Everything you need to know Forensic Accounting - Career Path, Jobs, Salary & Certifications
- A career in Forensic Accounting and Auditing is witnessing a great demand. Practitioners believe that the demand for the services of forensic accountants is growing because of the tightening economic conditions and the increasing scrutiny of how companies are governed.
- But what exactly do forensic accountants do? How can I have a career in Forensic Accounting? Do I need any specific certifications for this course?
- In fact: In today's article, Himanshu Sarpal shares the exact strategy he used to start his journey in Forensic Accounting. He also tells us what exactly one needs to be a Forensic Accountant.
- Himanshu holds a Bachelors Degree in Commerce from the University of Delhi and is a Chartered Accountant from ICAI (The Institute of Chartered Accountants of India).
What is Forensic Accounting?
- Where there are questions about financial transparency, legitimacy, or shenanigans, you’ll find a need for Forensic Accounting/Auditing.
- For instance, ABC & Co., on the recommendation of its Chief Operating Officer (COO), entered into a contract with XYZ & Co. for the supply of Product X. At the time, XYZ & Co. was not authorized to conduct business because its license was suspended due to certain irregularities in taxes paid. The COO had knowledge of this fact but still recommended that ABC & Co. enter into a contract with XYZ Co because he was secretly receiving compensation from XYZ & Co. for doing so.
- Forensic Audit can reveal cases of potential fraud as mentioned above.
What is the Role of a Forensic Accountant?
- The requirement of Forensic Accounting comes due to a high rate of white collars crimes all over the world. Like manipulated financial statements, vendor favoritism, dummy vendors/customers and other wrongdoings.
- So the role of a Forensic Accountant is to investigate such matters done by the various perpetrators whether they are internal or external persons.
- Moreover, it also helps the regulatory bodies like RBI, SEBI, MCA, SFIO, etc to investigate the matters.
- Recently, RBI has also issued a circular which states that high-value borrowers mandatorily comes under the purview of Forensic Audit.
- So you can imagine the need for Forensic Audit/ Accounting in India.
Who can Become a Forensic Accountant?
It is NOT necessary for one to be a Chartered Accountant/CPA to be a Forensic Accountant.
- Every forensic team consists of professionals from diversified areas.
- An ideal forensic team consists of- Chartered Accountants, Engineers, MBA’s, MBE’s, Lawyers, Semi Qualified Chartered Accountants, other professionals, and fresh graduates as well.
- Forensics is NOT only checking accounting records/Financial Statements. It has a wider range of services like Business Intelligence, Investigation, Asset Tracing, Anti-Bribery Measures, Dispute Resolution mechanisms, Brand Protection and a lot more.
Forensic Accounting Firms
- It is a total myth that forensic practice can be set up only by the top Chartered Accountancy / CPA firms. Other than Big 4 Accounting Firms many other small/mid-sized firms are working in the Field of Forensic Audit.
- Indian Banks Association has a list of 72 Forensic Accounting Firms.
- So if you are not getting an opportunity in a Big 4 Firm or a Big 10 Firm – Start your Forensic Accounting Journey in other equally amazing smaller firms.
What is the Career Path to Become a Forensic Accountant?
- Nowadays, since processes in every organization are technology-driven, almost all organizations have set up their own Risk Assurance Department. This department works hand in hand with the third party Forensic Auditors.
- These teams also investigate the matters/complaints made through the anonymous whistleblower letter in the organization.
- There are many organizations that also have their in-house separate Forensic Audit Team.
- Forensic Accountants/Auditors also helps investors do their due diligence, analyzing deals to check out potential fraud. They investigate bankruptcies, mergers, and acquisitions, to make sure all parties involved are showing their cards.
- Forensic accountants help law firms in divorce cases, dragging out any financial skeletons in the closet. They also work in insurance companies verifying whether claims are legitimate etc.
- In short, where there is a chance of Accounting Fraud you will find an opportunity for a Forensic Accountant.
- Also, every forensic accounting case is different. The modus operandi used by fraudsters is new to the Forensic Auditor. This ultimately creates a challenge for the forensic auditor to crack the case in the best possible manner. Thus the job of a Forensic Accountant is not boring or routine. So people usually enjoy being a Forensic Accountant/Auditor.
