What is forensic accounting?
Just like the name implies, forensic accounting is concerned with the evidence of economic transactions and reporting within an accounting system. Forensics is a broad range of subspecialties that use techniques adapted from the natural sciences to obtain criminal or other legal evidence. Forensic accountants are usually Certified Public Accountants (CPAs) that specialize in those types of engagements where there is a need for such evidence.
Forensic accounting also involves the legal framework that allows the evidence to be suitable in order to establish accountability. In other words, forensic accounting is accounting that is acceptable for legal review should the need for establishing accountability occur.
How does forensic accounting happen?
A forensic accountant will review and prepare a financial report in such a thorough manner that it assures the highest level of assurance by arriving to a conclusion in a scientific fashion. These reports are based upon the scientific detection and interpretation of the evidences of phenomena introduced into the books and records of an accounting system and the effects of such phenomena upon the accounts, inventories, or the presentation thereof. Much like forensics is used to gather evidence a crime scene, a forensic accountant will use accounting principles to construct legal and scientific sound financial reports to be used in the event of litigation or an audit.
The primary orientation of forensic accounting is explanatory analysis such as the cause and effect of phenomena–including the discovery of any deception, and its effects–introduced into an accounting system domain. The primary methodology employed by forensic accountants is objective verification.
How to prepare for a career in forensic accounting?
Just like forensic dentists are first dentists, forensic accountants are first accountants. Therefore, future forensic accountants have to follow these certain steps before they become specialized in their field. In order to prepare for a career in forensic accounting you must meet the following:
- Educational requirements: You must have a bachelor’s degree or higher in accounting from an accredited four year school. If applying in the US, foreign schools documents need to be sent directly to the Board granting certification in the jurisdiction or state you are applying to. The Board will determine if the school transcripts will be accepted.
- Pass certification exam: In order to qualify to take the exam you must have met the requirements as stated in step #1.
- Experience: You will need to have a specific number of hours of general experience to receive licensure.
You can also get information about training online for general accounting studies by entering keywords, online accounting study or online accounting courses over the Internet. To get specific requirements on test dates, requirements and fees contact the jurisdiction where you want to take the CPA certification exam.
Why forensic accounting?
Due to turbulent economic times and recent financial scandals in companies, government organizations will be watching companies very closely for tax fraud or other illegal accounting practices. Therefore, forensic accounting will be in high demand by companies.
How to decide if you have a future in forensic accounting?
In order to have a successful career in forensic accounting you must have the educational requirements and strong inclination towards financial reporting and how it applies to the law. You will also need to have high ethical standards, as you will be in a position to manipulate and handle the financial resources of any given organization.
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