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About Forensic Accounting

India has recently seen some of the biggest financial frauds in corporate history - the Satyam Scam in 2009 for Rs. 14,000 crores, Vijay Mallya’s Rs. 9,000 crores King fisher Airlines Scandal and the latest Nirav Modi’s Rs. 11,400 crores PNB Scam.

Forensic accountants have a big hand in unearthing these scams and then gathering strong tangible evidence to put the culprits behind bars. Forensic Accounting is a niche area of investigation for white-collar crimes. Itis a field of study that combines accounting, auditing, and investigative acumen to scrutinize a company’s financial statements. In short, forensic accountants are trained to offer accounting analysis from a litigation perspective.

Forensic accounting includes business fraud investigation, partnership and shareholding dispute, insurance claims, economic losses, personal insurance and even matrimonial cases (since forensic accounting assesses losses and thereby financial compensation, it is relevant in cases of divorce and to determine adequate compensation for spouse and child support.)

Auditing and forensic accounting are often confused because of the similarities in the nature of the jobs. However, auditing aims at error detection and prevention and does not involve litigation, while forensic accounting aims at fraud detection and the investigation carried out is documented and presented for litigation purpose.

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To become a forensic accountant, you must have a Certified Public Accountant (CPA) certification. You can also become a specialist by taking certification programs like Certified Forensic Accountant (CR.FA), Certified Fraud Examiner (CFE) and Certified in Financial Forensics (CFF). A forensic accountant can specialize in computer forensics, bankruptcy fraud, insurance claims and personal injury.

The course curriculum of these certification programs include financial & forensic accounting, financial frauds investigation, criminology and ethics, legal framework for forensic accounting, forensic audit interviews, case studies on banking frauds, Indian & international laws, IT Act with respect to business laws, mathematical quantification, digital forensics and cyberlaw, ethical hacking, and digital incident response.

In general, following are the organizations with offer certifications for forensic accounting:

Association of Chartered Certified Forensic Accountants
National Association of Forensic Accountants
The Institute of Certificate Forensic Accountants
Association of Certified Fraud Examiners
Forensic CPA Society

In India, the best path to follow a career in forensic accounting is to first acquire a bachelor’s, then a master’s degree (optional) in forensic accounting, accounting, finance or a related field. An additional qualification in criminal justice or law enforcement is alwaysan added advantage. You must then apply and study one of the specialized courses for forensic accounting.

ICFAI Tripura offers a 2 years post graduate diploma in Forensic Accounting course. The Institute of Chartered Accountants of India also offers a certificate course on Forensic Accounting and Fraud Detection. A minimum of a bachelor’s degree along with three years of experience in the similar field is required for admission to this course. After completing the course, aspiring forensic accountants must appear and clear the CFPA examination. Indiaforensic Consultancy Services (ICS), a specialist organisation in forensic accounting education offers 7 certification programs in digital banking, investigative accounting, compliance and money laundering.

The Association of Certified Fraud Examiners (ACFE) also offers a Certified Fraud Examiner (CFE) course. The course prepares you for the CFE Exam through instructor-led and self-study modules.

Few colleges in the UK like Sheffield Hallam University and the University of South Wales offer undergraduate Forensic Accounting BA (Hons) programs. Others like the University of Portsmouth offer a 1-year postgraduate Forensic Accounting MSc degree. Most forensic accounting university courses in the US are postgraduate degrees. The University of Albany, State University of New York offers a Master’s of Science in Forensic Accounting course. The Golden Gate University offers an MS/MSc./MA in forensic accounting and the St Thomas University offers a Master of Accounting (MAC) - Specialization in Forensic Accounting 30 credit hour course.

India

Duration: 7 Days - 2 Years

Fee per course/annum: ₹ 20,000 - 30,000

USA

Duration: 1 Years/30 credits

Fee per course/annum: USA $22,000 - $27,000

UK

Duration: 4 weeks - 3years

Fee per course/annum: £12,000 – £14,000

Career Prospects

As a part of the training, professionals in this field accumulate knowledge in the field of white-collar crimes, money laundering, insurance claims, GAAP or GAAS violations, telemarketing/contract and procurement/ securities/ financial statement/ bankruptcy/ credit card fraud, asset misappropriation, embezzlement, financial data and evidence integrity analysis, etc. In the US, forensic accountants after being hired by the FBI, undergo a six weeks training program in areas including financial investigation techniques, testifying as an expert witness and legal training.

