A Forensic Accounting Degree: Why You Should Earn One
Financial criminal activity almost brought down Wall Street in 2008, and the widespread fraud that was uncovered had a significant negative impact on the global economy for several years afterward. It also devastated many American families, businesses, and entire industries. And this was just one of numerous large financial scandals over recent years. You have likely heard of other financial crimes associated with Enron, WorldCom, and Bernie Madoff, just to name a few past offenders.
The schemes by the wrongdoers mentioned above were all large-scale frauds, but financial and accounting fraud happens on a smaller scale more often than you probably realize. In fact, a 2016 study found that, of the 328 U.S. businesses surveyed, 38 percent of them had experienced some form of fraud over the previous two years. Of the types of fraud reported, 55 percent was asset misappropriation, 54 percent was cybercrime, 15 percent was money laundering, and 14 percent was bribery and corruption.*
Further to that, a 2016 global fraud study found that the average organization loses five percent of its revenue every year due to fraud. Of the 2,410 fraud cases that were analyzed, the total losses amounted to more than $6.3 billion. More than 23 percent of occupational fraud cases resulted in a loss of at least one million dollars. The study also found that asset misappropriation was the most common form of fraud and that, although financial statement fraud was far less common, it resulted in far bigger losses. The median loss was $975,000 per crime, whereas asset misappropriation resulted in a median loss of $125,000.**
These studies highlight the importance of, and need for, forensic accounting professionals. Economic fraud can be devastating to hundreds of individuals inside and outside of the organizations in which the fraud takes place. And, as seen in 2008, it can cause national and even global economic crises. By earning a forensic accounting degree, you can prepare to join this increasingly important vocational field.
Forensic accounting schools can equip you with the accounting, auditing, and investigative skills needed to take part in criminal investigations. And you can learn how to offer litigation support, which occurs when you help a party, or parties, quantify economic damages prior to, or during, a legal proceeding. This could pertain to legal matters such as divorce, bankruptcy, and contract disputes.
As a forensic accountant, you could expect to track funds and identify assets. You will complete a thorough forensic analysis of financial data, which could include anything from documents and records pertaining to mergers and acquisitions to venture capital investments to stocks and bonds purchases. Once your investigation is complete, you will prepare a report of your findings, which could be used for legal and court proceedings. You may even be called as an expert witness during a trial.
Forensic accountants can also help organizations take preventative measures. You could help design accounting and auditing systems and implement procedures that help an organization reduce and manage the risk associated with economic fraud. So you can see that this career field is as interesting as it is essential. The country needs aspiring professionals like you to help keep organizations free from financial crime.
So are you feeling intrigued? Well, continue reading to discover even more reasons why earning a forensic accounting degree could be a great choice for you!
1. There Are Many Good-Quality Forensic Accounting Programs to Choose From
In determining how to become a forensic accountant, you will see that education is your first, and probably most important, step. Most forensic accounting schools offer bachelor's degrees since that is the industry standard for the minimum required education needed to enter the field. A typical bachelor's degree program takes approximately three to four years to complete, and many institutions offer on-campus and online options. This can provide you with some flexibility in your scheduling and enable you to find a program that works with your lifestyle and current commitments.
If you already hold a bachelor's degree or want to earn a more general finance or accounting degree to start with, then you could go on to earn a post-baccalaureate forensic accounting certificate or a Master of Accounting degree that includes forensic accounting as a concentration. These options can also help you get on the path to a forensic accounting career.
Depending on your program choice, you can expect to learn about business essentials pertaining to the areas of management, marketing, and entrepreneurship. Once your base knowledge has been established, you will start learning about accounting-specific topics, which could include the following:
- Payroll accounting
- Cost accounting
- Tax accounting
- Control systems
- Fraud examination
- Financial analysis
- White-collar crime
- Criminal investigation
- Intelligence gathering
- Computer forensics
- Forensic psychology
A forensic accounting degree program could also begin preparing you for important industry certifications. Although these certifications are not mandated, many organizations require them. So if you have specific credentials in mind, then you will want to be sure that any program you choose will meet the education requirements for your desired certification.
2. There Are Forensic Accounting Certification Options That Can Help Enhance Your Career
The people who commit economic crimes put a great deal of effort into covering up their activities. By obtaining additional industry certifications, you are showing potential employers that you possess the specialized knowledge needed to analyze data on a deep level in order to uncover complicated financial schemes.
There are multiple forensic accounting certifications available, but the two most common are the Certified Fraud Examiner (CFE) and Certified in Financial Forensics (CFF) credentials. Both of these designations require you to become a certified public accountant (CPA) first. Here is a basic breakdown of the process to acquire each certification:
- Certified Public Accountant (CPA)
- The State Board of Accountancy within your specific state administers this certification.
- You must complete an approved accounting program. This usually requires a minimum of a bachelor's degree. However, the requirements vary between states, and you may require additional training hours beyond a bachelor's degree.
- Once you have met the education requirements, you must take a four-part exam. Each part can be completed individually. Some states may also require you to complete an ethics exam.
- You will also have to obtain professional experience. Again, this can vary between states, but you may be required to have one to two years of relevant work experience.
- Once you have achieved the education, exam, and experience requirements, you can receive your CPA license.
- Your license will need to be renewed. It is typically required every three years, and you will need to complete a predetermined amount of continuing education hours within that time.
- Certified Fraud Examiner (CFE)
- The CFE certification is administered through the Association of Certified Fraud Examiners (ACFE).
