Opportunities for Forensic Accountants Exploding
Last month, the FBI announced it was investigating 14 corporations involved in subprime lending as part of its Subprime Mortgage Industry Fraud Initiative launched last year. The companies in question come from the financial services industry, including mortgage lenders and investment banks that bundle loans into securities which are sold to investors. The FBI also says it is looking at insider trading by some executives. Forensic accountants are among the professionals the FBI has enlisted to work on the investigations, according to AccountingWeb.com.
Amid the current subprime crisis as well as a slew of recent accounting scandals, forensic accounting has become a hot field that’s getting hotter. Membership in the Association of Certified Fraud Examiners (A.C.F.E.), which was founded only in 1988, has increased by more than 50% since 2003 to 43,000 members, according to Conde Nast Portfolio.com. Executive search firm, A.E. Feldman, says that CPAs looking for forensic accounting jobs are in a prime position to capitalize on the surge in demand. The recruiting firm adds that the CFE (certified fraud examiner) has emerged as the “gold standard” in the area of fraud. The certification not only opens doors for qualified candidates, but also commands a higher salary.
The FBI is currently investigating fraud allegations against Countrywide Financial, according to The Wall Street Journal. The probe will examine Countrywide’s underwriting and mortgage origination and securitizations processes to find out whether or not the company misrepresented losses related to subprime loans.
When the FBI, the DOJ, law enforcement agencies, courts, lawyers and accountants want assistance in uncovering economic crimes, they are increasingly turning to forensic accountants, according to AccountingWeb.com.
Forensic accountants conduct investigatory accounting work in preparation for prosecution and litigation. They identify evidence of irregularities in financial statements and non-financial records and build compelling cases for what that evidence shows. Forensic accounting requires familiarity with both criminal and civil law. They must use hundreds of techniques from statistics to psychological profiles. Today, accountants are also involved in estimating and evaluating risk management. Additionally, they are increasingly part of the team that helps senior management determine appropriate risk.
FTI Consulting, the global business advisory firm, says that opportunities in forensic and litigation consulting will be significant in 2008 as litigation surrounding the global credit crisis and turmoil in the financial markets has started to provide multiple engagements. The firm says the issues involved include valuation of complex financial instruments, financial statement reporting and investigations into business practices.