- Forensic Auditor/Accountant can move into a Risk Advisory Department i.e., Internal Audit division of any organization if they wish to.
The Scope of Forensic Accounting Outside India
The emergence of Forensic Accounting in India comes from other developed countries.
- So, scope-wise it is one of the emerging areas for finance professionals in India as well as outside India.
- In the US and other developed countries, there are other careers you can get into with a forensic accounting degree or forensic accounting experience. You can become a CIA Analyst, Criminalist, Expert Witness, FBI Agent, Fraud Investigator, ICE Agent, Insurance Claims Investigator, Legal Consultant, Private Investigator, etc.
What are the Forensic Accounting Certifications?
- Unlike many other professions, there are no official education requirements for Forensic Accountants.
- Mostly many Forensic Accountants / Auditors are Certified Public Accountants (CPA) and Chartered Accountants (CA).
- However, gaining the need for Forensic Accounting - Various Forensic Accounting Degree Programs are offered by the different Institutes in India and abroad. Anyone pursuing these Forensic Accounting Degrees can get a good idea on detecting fraud.
- There are many International certification courses also available to be a Certified Forensic Accountant. However, the Association of Certified Fraud Examiners (ACFE) - Certified Fraud Examiner (CFE) is the most recognized.
- The ICAI has also started one certification course - Certificate Course on Forensic Accounting and Fraud Detection.
- Also in India and globally a lot of Forensic Accounting courses can be done while still in college.
What is the Skillset required to become a Forensic Accountant?
In my personal opinion, the following qualities would be needed:
- Ethical (Personal relation and emotions cannot be allowed to influence any aspect of forensic audit)
- Must see things beyond the books and must be Curious
- Confident: The presence of a Forensic Accountant/ Auditor is not always appreciated as the outcome of their efforts could have legal serious repercussion. This, in turn, calls for an individual of unshakable confidence and conviction.
- One must be aware of the current affairs of the economy.
- Enough patience, because sometimes it takes a long time to detect the modus operandi of the fraudster.
- Must be team players - As they are likely to work in environments where they must collaborate with other professionals.
- Never Give Up Attitude
My Day as a Forensic Accountant
To be a forensic auditor, it involves a lot of client interaction. This helps us to understand the policies and processes of the organization so one could Discover and analyze things.
- Most days we have meetings with the top management of various organizations. Thus giving one great exposure to client interaction. It also teaches how different people think.
- So our day consists of a lot of Discovery and Analysis (examining the evidence) of the things we have discovered.
- All we have discovered and analyzed needs to be reported. So reporting is also another important part of my day.
- Every new day is a challenge for me to give my best to the organizations with whom I work.
Forensic Accounting Interview Tips
- One must be aware of what exactly is Forensic Accounting and how it differs from other fields of auditing.
- Must be aware of various sections of Companies Act 2013, which deals with forensic audits and frauds. For example, Section 447 which defines the meaning of fraud.
- Must also have knowledge about - Other laws like the Prevention of Corruption Act and Insolvency and Bankruptcy Code, 2016.
- Must have theoretical knowledge of Market Intelligence, IBC Act, FCPA and UK Bribery Act.
- Must also know about various financial statement frauds in India and outside India and current affairs of the economy, as a lot of frauds have been reported by the media of our country in the past few months.
- To be a forensic auditor, as I mentioned above, a lot of client interaction is involved in the profile, one must have good communication skills whether in English or Hindi.
- In our society, our knowledge is judged on the basis of our English speaking capabilities but trust me if you have proper content/knowledge you will be confident to speak to anybody on any given topic even in Hindi.
- Having a good knowledge of computer software programs, including Microsoft Word, Excel, and PowerPoint is important. This helps in gathering and analyzing information.
- Job candidates will need to learn online researching skills and the use of database management and analytical software
Now It’s Your Turn!!!
And now I’d like to hear from you:
Would you want to become a forensic accountant?
Or maybe you have a question about something you read.
Either way, let me know by leaving a comment below right now. If you have a specific question, comment below and I will connect you to Himanshu or anyone capable of helping you.