Generally, the job of forensic accountants involve accumulating financial evidence, organizing the collected information and communicating their findings in court through reports and presentations. Forensic accountants have a major role to play in big criminal and civil cases. Often, forensic accountants in India are required for investigating:

  • RBI Red Flagged Accounts
  • Serious Fraud - an investigation office setup under the
  • Ministry of Corporate Affairs
  • Economic Offences Wings
  • Multi-national companies

In the US, forensic accountants find employment in:

  • State or federal law enforcement agencies
  • Federal Bureau of Investigation (FBI)
  • The United States Secret Service
  • Public accounting firms
  • Large corporations
  • Many forensic accountants with specialization have their own
  • consulting business.
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Jobs & Salary

Forensic accountants generally work on a 40 hour per week schedule, extended only at times when preparing for a court appearance, for a trial or during the tax season. Some of the popular job titles for forensic accountants are

Certified Forensic Accountant
Certified Fraud Examiner
Investigative Accountants
Investigative Auditors

In India, the big four auditing firms (BIG 4) ( KPMG, Ernst & Young LLP (EY), Deloitte and Price waterhouse Coopers) are in the list that is empanelled by the Indian Banks’ Association (IBA) to do a forensic audit of frauds in banks. Besides these four companies, some of the other top employers of forensic accountants in India are:

BMR Advisors
Chokshi and Chokshi LLP
Grant Thornton
Mukund M Chitale and Co.

In India, the big four auditing firms (BIG 4) ( KPMG, Ernst & Young LLP (EY), Deloitte and Price waterhouse Coopers) are in the list that is empanelled by the Indian Banks’ Association (IBA) to do a forensic audit of frauds in banks. Besides these four companies, some of the other top employers of forensic accountants in India are:

Grant Thornton LLP
BDO USA LLP
RSM US LLP
Crowe Horwath LLP
Baker Tilly Virchow Krause, LLP
Moss Adams LLP

Due to increase in stringent federal/national and state regulations concerning financial disclosures and dealings, forensic accounting jobs are seeing strong growth. In US, the salary for forensic accountants ranges between $5,200 and $8,400 a month with the average salary being $6,750 a month.

In India, the starting salary of a forensic accountant is between Rs.25,000 – Rs. 30,000 a month. On an average, a fraud investigator with a few years of experience makes around Rs. 100,000 a month. A forensic accountant makes around Rs. 60,000 a month.

Pros & Cons

As lucrative as the growth prospects are for a forensic accountant, it requires many years of studies, certifications and work experience to make it big in this field. Besides the technical qualifications, one must have an analytical mind, be detail-oriented, ethical, inquisitive and intuitive to be successful in this profession.

Pros
  • Forensic accountants are in high demand due to their specific knowledge and skills
  • It is a highly respected and a well-paying job
  • You will always be updated with the latest in accounting technology
Cons
  • Forensic accountants are under a lot of pressure since their testimonies can mar reputations
  • Forensic accounting investigations are complex and time-consuming
  • Extensive work experience is required even before you get certified as a forensic accountant

Famous Personalities

Cynthia Cooper

An American accountant who was named as one of three ‘People of the Year’ by Time magazine in 2002, is famous for being the whistleblower of the WorldCom accounting scandalwhen she served there as the Vice President of Internal Audit. In 2002, along with her team, Cooper investigated and discovered $3.8 billion in what became the largest incident of accounting fraud in U.S. history.

Joseph Gutheinz

TAn American attorney, Joseph Richard Gutheinzwas aformer Army intelligence and Federal law enforcement officer and is known for leading the Omniplan task force investigation where a NASA contractor (Omniplan) was submitting false claims to NASA. Along with his task force of 25 agents, inspectors, auditors and a financial analyst, Gutheinzhelped solve the case which led to the closure of 7 companies, making it one of the largest count conviction in NASA history.

Harry Markopolos

An American independent forensic accounting and financial fraud investigator, Harry Markopolos was the whistleblower of the Bernard Madoff scandal. Through evidence that spread over nine years, he discovered that Bernard L. Madoff Investment Securities LLC was a massive Ponzi scheme. Markopolos alerted the U.S. Securities and Exchange Commission (SEC) about the fraud. The evidence was later used to convict Madoff for 150 years in prison.

Timeline

1919 Charles Ponzi begins his infamous financial scheme which eventually bankrupts 6 banks and defrauds $20 million from investors

1946 The term Forensic Accounting is coined

1970 FBI hires accounting experts to solve money related cases

1991 CPA start givingout forensic accounting certifications

2001 Enron is discovered to have committed a $31.8 billion financial fraud

2002 WorldCom files the largest bankruptcy claim in history

2009 AICPA issues more than 3500 CFF certifications to forensic accountants

2013 In India, a Ponzi scheme run by Saradha Group collapses resulting in the embezzlement of Rs. 2,500 crores.

2018 Punjab National Bank gets embroiled in frauds related to Letter of Undertaking worth Rs. 11,600 croreslinked to jewellerNirav Modi of Firestar Diamonds

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