Forensic accountants are financial detectives who audit, investigate, and ascertain the accuracy of financial reports and documents, often in connection with anticipated or ongoing legal action.

Key Takeaways

  • Forensic accountants ferret out questionable or downright fraudulent financial record-keeping practices.
  • Their skills are in demand in advance of proposed mergers and acquisitions as well as in criminal investigations and legal cases.
  • They may work for companies, individuals, government agencies, or nonprofits.

Their job is to ferret out questionable financial data, chiefly for the purpose of investigating white-collar crime involving individuals as well as businesses of all sizes. They may work for businesses, nonprofit organizations, government and law-enforcement agencies, estates, or individuals.

There are many career options available for those who are interested.

Forensic Accounting: An Overview

It's not all about outright crime. Forensic accountants may help organizations establish or improve their risk management and risk reduction procedures through customized design of accounting and auditing systems.

As a function of due diligence and investment analysis, they may advise on a wide variety of planned financial transactions including mergers and acquisitions, venture capital investments, purchases of corporate bonds, commercial paper and stocks, and bankruptcy proceedings.

From Dubious Practices to Outright Fraud

In many cases, they may find instances of dubious record-keeping meant to obscure financial problems. But they may also find evidence of outright criminal acts.

The criminal activity uncovered may include fraud, embezzlement, money laundering, concealment of debt, concealment of assets, or other fraudulent activities. Forensic accountants may be called upon to testify in court as expert witnesses in criminal and civil litigation and appear in pretrial depositions.

Following the Money

Beyond their work in the business sector and in the investigation of individual assets for legal purposes, forensic accountants may also examine criminal enterprises to recover illegally obtained money or track money laundering activities.

In a government confiscation of assets in organized-crime cases, or in tax cases against individuals or companies, the work of a forensic accountant is indispensable.

The Credentials

Forensic accountants are also often certified public accountants and certified fraud examiners (CFEs). A certified fraud examiner has extensive training in the prevention and deterrence of fraud and is required to pass a 500-question examination for certification. The test covers topics such as investigation techniques, financial transactions, criminology and ethics, and legal elements of fraud. Requirements for certification also include high moral character and exemplary professional and academic standards.

The CFE credential is conferred by the Association of Certified Fraud Examiners. The certification is recognized worldwide, and prospective employers look for it when recruiting a forensic accountant.

Both the forensic accountant and the CFE must have a comprehensive understanding of business information and all aspects of financial reporting, including:

  • The balance sheet showing a business's assets, liabilities and net equity at the time of the report
  • The income statement, which reports the profit or loss of a company over the reporting period
  • The statement of retained earnings, which reports dividends paid and other items credited to or charged against earnings. This data may also be included in the balance sheet.
  • The statement of cash flows showing the cash coming into the company (inflow) and going out of the company (outflow). Cash equivalents also appear in the statement of cash flows.

Reported information in these documents must comply with generally accepted accounting principles (GAAP), which spell out accounting rules and procedures.

Becoming a Forensic Accountant

Forensic accountants are required to have a bachelor's degree in any field, with a minimum of 24 credit hours in accounting. Employment opportunities and career advancement may be enhanced with a master's degree in accounting or any of the business sciences.

Entering the field of forensic accounting as a certified public accountant is an advantage. As an adjunct to forensic accounting, a career-minded accountant may also become a certified fraud examiner.

Courses in forensic accounting are offered at many colleges and universities and through online educational programs. Scholarships, grants, and subsidies for the education and training of forensic accountants are available from governmental and private sources.

Job Opportunities, Career Path, and Compensation

Forensic accounting is a well-paid occupation. The average salary is about $80,000 a year while seasoned professionals may earn $150,000 or more.

Salaries depend on experience, years in the profession, and the type and size of the entity. A small business can't pay as much as a major corporation, and a nonprofit organization may pay less than a for-profit organization.

Location is a big factor in the pay scale. Compensation in major cities will be higher than the national average, as will living costs.

Newer regulations such as those introduced in 2002 with the Sarbanes-Oxley Act have created many opportunities in the field. The act toughened accounting and reporting standards for corporations.

Potential places of employment include law enforcement, state and local governments, and federal agencies including the Internal Revenue Service, the Department of Defense, the Government Accountability Office, the FBI, and the CIA.

They also are in demand by businesses of all sizes, the financial services industry, and the nonprofit sector. provides information about potential job opportunities.