What Is Forensic Accounting? (Education, Careers, and More)

Forensic accounting is the branch of accounting that deals with the detection and prevention of financial crimes. As a forensic accountant, you'll use your competencies in accounting, auditing, and investigative techniques to detect and analyze cases of fraud and other financial crimes. 

A study in 2020 by the Association of Certified Fraud Examiners found that the median fraud by business owners and executives is $600,000.[1]  In this guide, learn more about how forensic accountants use their investigatory and analytical skills to identify different types of financial crime.

What areas do forensic accountants work in?

Forensic accountants investigate fraud, embezzlement, and other white-collar crimes. As businesses become more complex, so will their financial investigations; oftentimes, forensic accountants will be asked to present accounting analysis and evidence in a trial or business-related issues. You might end up working in one or several of these areas during your career as a forensic accountant:

• Business economic losses and bankruptcy: You’ll collaborate with businesses, creditors, and bankruptcy trustees to investigate possible fraud or mismanagement of assets in business bankruptcies or other situations involving economic losses. 

• Family and marital disputes: You’ll liaise with attorneys and clients to investigate cases of possible fraud or misappropriation of assets in divorce or other family disputes. 

• Hidden or misappropriated assets: As a forensic accountant, you may look for assets that have been transferred or concealed by an individual or business. 

• Insurance claims: You'll investigate the claims to determine their validity.

• Money laundering: If you identify a financial crime, you may pass on details to the FBI and other law enforcement agencies to investigate. You may also work with them as a local partner.

• Securities fraud: You’ll follow the regulations of the Securities and Exchange Commission (SEC) and Finance Industry Regulatory Authority (FINRA) to investigate cases of possible securities fraud. 

• Tax fraud: You’ll work with the IRS and local government to investigate cases of possible tax fraud.

Forensic accounting audit procedures

An organization's financial statements provide an overview of its financial health. However, these statements may uncover only some of the story. In these cases, a forensic accountant may perform an investigation. Here is the typical process of a forensic accounting audit:

1. Investigation

The first step in a forensic accounting investigation is to gather all relevant information. This includes financial statements, tax returns, bank records, and any other documents that could provide information. Once you have all the needed data, it is time to start investigating the numbers. The goal of this phase is for you to identify any irregularities that could indicate fraud or wrongdoing.

2. Reporting

Once the investigation is complete, you’ll report your findings to the client. Depending on the nature of the case, you may share these findings with law enforcement or other regulatory agencies. 

3. Litigation

In some cases, the findings of a forensic accounting investigation can lead to litigation. In such cases, you may be asked to provide expert testimony or support during the trial.

How to become a forensic accountant

Forensic accounting is a rapidly growing field that offers many opportunities for those with the right skills and forensic accounting education. As you pursue a career in forensic accounting, you'll need to do a few things to get started.

Get a relevant undergraduate degree.

A few different types of degrees can lead to a career in forensic accounting. A bachelor's degree in accounting, forensic accounting, finance, or a related field is typically the minimum requirement for entry-level positions. However, employers may also prefer candidates with a master’s or doctoral degree. According to Zippia, 71 percent of forensic accountants have a bachelor’s degree, and 20 percent have a master’s[2]. Enrolling in forensic accounting courses or considering a concentration, if possible, may be helpful in gaining a better understanding of the field. 

Read more: 8 Types of Accounting: Careers, Degrees, and Salaries

Gain professional experience. 

According to the Bureau of Labor Statistics, the overall job market for accountants and auditors is expected to grow 6 percent between 2021 and 2031 [3]. After earning a bachelor’s or master’s degree, apply for entry-level accounting positions to get hands-on experience to help prepare you for the certified public accountant (CPA) licensure.

Remember that a forensic accountant is not an entry-level position, so employers may expect candidates to have professional experience in the field.  You can search for job openings online, through commercial job sites, and your local or federal government website.

Earn your CPA.

To work as a forensic accountant, you will need to be a certified public accountant (CPA). The certification requirements for becoming a CPA vary from state to state but generally involve passing an exam that demonstrates that you’ve mastered technical skills, have at least a bachelor's degree and meet experience requirements. 

Read more: What Is a CPA and How Do I Become One?

Become a certified fraud examiner (CFE).

While not required, becoming a certified fraud examiner (CFE) can enhance your resume and show employers you’re dedicated to this profession. To become a CFE, you'll need to pass an exam administered by the Association of Certified Fraud Examiners (ACFE), have joined the ACFE, and have at least two years of professional experience. 

What skills do I need to become a forensic accountant? 

At a high level you'll need to develop skills in accounting, auditing, and investigative techniques. Forensic accounting is an advanced form of accounting that focuses on investigating financial crimes. To become a forensic accountant, you need a blend of both technical and workplace skills:

Technical skills

You'll need technical skills related to accounting, finance, and information technology. The following are skills necessary to understand financial statements and transactions, use accounting software, and reconstruct financial data. 

• Able to operate accounting software

• Able to analyze financial documents

• Know how to conduct technical interviews for witnesses or suspects

• Have legal knowledge to review documents 

• Ability to analyze data to identify trends 

• Ability to conduct internal audits 

Workplace skills

To become a forensic accountant, you’ll also need to develop various workplace skills to handle data and present findings. Here are some important skills to have to succeed as a forensic accountant. 

• Critical thinking

• Detail-oriented

• Excellent communication

• Analytical thinking

Is forensic accounting right for you?

Getting qualified to be a forensic accountant takes time, so before you jump into this career, it's important to assess your interests and define your goals. This will help you determine if forensic accounting is the right career path for you. Ask yourself the following questions:

• Do you have an interest in finance and accounting? 

• Do you enjoy working with numbers and solving complex problems? 

• Are you interested in crime and learning the ins and outs of the law?

Answering the following questions will help you narrow your career path and decide the next steps in your career.

• Do you want to work for a government agency or a private company? 

• Do you want to specialize in a particular area of forensic accounting? 

Job titles of forensic accountants

There are a variety of jobs in forensic accountancy, and here are some of them and their annual US base salaries: 

• Forensic auditor: $61,964 [4]

• Financial investigator: $65,871 [5]

• Fraud examiner: $75,321 [6]

• Fraud investigator: $54,028 [7]

• Senior forensic accountant: $74,380 [8]

• Forensic accounting senior associate: $68,039 [9]

There are some other job roles that overlap with forensic accounting, such as the following: 

• Litigation support specialist:$59,680 [10]

• Financial analyst: $73,306 [11]

• Anti-money laundering analyst: $65,164 [12]

• Asset recovery specialist: $49,276 [13]

• Fraud prevention specialist: $41,423[14]

Professional certificates and online courses to learn more

Forensic accounting is a complex and ever-changing field, so it is important to gain specialist knowledge and keep up with the latest developments. You can use online courses to gain the entry-level forensic accounting skills and knowledge necessary to build upon an accountancy degree and start a career in this field. 

You might like to consider the Forensic Accounting and Fraud Examination Professional Certificate, offered by West Virginia University on Coursera. This can provide you with a starting point to understand more about forensic accounting.

Frequently asked questions (FAQ)