Courses to Take to Become a Forensic Accountant
Fraud can be a huge problem for a business or a government entity, and that problem is growing. Most frauds involve financial matters, so the most logical people to investigate them are accountants. Forensic accountants are specially trained to investigate and report fraud in relation to legal cases. If you want to tap into this growing career field, here are some courses to take and certifications to consider so you can be at the top of the forensic accounting pack.
You want to first study accounting, of course. Taking a variety of courses in financial and advanced accounting, as well as one or two courses in auditing, is essential. Then, you want to supplement your accounting knowledge with other courses:
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Forensic accounting: If your school has a forensic accounting course, take it! You'll learn about forensic techniques, internal controls, and legal issues.
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Computers: You must be proficient in such common programs as Word, Excel, Access, and PowerPoint. When you investigate fraud, you use these programs to perform your analysis, write reports, and present your findings. Also, your targets (individuals and companies that you investigate) use these programs, and you must know how to navigate through complex files and find the frauds.
You also need to know about accounting software (such as QuickBooks, Peachtree, SAP, and Oracle) because your targets will keep their accounting records using such software.
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Law: Knowing business law is invaluable for a forensic accountant so you can know if certain transactions are legal and be familiar with the Uniform Commercial Code (a federal act that governs sales and other commercial transactions throughout the United States). Knowing the basics of civil and criminal law is useful as well.
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Statistics: Knowing statistics and the principles of chance or odds will help you determine the true rate of errors and defalcations (the amount of money that has been misappropriated) in the transactions you examine.
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Economics: Understanding incentives that lead people to commit fraud requires knowing something about economics. Behavioral economics is a growing field today. Additionally, knowing economics helps in quantifying damages in civil litigation.
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Psychology: Accounting is as much about people as it is about numbers. Clients tell accountants about their problems with employees, customers, spouses . . . You need to learn how to handle being a confidant and advisor.
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Ethics: When you encounter situations where someone's actions are within the limits of the law but are still wrong, what do you do? A study of ethics can help.
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Languages: Never underestimate the value of speaking a second (or third or fourth) language. If a criminal speaks a language other than English, the investigator should as well.
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Criminology: Studying crime, criminals, and corrections will help you understand how the fraudsters you are up against work, why they do what they do, and how they interact with the people around them.
Accounting Glossary
accounting equation
The equation Assets = Liabilities + Equity, which demonstrates the two-sided nature of accounting and is useful for explaining the concept of double-entry accounting (or double-entry bookkeeping).
Accounting Glossary
accounting period
The time period for which financial information is being tracked in a business, such as monthly, quarterly, or annually.
Accounting Glossary
accounts receivable
An account that records the amounts that customers owe to a business.
Accounting Glossary
adjusting entry
A correction made to a bookkeeping account that adjusts for accounting errors or other necessary changes at the end of the accounting period.
Accounting Glossary
cash flows
Used to describe the source or sources of cash or how cash is used.
Accounting Glossary
Chart of Accounts
A list of all the accounts used by a business, including what types of transactions go into each account.
Accounting Glossary
debit
An accounting entry that increases an asset or expense account, and decreases a liability or income account.
Accounting Glossary
dividends
A portion of a company’s profits paid by share of common stock on a quarterly or annual basis.
Accounting Glossary
FASB
Financial Accounting Standards Board. FASB is the highest-ranking authority in the private (non-government) sector of the U.S. for making pronouncements on GAAP and for keeping accounting standards up-to-date.
Accounting Glossary
Federal Unemployment Tax
In the U.S., the fund that used to be known simply as Unemployment. Employers contribute to the fund, and states also collect taxes to fill their unemployment fund reserves. (The acronym FUTA means Federal Unemployment Tax Act.)
Accounting Glossary
fidelity bonds
A type of insurance — typically carried by employers for their employees — that helps guard against theft and reduce the risk of loss.
Accounting Glossary
FIFO
First-in, first-out. A method for costs of goods sold in which a business charges out product costs to cost of goods sold expense in the chronological order in which the goods were acquired.
Accounting Glossary
fungible
Describes a product that is interchangeable and virtually indistinguishable from another product.
Accounting Glossary
General Ledger
A summary of all of a business’s accounts and transactions.
Accounting Glossary
IASB
International Accounting Standards Board. The IASB (based in London) is the main authoritative accounting standards setter outside the U.S.
Accounting Glossary
Journals
The location in which bookkeepers keep records (in chronological order) of daily company transactions.
Accounting Glossary
LIFO
Last-in, first-out. A method for costs of goods sold that selects the last item you purchased first, and then works backward until you have the total cost for the total number of units sold during the period.
Accounting Glossary
LLP
Limited liability partnership. A legal structure that state laws offer to qualified professionals in which all the partners have limited liability.
Accounting Glossary
PC
Professional corporation. A legal structure that state laws offer to qualified professionals who otherwise would have to operate as an unlimited partnership liability.
Accounting Glossary
petty cash
A cash account that businesses keep on hand for unexpected expenses.
Accounting Glossary
revenue
Monies that are collected in the process of selling a company’s goods and services.
Accounting Glossary
salvage value
The amount that an asset is worth after it has been fully depreciated.
Accounting Glossary
statement of cash flows
A financial statement that summarizes a business’s cash inflows and outflows during an accounting period.
Accounting Glossary
transactions
Economic exchanges between a business or other entity and the parties with which the entity interacts and makes deals.
Accounting Glossary
worker’s compensation insurance
A type of insurance carried by employers that covers its employees in case they are injured on the job.
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