Certified Fraud Examiner - CFE

DEFINITION of 'Certified Fraud Examiner - CFE'

Certified Fraud Examiner (CFE) is a professional certification available to fraud examiners. CFEs are subject to periodic continuing education requirements in the same manner as CPAs and CFPs. The CFE designation is issued by the Association of Certified Fraud Examiners (ACFE), the world's largest anti-fraud organization, based in Austin, Texas.

BREAKING DOWN 'Certified Fraud Examiner - CFE'

Certified fraud examiners are required to get a bachelor's degree in accounting and have no less than two years of work experience. Applicants must have at least two years of work experience in a field related to fraud, such as auditing, loss prevention, law or accounting. CFEs must pass a certification exam, and requirements vary between state and federal governments.

CFEs have a wide range of career options. A CFE can move into an executive position, such as a special agent, an inspector general, a chief compliance officer, a chief risk officer or a chief audit executive. A CFE can specialize as an internal auditor, a government accountant, a local investigator, an external auditor, a state investigator or law enforcement.

CFEs are subject to a code of ethics. The Bernie Madoff scandal is an example of fraud examiners not adhering to a code of ethics. While working at Securities and Exchange Commission (SEC), David Kotz, the former SEC inspector general, did not maintain independence during the Madoff scandal investigation and conducted activity that constituted a conflict of interest, which violates the CFE code of ethics. David P. Weber is a high-profile CFE and the former SEC assistant inspector general. He was the whistle blower who stated Kotz had personal relationships that tainted the SEC investigation of the Madoff scandal.

History

In 1792, the first fraud occurred in the United States. The secretary of the Treasury, Alexander Hamilton, rebuilt the finance industry by replacing outstanding bonds with bonds from the U.S. bank. The assistant secretary of the Treasury, William Duer, was given access to classified Treasury information. He alerted his friends about classified information before unveiling it to the public, and he knew it would increase the bond prices. Then, Duer sold the bonds for a profit. Hamilton spared the bond market by buying up bonds and acting as a lender. The 1792 bond crisis and the large volume of bond trading were the spark for the Buttonwood Agreement, which started the New York Stock Exchange (NYSE).

Outlook

The ACFE estimates that fraud costs the economy over $600 billion a year. Fraud is widespread because of government and corporate scandals. New and changing regulations and the development of the Consumer Financial Protection Bureau has increased employment of fraud examiners. The Bureau of Labor Statistics projects hiring of fraud examiners to increase 10% from 2014 to 2024.

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