Although homicide, theft, and drug-dealing appear to take the lion’s share of conspicuous criminal prosecutions, Americans are increasingly aware of a more insidious form of misconduct: white-collar crime. Even before the Great Recession—the era of subprime mortgages, inflated corporate bonuses, and rampant economic nepotism—forensic accounting had entered the scene to combat the WorldCom and Enron scandals.
So how widespread are these accounting-based malfeasances? In its most recent “Report to the Nations on Occupational Fraud and Abuse,” the Association of Certified Fraud Examiners (ACFE) found that typical organizations lose 5 percent of their revenues to misconduct annually.
There are three main types of fraud: asset misappropriations (the most common), corruption, and financial statement fraud (i.e., “cooking the books”), and many cases combine two of the categories. Among the industries surveyed, ACFE (2018) found the highest proportion of misbehavior among three sectors: banking & financial services, manufacturing, and government & public administration. And not surprisingly, average losses increased as a function of the perpetrator’s level of power or authority in an organization.
To expose these financial abuses, forensic accountants perform a number of functions. According to the Federal Bureau of Investigation (FBI), forensic accountants exercise a number of functions including analyzing financial records to create profiles and detailed reports; ensuring compliance with government and accounting regulations (e.g., GAAP); tracing income sources and transaction histories; working with case agents in structured interviews of suspects; preparing search warrants or affidavits to more thoroughly investigate cases; and testifying as expert witnesses in court cases.
These forensic professionals typically begin as certified public accountants (CPAs) and employ similar detecting skills to “follow the money” and build criminal cases when financial statements or records are amiss. In addition to corporate investigations, they are deployed in a wide range of cases such as insurance fraud, business valuation, embezzlement, divorce, antitrust suits, credit card fraud, bankruptcy, personal injury claims, money laundering, damage assessments, contract disputes, and even tracking terrorism. They can be employed full-time for government agencies, insurance companies, banks, and police departments, or may be hired as contractors to investigate when suspicions of misconduct arise.
Some of the world’s most notorious criminals have been brought to justice with the hard work of forensic accountants, including Al Capone and his conviction for tax evasion. Read on to discover how much money these forensics professionals typically make, as well as the steps to joining this career in white collar crime-fighting.
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The US Bureau of Labor Statistics (BLS 2020) reports that accounting is a profession on the rise. In fact, there will be a projected 4 percent increase in openings for accountants and auditors between 2019 and 2029—the same as what’s expected among all occupations nationally during the same period.
In the survey entitled “Compensation Guide for Anti-Fraud Professionals,” the Association of Certified Fraud Examiners (ACFE 2020, report available for download) found that forensic accountants are among the highest paid accounting professionals. In fact, they reported higher average annual salaries than four related accounting job functions—fraud examiners, compliance officers, external auditors, and internal auditors—reporting the following salary ranges:
The ACFE (2020) also reported that having professional certifications can enhance a person’s earning potential. By illustration, certified fraud examiners (CFEs) made significantly more than their non-certified colleagues.
Forensic accountants typically have at least a bachelor’s degree in accounting or a related field. For the forensic specialty, many will also choose to pursue a more advanced degree or certificate program in order to gain more specialized knowledge.
Practicing accountants in any specialty must have the Certified Public Accountant (CPA) credential. Although the specific requirements for this test vary by state, most states require 150 hours of experience before one is able to sit for the CPA exam. The additional required hours can be earned either in a master’s degree program or a post-baccalaureate internship. Forensic accountants may also choose to pursue a professional credential such as the Certified Fraud Examiner (CFE) credential in order to further their career prospects. Details about potential certifications are available in the section below.
There are varied paths to becoming a forensic accountant, but the vast majority have at least a bachelor’s degree in accounting, finance, economics, business, or a related field. As proof of point, O*NET—a data organization partnered with the US Department of Labor—found that 39 percent of surveyed accountants had some college experience and 42 percent had bachelor’s degrees.
Here is one possible path to becoming a forensic accountant:
Coursework varies by program emphasis, but generally involves instruction in the principles of accounting, fraud auditing, asset misappropriation scams, rules of compliance, quantitative methods & analysis, and general education requirements, among others. In addition to the programs listed on the forensic accounting education page, there is a wealth of options to consider.
Some schools such as John Jay College of Criminal Justice in New York City provide fraud examination as a minor to qualified undergraduate students. These students receive training in fraud examination, forensic accounting, and white-collar crime. As part of their minor, these students cover the material necessary to take the certified fraud examiner (CFE) exam.
While there are some bachelor’s programs in forensic accounting, it may be advisable to pursue a degree in a related discipline such as accounting, business, or finance. For example, the University of Pennsylvania (UPenn) provides a top-notch undergraduate program in accounting through its famous Wharton School of Business. Offering advanced instruction in financial accounting, tax planning and administration, and corporate valuation, UPenn’s bachelor’s degree in accounting is competitive and prestigious.
Also, although the majority of these programs are on-campus, there are online programs available such as the one at Franklin University. For more information on distance-based programs, please visit the online forensics programs page.
Finally, students are advised to seek out accredited programs—those which have met or exceeded quality standards related to faculty, facilities, student support services, and more—and there are several institutions which provide accreditation. For accounting and business, the primary programmatic accreditation body is the Association to Advance Collegiate Schools of Business (AACSB).
Second, although there is a wide range of additional certifications relevant to forensic accounting, some are more reputable than others.
The Federal Bureau of Investigation (FBI), for instance, only accepts the following credentials among its applicants in forensic accounting: certified public accounting (CPA), certified financial forensics (CFF-AICPA), certified fraud examiner (CFE), and certified internal auditor (CIA).
The American Institute of Certified Public Accountants (AICPA) provides the certified in financial forensics (CFF) credential. Established in 2008, the exam for this certification is open to qualified CPAs with at least 1,000 hours of experience in forensic accounting over the previous five years, as well as 75 hours of continuing professional education (CPE) in relevant subject matter.
The Association of Certified Fraud Examiners (ACFE) offers the certified fraud examiner (CFE) credentialing exam to bachelor’s-prepared ASFE members with at least two years of applicable professional experience in internal auditing, criminology, fraud investigation, or loss prevention. The exam costs $400 and tests subjects’ knowledge in four areas: fraud prevention and deterrence, financial transactions and fraud schemes, investigation, and law.
Finally, the Institute of Internal Auditors (IAI) provides the certified internal auditor (CIA) certification, as well as four specialty certifications: control self-assessment, government auditing, financial services auditing, and risk management assurance.
For example, the University of West Virginia offers a hybrid (i.e., online and on-campus mix) master’s of science program in forensic and fraud examination (MSFFE). The 30-credit MSFFE—ideal for working professionals—can be completed in as few as 12 months features interdisciplinary coursework in criminology, professional ethics, data analysis methodologies, MBA courses, and more.
For more information on graduate programs, please visit the forensic accounting programs page.
Rachel Drummond is a freelance writer, educator, and yogini from Oregon. She’s taught English to international university students in the United States and Japan for more than a decade and has a master’s degree in education from the University of Oregon. Rachel writes about meditation, yoga, coaching, and more on her blog (Instagram: @racheldrummondyoga).