1. Forensic and Investigative Accounting
Chapter 2
Forensic Accounting Education, Institutions, and Specialties
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2. Termites, Rust, and Fraud
Just as termites never sleep, fraud never sleeps.
Just like termites, fraud can destroy the foundation of an entity.
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3. Professors’ Top Ten Topics in Forensic Accounting Curricula
Fundamentals of fraud.
Financial statement fraud.
Types of fraud.
Cooking the books and problems in accounting.
Elements of fraud: pressure, opportunity, and rationalization.
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4. Professors’ Top Ten Topics in Forensic Accounting Curricula
Antifraud controls.
Internal control evaluation.
Theory and methodology of fraud examination.
Principles of ethics and corporate code of conduct.
Fraud detection and deterrence programs.
Practitioners tend to emphasize litigation service
more than professors.
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5. Knowledge, Skills and Abilities Needed by Forensic Accountant
Law, legal system, courts, and courtroom procedure.
Financial statement fraud.
Corporate governance, shareholder rights and litigation, securities laws, and protections.
Report writing and communication.
Criminal law and procedure.
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6. Knowledge, Skills and Abilities Needed by Forensic Accountant
Computer fraud and cybercrime.
Human factors involved in intelligence gathering, interview techniques and understanding the motivations for fraud and other criminal activities.
Ethical issues in business.
Business valuation.
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7. Forensic and Investigative Accounting
Find It, or I’ll Sue
Accountants must be attuned to detecting fraud at every level of service, including standard accounting services, compilations, reviews, and bank reconciliations. If there is fraud and you don’t detect it, you are going to be sued, and you will likely lose, as the public perception is the accountant is the watchdog.
Robert J. DiPasquale, Parsippany, N.J.
Source: H.W. Wolosky, “Forensic Accounting to the Forefront,” Practical Accountant, February 2004, pp
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8. Forensic Accounting Knowledge Base
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9. Careers in Forensic Accounting
Parade magazine on April 15, 2007, indicated that the hottest jobs for college graduates were forensic accountants.
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10. Income Expectations for Forensic Accountants
Salaries start around $50,000.
Senior-level government employees can earn between $85,000 to $95,000.
In the private sector, one can earn between $125,000 to $150,000.
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11. Forensic and Investigative Accounting
Consulting Fees
Forensic accountants work with attorneys, private investigators, law enforcement officers, corporate security specialists, the IRS, and the FBI.
In 1999, Kessler International stated that the firm charges about $300 per hour for forensic consultations.
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12. Background in Forensic Accounting
A forensic accounting background is helpful in these professional specialties:
Accountants
Consultants
Internal auditors
IRS auditors
Government auditors
FBI agents
SEC accountants
Bankruptcy specialists
Professors
Bank examiners
Chief financial officers
Valuators of closely held businesses
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13. Specialties Within Forensic and Investigative Accounting
Employee Crime Specialist
Asset Tracing Specialist
Litigation Services Specialist and Expert Witness
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14. Forensic Groups and Credentials
American College of Forensic Examiners International (ACFEi)
Certified Forensic Accountant (Cr.FA)
Association of Certified Fraud Examiners (ACFE)
Certified Fraud Examiner (CFE)
Association of Certified Fraud Specialists (ACFS)
Certified Fraud Specialist (CFS)
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15. Forensic Groups and Credentials
The CFFA group becomes:
Master Analyst Financial Forensics(MAFF)
Change CFFA to MAFF (twice)
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16. Forensic Groups and Credentials
Forensic Accounting Society of North America (FASNA)
None
National Association of Certified Valuation Analysts (NACVA)
Certified Valuation Analyst (CVA)
Certified Forensic Financial Analyst (CFFA)
Certified Fraud Deterrence (CFD) (merged with CFFA in 2007)
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17. Professional Groups and Credentials
National Litigation Support Services Association (NLSSA)
None
Network of Independent Forensic Accountants (NIFA)
Institute of Business Appraisers
Certified Business Appraiser (CBA)
American Institute of CPAs
Certified Financial Forensics (CFF)
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18. Seven Important MAFF Areas
The NACVA’s Master Analyst Financial Forensics lists seven important areas:
Financial Litigation Specialization
Forensic Accounting Specialization
Business and Intellectual Property Damages Specialization
Matrimonial Litigation Support Specialization
Business Valuation in Litigation Specialization
Bankruptcy/Insolvency Specialization
Fraud Risk Management Specialization
A description of these areas can be found on their website
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19. CPA Certificate Important
AICPA research indicates that CPAs represent 94 percent of forensic experts hired over two years.
