Accounting is an area that can now be defined beyond mainstream career options. One of these unique career options is that of a Forensic Accountant. The evolution of accounting is courtesy of developments in financial technology or Fintech as it is more widely known. With the aid of Fintech, many private, public, and government organizations now have a place for forensic accountants.
What is forensic accounting, you may ask? It uses accounting to analyze the financial data and identify crimes of a financial nature such as fraud, embezzlement, tax evasion, and the likes. Other than this, a forensic accountant can also work in risk management, establishing relevant safety policies, and solving complicated financial litigations. Typically, you will find a forensic accountant working in law enforcement agencies, law firms, banks, large corporations, and other government bodies.
People aspiring to be forensic accountants are attracted by career mobility, job satisfaction, the independent nature of the work, and most importantly, the handsome compensation packages. Because the job entails great responsibility and there is a lot of money at stake, companies are willing to pay more for highly skilled forensic accountants. The average forensic accounting salary falls between $79,000 and $90,000. In some cases, it can go up to $ 150,000 per annum.
Forensic accounting is pure detective work. And you should know why it is becoming increasingly popular in the contemporary business world.
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1. Prevent Financial Fraud and Embezzlement
Financial crimes within an organization are often carried out with utmost sophistication. The resulting financial loss to the company is huge and could lead to bankruptcy. Preventing these crimes is essential for promoting a lawful and fair business environment. The core job of forensic accounting is to safeguard companies from such fraudulent activities.
The most common types of fraud are corruption, asset misappropriation, and phony financial statements. To spot and prevent these crimes from happening, forensic accountants study financial statements and asset declaration reports in detail. By minimizing the possibilities of financial malpractice, forensic accountants add significantly to the reputational capital and goodwill of a firm in the open market.
2. Providing Litigation Support
Finance is a subject that is based on numbers. Unless you understand numbers and their importance, it is impossible to provide useful information about what these digits tell in the greater context of things. Sometimes, businesses find themselves in hot water due to a financial dispute. At this point, a forensic accountant provides far greater assistance than lawyers in resolving cases.
Forensic accountants also provide their services as a financial detective in civil cases outside of the corporate world. Prosecutors and attorneys often take assistance from forensic accountants to discover undeclared assets or income.
3. Developing Risk Management Policies
The rise in innovative technology has also impacted the ease with which financial crimes are carried out. To secure themselves against cybercrime, embezzlements, and other fraudulent activities, companies are now making risk management policies to prevent such crimes from happening in the first place. A simple accountant or an auditor does not have the required set of skills to do this. Instead, large corporations now seek a forensic accountant’s help for the job, thus increasing their demand in the market.
The first step in forensic accounting is to evaluate the company from top to bottom and identify irregularities and loopholes. Then, the forensic accountant drafts new policies to secure business interests and prevent financial crimes from happening. Developing an action plan for an ill-fated event in the future is also part of the job.
4. Assisting Government Investigations
It is safe to say that political corruption has damaged economies and societies beyond repair. And this cancer has only increased in recent times. As a result, governments worldwide take assistance from forensic accountants to reveal corruption and embezzlement done at the state level. However, the outcome of politically motivated investigations is questionable and often nullified by the vested interests of influential individuals and power groups.
Although Fintech has brought convenience to stakeholders, it has raised some serious problems for private and public organizations too. Forensic accounting provides a solution to this problem and helps in the overall risk management of the company. It is also a financially rewarding job, where you have several career opportunities and a clear growth path.
To be a successful forensic accountant, you must possess a specific set of skills. Organizations seek skills like data science, data analysis, and data visualizations. These skills will allow you to sort through a collection of financial data more effectively. Several colleges and universities offer high-rated degrees in forensic accounting, both offline and online, allowing greater flexibility as you study to become one. So, does the world of financial crime excite you? Do you want to be a part of an elite club of highly skilled and in-demand professionals? Do you want to be a forensic accountant?