blog/job-market/what-do-you-need-to-succeed-in-forensic-accounting-jobs
  4. Retrieved on February 13, 2023, from investopedia.com/articles/financial-careers/08/forensic-accounting-career.asp
  5. Retrieved on February 13, 2023, from indeed.com/career-advice/finding-a-job/what-is-forensic-accounting
  6. Retrieved on February 13, 2023, from fcpas.org/about-us/what-is-a-forensic-accountant/
  7. Retrieved on February 13, 2023, from linkedin.com/pulse/when-does-insurance-claim-need-forensic-accountant-hugo-loneragan/
  8. Retrieved on February 13, 2023, from acfe.com/career/career-paths/career-path-accounting/career-path-detail-forensic-accountant
  9. Retrieved on February 13, 2023, from roberthalf.com/blog/job-market/what-do-you-need-to-succeed-in-forensic-accounting-jobs
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  12. Retrieved on February 13, 2023, from salary.com/research/salary/recruiting/forensic-accountant-salary/washington-dc
  13. Retrieved on February 13, 2023, from fbijobs.gov/sites/default/files/2022-05/Forensic%20Accountant.pdf
  14. Retrieved on February 13, 2023, from indeed.com/cmp/Federal-Bureau-of-Investigation-%28fbi%29/salaries/Forensic-Accountant
  15. Retrieved on February 13, 2023, from niche.com/colleges/yeshiva-university/rankings/