Forensic accounting is one of the fastest growing professions. In fact, it has been deemed as one of the “20 hot job tracks of the future”. But why is forensic accounting so important? What do forensic accountants do? Understanding why forensic accounting is so important to our society can help you to determine if this career field is right for you.
Although forensic accounting sounds like a new career, it has actually been a profession since the early 19th century. During this time, the American economy was beginning to grow. Companies were conduction business throughout more than one state, which later paved the way for larger corporations.
During this time, it was very easy for companies and businessmen to hide sales and income by using banks throughout the different states that they conducted business in. In attempt to foil this common problem, the U.S. Department of Justice created an investigating unit that could specialize and handle interstate transactions. These accountants were hired and used to help the government find income that businesses were hiding in an attempt to avoid paying taxes.
Over time, this investigative unit grew. Under the authority of President Hoover, this unit later became the Federal Bureau of Investigation, or FBI. The FBI quickly expanded and grew, going from nine national offices to 30. They continued to use their skills and knowledge to track down businesses and individuals that engaged in fraudulent practices, bringing them to justice.
Forensic accounting gained its recent popularity when companies like HealthSouth and Enron made several financial violations that left many senior citizens in America without retirement funds. The investigation following this fraud case paved the way for public exposure to the forensic accounting position.
Today, accounting firms have tripled the number of investigative accountants on their staff. This is due to the growing request and demand of their services. Colleges and universities are now offering programs designed specifically for forensic accountants, making it easier to obtain a degree.
The role forensic accountants play in society
Originally, forensic accountants were only requested when fraud was suspected. Today, regular audits are done within large corporations to prevent fraud before it happens. It also ensures that fraud is detected early on to minimize company loss. Forensic accountants also search out hidden assets in high profile divorces and aid the government, still, in tax evasion and fraud.
About the Job
Forensic accountants utilize their investigative and analytical skills to analyze financial information. They look through books, receipts, reports, ledgers, as well as any other financial documents that have been kept. They compare all of the information they find, ensuring that all of the information matches up. When they detect something is awry, the dig further, until the problem is found. Once all information has been gathered and analyzed, the forensic accountant submits all of the information to the client.
If fraudulent activity is found, the company or organization will often decide to prosecute the perpetrator. In this phase of the forensic accountant’s job, their job responsibilities include compiling evidence and submitting information to the court, serving as an expert witness to testify in behalf or against a member of the lawsuit, and to relay information in a way that can be easily understood by those within the court that do not have basic accounting knowledge.
These types of investigations are done for insurance companies, government agencies, banks, private organizations, lawyers, civil courts, federal courts, and law enforcement agencies. Even nonprofit and public organizations are utilizing the services of forensic accountants.
Forensic accountants have also been utilized in protecting our country since the 9/11 attacks. This is how the original terrorists were tracked down. Forensic accountants assisted the Department of Homeland Security by uncovering the cash source that the terrorists used to fund their attacks. They continue to play an important part in ensuring the ongoing protection of our country.
Illegal handling of money within large corporations is expected to cost businesses over $600 billion dollars, this year alone. With the economy still trying to recover from the recession, this type of fraud can easily break a business. By utilizing the services of forensic accountants, large corporations are able to detect fraud quickly, before it gets out of hand.
The growth of this field has also created a rising career opportunity. The average earning for a forensic accountant is roughly around $82,000 annually. Additionally, there are thousands of job opportunities that have developed in this career field, improving the country’s overall economical state.
Although this profession has been around for about a hundred years, this new growth and popularity has increased economic security in our country. Their ability to detect financial fraud, saving companies large sums of money even further helps to repair our economical state. As you can clearly see, this career field plays a very important role in our society today.