Creating a Specialization in Forensic Accounting
Sit back, close your eyes, and imagine the following: A small business owner receives a letter or phone call from an IRS agent; his business has been chosen for a government audit.
The owner’s mind races he has filed his tax return on time and nothing seemed out of the ordinary, but somehow, the business was flagged. The small business owner begins to panic and it doesn’t take long for him to admit that he needs to hire experts to help him get through this stressful and uncertain time. Then, he realizes he needs to speak with an attorney, but also needs to speak with an accountant who understands government audits.
Bottom line? The business owner needs to hire a forensic accountant.
What You Need to Know about Forensic Accounting
Forensic accounting integrates accounting, auditing and investigative skills – it’s finding out the truth about the numbers, e.g., financials and compliance, for accuracy. It provides an accounting analysis that’s appropriate to a court that will form a basis for discussion, debate and ultimately dispute resolution.
Other forensic accounting assignments include:
- Investigating construction claims
- Product liability claims
- Trademarks or patent infringement
- Determining the economic impact of the breach of a noncompetition or nondisclosure agreement
Unfortunately, some small business owners don’t have the funds or don’t budget for a forensic accountant prior to filing tax returns or to double check the honesty and integrity. Keep in mind that the bulk of forensic accounting happens after the fact because of a problem such as fraud, embezzlement or government audit. Clients have to hire a forensic accountant to find out what’s “real and right” vs. mis-categorized or fraudulent posts.
Forensic Accounting: The Specialized Training You Need
According to the American Board of Forensic Accounting (ABFA), “A forensic accountant refers to a professional who performs an orderly analysis, investigation, inquiry, test, inspection, or examination in an attempt to obtain the truth and form an expert (a judge, under Rule 702, can qualify a professional as an “expert” in a given court case) opinion. Almost every scientific and technical field has a forensic application.”
To become a Certified Forensic Accountant®, you must:
- Have a CPA designation or international equivalent (to be determined by the Board).
- Be registered with your State Board of Accountancy, if it’s required.
- Be in compliance with all local ordinances, state laws, and federal regulations – no felony convictions.
- Have excellent investigative and interviewing skills.
- Provide at least two professional references.
- Take a time, open book test with randomly selected objective questions. You need a score of 70% or greater on each section to pass.
You may also consider becoming a Certified Fraud Examiner because it complements the CFA. Having these two designations will set you apart from other Certified Forensic Accountants.
How to Find Forensic Accounting Clients
Throughout the years, there has been an increased demand for forensic accounting services because of financial collapses, increases in white collar crime and growing instances of occupational fraud. The Association of Certified Fraud Examiners (ACFE) estimates that a typical organization loses to al types of of fraud with a medium of 5%.
The following can help you to find forensic accounting clients:
Associations – Join the ABFA, Institute of Certified Forensic Accountants, National Association of Forensic Accountants, Forensic CPA Society or Forensic Accountants of North America.
Conferences – Attend conferences, from accounting to legal. You can network, make connections and gain clients.
Journals and Magazines – Subscribe to journals and magazines such as the Journal of Forensic and Investigative Accounting, Fraud magazine, Strategic Finance, Accounting Today, Journal of Accountancy, WSJ Accounting and others.
Partner with a Law Firm – Attorneys and forensic accountants work together. Build and develop a relationship with an attorney and you may have more work than you can handle.
Webinars – Register for webinars from associations and businesses. The contacts you make can lead to clients.
Are You Ready to Boost Your Forensic Accounting Practice?
As a forensic accountant, you must scrutinize the fine details while seeing the big picture. You must listen effectively, observe body language, and communicate clearly and concisely. Other traits you must have include the following:
- Sound professional judgement.
Some benefits of becoming a Certified Forensic Accountant include enhancing your professional reputation and supporting your continued professional development.
If you’re ready to boost your forensic accounting practice, implement the above tips today and watch as your business grows tomorrow.