- You need to meet the education and professional experience requirements. Typically, you will need to have a minimum of a bachelor's degree and two years of relevant work experience, along with a valid CPA license.
- You also need to be an ACFE member in good standing.
- You can prepare for the CFE exam by taking the self-study exam prep and review courses.
- When you submit your exam application, you will need to include proof of your education, as well as three professional recommendations.
- Upon passing the exam, the certification committee will review your entire application. Once approved, you will be an official CFE.
- To retain your designation, you must pay an annual membership fee and complete 20 hours of continuing education every year.
- Certified in Financial Forensics (CFF)
- This credential is granted by the American Institute of CPAs (AICPA)
- You must currently hold a valid CPA license.
- You will need to pass the CFF exam.
- Upon completing the exam, you will also have to show that you have met the necessary work experience and education requirements. These include 1,000 hours of forensic accounting experience and 75 hours of forensic accounting education.
- Once you have received your CFF credential, you will need to maintain your membership with the AICPA, pay an annual renewal fee, maintain your CPA designation, and complete 60 hours of continuing education every three years in order to keep your CFF designation valid.
Along with helping to increase your job opportunities, these certifications can also bring you better-paying career possibilities. For example, an industry study found that those with a CFE credential earned a 23-percent higher forensic accountant salary than those who were not certified.**
3. The Work Is Often Fascinating and Fulfilling
You are not just an accountant working with numbers; you are a criminal investigator, and this can lead to exciting and intriguing work alongside other legal and law enforcement professionals. Each case is different, and the work can sometimes be unpredictable, which means that it is seldom boring and monotonous. You could find yourself working on money laundering or tax evasion cases. You could be working to uncover hidden assets or investigating falsified documents (which are elements of criminal practices that are often referred to as "cooking the books"). You could also be involved in:
- Shareholder disputes
- Injury claims
- Insurance claims
- Business or employee fraud investigations
- Marital disputes
- Professional negligence cases
You may also be involved with organized crime cases in which you help the government find and recover illegally obtained money. Even the FBI hires forensic accountants. They are involved in tracking the financial misdeeds of criminals, terrorists, and spies. FBI forensic accountants have played a part in investigating fraud cases involving hundreds of millions of dollars.
As a forensic accountant, you will often be called on as an expert witness to present your findings and testify during court proceedings. No matter where you are employed, you can expect to be conducting important work that protects citizens, organizations, the government, and even the overall economy.
4. The Earning Potential Is Exceptional
The Bureau of Labor Statistics includes forensic accountants within the accountants and auditors occupational category. As of 2015, the reported annual salary range for this group was $41,400 to $118,930 and higher. And while the national average salary is $75,280 per year, the regions and states of the District of Columbia, New York, New Jersey, Massachusetts, and Alaska offer higher-than-average paying jobs. The average salary in these areas ranges from $80,980 to $93,000 per year.***
That being said, a 2015-2016 industry report found that forensic accountants typically earn higher annual salaries than accountants who do not specialize in forensics. Those who were CFE-certified earned a median salary of $105,000, whereas those who were not certified earned a forensic accounting salary of $90,634.**
5. There Are Good Job Opportunities Available
As mentioned above, the growing concern over curbing economic fraud is increasing the demand for forensic accountants. Legislation, such as the Sarbanes-Oxley Act, has furthered this demand. The government has enacted these measures to help protect investors, improve financial reporting, and prevent accounting fraud. So this means that more organizations are seeking the services of forensic accountants to protect themselves as well as their shareholders, investors, and employees.
Overall, accountant and auditor jobs are projected to grow in number by 11 percent in the ten-year period from 2014 to 2024. That amounts to approximately 142,400 jobs. However, industries that are closely associated with forensic accounting activities are expected to experience even higher growth. For example, the securities, commodity contracts, and other financial investments and related activities sector is expecting more than 29-percent job growth for accountants. And the funds, trusts, and other financial vehicles sector is estimating almost 20-percent job growth.****
Forensic accounting job opportunities can be found within organizations of almost any size in a variety of industries. Some places that you may be able to begin your career include:
- Accounting firms
- Government agencies
- Consulting firms
- Law firms
- Law enforcement agencies
- Insurance companies
- Financial institutions
- Large corporations
6. Forensic Accounting Programs Can Often Prepare You for Other Career Paths
One of the benefits of earning a forensic accounting degree is that your education can prepare you for several other vocational paths. If at any point throughout your career you decide that you need a change, then you will be happy to know that you have options. Look at some of the other positions—along with their average annual salaries as of 2015—that you could consider:***
- Financial manager—$134,330
- Business manager—$119,460
- Personal financial adviser—$118,050
- Financial analyst—$95,320
- Management analyst—$91,770
- Financial examiner—$88,310
- Credit analyst—$79,720
- Tax examiner—$57,280
- Bookkeeper, or accounting or auditing clerk—$38,990
Get Ready to Follow the Money
Are you ready to start holding white-collar criminals accountable for their actions? Then take steps today to make that happen. Find a forensic accounting degree program in your area by entering your zip code into the search tool below. An impressive career as a financial crimes investigator might await you!
* PricewaterhouseCoopers, "Global Economic Crime Survey 2016: US Results," website last visited on June 7, 2016.
** Association of Certified Fraud Examiners (ACFE), website last visited on June 7, 2016.
*** Bureau of Labor Statistics, U.S. Department of Labor, Occupational Employment Statistics, website last visited on June 7, 2016.
**** Bureau of Labor Statistics, U.S. Department of Labor, Occupational Outlook Handbook, 2016-17 Edition, website last visited on June 7, 2016.