Forensic Accounting Defined

The relatively new field of forensic accounting is white hot right now because of recent “errors” in many accounting and financial departments. From the very famous cases, such as the Enron and WorldCom, to lesser but no less important situations in smaller companies, examining the financial statements and accounting entries of others has taken on new importance. Forensic accountants investigate white-collar crime, testify in cases of contractual disagreements and bankruptcies, and examine potential criminal transactions, such as money laundering or income tax evasion. There are public accounting firms that now even specialize in forensic accounting only, no longer performing any write-up work, consulting, or standard auditing.

To be an effective forensic accountant, you must have a solid background in pure accounting, all the specialized education you can achieve in analyzing transactions and spotting potential problems, and a good understanding of state and federal regulations, civil or criminal, related to generally accepted accounting principles (GAAP). Most forensic accountants have also earned their Certified Public Accountant designation.