Source: Field of Forensic Service Remains Hot, A. E. Feldman Blog, -services-rem...
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20. Fundamental Forensic Knowledge of a CFF
Professional responsibilities and practice management.
Laws, courts, and dispute resolution.
Planning and preparation.
Information gathering and preservation (documents interviews/interrogations, and electronic data).
Discovery.
Reporting, experts, and testimony.
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21. Difficulties With Fraud
Joseph Wells says
Regrettably, the actual cost of fraud is unknown and unknowable. It is a concept the criminologists call “the dark figure.” Unlike visible crimes such as robbery, not all frauds are uncovered. Of those uncovered, not all are reported. No agency is tasked with compiling comprehensive data on fraud.
Source:
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22. Forensic and Investigative Accounting
Predication
The ACFE group indicates that in the private sector, a fraud investigation should not be conducted without proper predication.
Examples: Anonymous tips, complaints, audit inquires, conflict of interest.
Thus, predication is the basis for undertaking a fraud investigation.
Without predication, the target might be able to sue for real or imaginary damages.
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23. Skills of a Forensic Accountant
Mean
Analytical Skills
6.51
Basic Accounting Skills
6.31
Problem Solving Skills
6.30
Data Analysis Skills
6.27
Interviewing Skills
6.25
Verbal Communication Skills
6.11
Basic Computer Skills
6.05
Source: D.A. McMullen and M.H. Sanchez, “A Preliminary Investigation of the Necessary Skills, Education Requirements, and Training Requirements for Forensic Accountants,” Journal of Forensic and Investigative Accounting, Vol. 2, Issue 2, July-December, 2010, p.43.
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24. Characteristics of a Forensic Accountant
Mean
Persistence
6.12
Skepticism
Puzzle Skills
6.08
People Skills
6.04
Flexibility
5.91
Works well in teams
5.84
Experience in Auditing
5.80
Source: D.A. McMullen and M.H. Sanchez, “A Preliminary Investigation of the Necessary Skills, Education Requirements, and Training Requirements for Forensic Accountants,” Journal of Forensic and Investigative Accounting, Vol. 2, Issue 2, July-December, 2010, p.43.
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25. Increasing Demand for Forensic Accountants
2012 AICPA survey: Noticeable increase in demand for FA services.
Forty-seven percent of respondents saw an increase in hours spent.
2011 AICPA survey: one-half of participants had average increase in FA services of 20 percent.
2011 AICPA survey found 25 percent of participants hired more FA professionals.
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26. Society for Financial Examiners
Established in 1973, the Society for Financial Examiners is a professional organization for examiners of insurance companies, banks savings and loans, and credit unions. SOFE offers three professional designations which are earned by completing extensive requirements and a series of examinations.
Source:
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27. International Association of Asset Recovery
The International Association of Asset Recovery (IAAR) has a new certification called the Certified Specialist in Asset Recovery (CSAR). The IAAR mission is to help practitioners to win back assets that rightful belong to victims, government agencies, other organizations, or individuals who have been victimized by criminal or wrongful conduct.
Source:
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28. Corporate Crime Reporter
The Corporate Crime Reporter is a legal print newsletter published and mailed 48 times a year (corporatecrimereporter.com). Some articles are posted on their website, but are only highlights from the print newsletter.
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