From the infamous downfall of Enron to Bernie Madoff’s high-stakes Ponzi scheme, corporate fraud scandals share a key trait. All were exposed by teams of forensic accountants tasked with following the money and determining the likelihood that a crime took place.
Professionals interested in forensic accounting can deepen their understanding of corporate financial statement analysis and auditing through Pittsburg State University’s online Master of Business Administration (MBA) in Accounting program. Graduates gain foundational accounting knowledge and the tools they need to become CPAs and even specialists in forensic accounting.
What Does a Forensic Accountant Do?
Forensic accountants combine an investigative spirit with accounting and auditing skills to create a full picture of an individual or company’s finances. They look for evidence of crimes, usually on behalf of clients like insurance companies, banks, corporate attorneys or law enforcement agencies.
The profession of forensic accounting draws its name from “forensic evidence,” or evidence admitted and presented to a court of law. Often, these accountants serve as expert witnesses who complete reports on the alleged criminal activity and testify in court about how the accused individual or business did or did not commit financial crimes.
Forensic accountants are not only tasked with discovering how someone may have committed financial crimes but also calculating the total economic damages the alleged criminal activity caused. Their cases could involve allegations of financial theft, embezzlement, debt defaults, bankruptcy, tax evasion or fraud, money laundering, professional negligence, securities fraud, divorce proceedings or disputes over a corporation’s valuation.
The work can be time- and labor-intensive, sometimes lasting months or years depending on the complexity of the case or the size of the company under investigation. For instance, signs of financial mismanagement within the Enron Corporation were first discovered in 2001, eventually revealing the company hid billions in bad debt and inflated earnings. However, it took until 2006 for several corporate executives to face the music in court, and not without the testimonies of forensic accountants.
Forensic Accounting Techniques and Tools
Forensic accountants use various techniques to trace funds and discover fund mismanagement. One method is conducting a due diligence review, where the accountant examines a company’s financial statements, compares those numbers over a period of years, benchmarks them against competitors and identifies potential irregularities.
Professionals also conduct asset identification and recovery procedures by scrutinizing tax returns, bank and real estate records, insurance policies, court filings and credit reports for clues about where a company or individual’s wealth lies. Some forensic accountants study alternative dispute resolution to learn more about their role in the legal process and better understand the judicial system.
Accountants must develop familiarity with technology and software to succeed in the field. This insight helps them to understand how companies may have used those products to obscure criminal activity. Skills in data collection, analytics and visualization are also necessary to conduct analysis and display findings in a way that makes sense to clients and juries.
Beyond their technical skills, successful forensic accountants are extremely detailed problem solvers who can communicate complex ideas with clarity and authority. They are eager listeners who ask probing questions and work collaboratively with outside counsel, clients and other experts to develop written reports and present evidence verbally.
Prepare for a Forensic Accounting Career With Pittsburg State University
As part of the Financial Statement Auditing/Seminar and in Auditing course in Pittsburg State University’s online MBA in Accounting program, students study financial accounting system risks and controls, professional auditing standards and auditors’ ethical and legal responsibilities.
By mastering these concepts and learning how auditing techniques can help solve financial crimes, graduates leave the program prepared to pursue their Uniform CPA Examination and a successful career in forensic accounting.
Learn more about Pittsburg State University’s online Master of Business Administration in Accounting program.
