The profession of forensic accounting is relatively new, with credentialing from the American Institute for Certified Public Accountants (AICPA) first being offered in a Certified in Financial Forensics (CFF) certification program in 2008. The forensic accounting profession is an expanding niche where services generally involve:

  • The application of specialized knowledge and investigative skills possessed by Certified Public Accountants (CPAs)
  • Collecting, analyzing and evaluating evidential matter
  • Interpreting and communicating findings in the courtroom, boardroom, and other legal/administrative venue

These services are typically be used in fraud prevention, economic damages calculations, bankruptcy or insolvency, family law, financial statement misrepresentation, valuation, and computer forensic analysis.

According to the AICPA, fundamental forensic knowledge required to be an effective forensic accountant, including:

  • Professional responsibilities and practice management
  • Laws, courts and dispute resolution
  • Planning and preparation
  • Information gather and preservation (documents, interviews/interrogations, electronic data)
  • Discovery
  • Reporting, experts and testimony

These are in addition to the core CPA skills of:

  • Education, training and experience with generally accepted accounting principles (GAAP) and its application
  • Attest services
  • Tax
  • General knowledge of business law and ethics

All of this information is covered in the article by Davis, Farrell, and Ogilby, in which they research the “current perceptions of what it means to be an effective forensic accountant.” There were three types of responders CPAs working primarily as forensic accountants, attorneys who hire CPAs, and accounting professors. The researchers wanted to look if there were any variances between the perceptions of forensic CPAs and accounting professors versus the attorneys who hire forensic CPAs in regards to:

  • Essential traits and characteristics for a forensic accountant
  • Core skills that a forensic accountant needs to possess
  • Most relevant enhanced skills that a forensic accountant should posses
  • Most frequent reasons why forensic accountants are ineffective

Overall the findings presented similarities in the perception of essential traits, the importance of credentialing between the respondents. On the other hand, the research indicated larger differences between the respondent groups regarding core skills, enhanced skills, and reasons why forensic accountants are ineffective (only pertains to attorneys and CPAs). Analytical was the number one trait among the respondent groups, and the groups shared identification of ethical as an essential trait.  Attorney’s identified the top two core skills as “oral communication” and “simplifying the information”, with professors having neither ranked out of their top five and CPAs ranking oral communication as third. As for enhanced skills, all groups identified “analyze and interpret financial statements and information” and “fraud detection” within their top five, but demonstrate a difference in perceptions with the remaining rankings.  The implications for this demonstrate the need for accounting professors and academia to increase focus on the needs of the forensic accounting market in order to prepare future graduates. The most important difference between respondent group answers is the perception of reasons why forensic accountants are ineffective. The top two answers from attorneys are “inability to simply the information” and “ineffective oral communication” Attorneys, who hire forensic accountants, use them in expert testimony during legal proceedings, so if a forensic accountant is unable to communicate and simply complex financial information for juries, then they are essentially useless.

I believe the findings of this research are important, as I previously noted, for academia because of the rapid expansion of forensic accounting and the needs of accounting graduates. Being able to align the needs of those hiring forensic accountants, and the skills of forensic accountants, increases the continued viability of forensic accounting as a profession. The article does provide a look at forensic accounting educational issues, which I found to be particularly interesting. The researchers questioned the professor and CPA respondent groups regarding types of resources that would provide an effective education for a forensic accountant. “Case studies” and “Traditional classroom educational programs” were close in strength of response as the effective education, indicating it is perceived that a combination of case study examination within the traditional classroom provides the most effective education. As forensic accounting continues to expand and demand increases, academic accounting programs will need to develop curriculum to match.

Source: http://www.aicpa.org/InterestAreas/ForensicAndValuation/Resources/PractAidsGuidance/DownloadableDocuments/ForensicAccountingResearchWhitePaper.pdf