They don’t carry guns or engage in car chases, but forensic accountants are among this century’s greatest crime fighters.
U.S. News & World Report listed these financial watchdogs as one of eight “careers to count on” in 2002. A rise in white-collar crime, an increase in oversight regulations and the globalization of business continue to give this occupation staying power.
“I wouldn’t have dared consider a career in law enforcement, but an investigative career that fights the kind of crime that stays on the books and papers, I thought sounded interesting,” said Jenna Green, assistant associate with Porter Keadle Moore, LLP (PKM), an Atlanta-based, full-service accounting firm.
Green was headed for a degree in marketing when she took Accounting 101 at Georgia Southern University as an undergraduate.
“My professor told me I’d be a good candidate for the university’s new forensic accounting program, so I looked into it,” said Green. She graduated with a Master of Accountancy degree with a concentration in forensic accounting in December 2008 and began work as an auditor at Porter Keadle Moore in January 2009.
“Besides the normal accounting skills, forensic accountants need that extra critical eye to look at financial records and be able to see suspicious activity [like embezzlement, theft, financial misappropriations or money laundering],” said Green. “Surprisingly, the other skill they need is an ability to read people. It’s all about interviewing and client interaction. You’d be surprised at how many people skills it takes.”
At this stage in her career, Green is doing less investigating and more prevention of fraud when she audits her clients’ books. She identifies areas where fraud could be perpetrated.
“All executives are more aware of white-collar crimes because of high-profile cases like [Bernard] Madoff’s [multibillion-dollar Ponzi scheme]. It’s important for all accountants and managers to be aware of potential fraud,” said Green. “I enjoy working with clients to help them make their company environments stronger.” She’s learned that if small-scale fraud is left unchecked, it usually escalates.
Statistics show that white-collar crimes are on the rise. The Treadway Commission has examined corporate fraud for three decades. Its study, “Fraudulent Financial Reporting: 1998-2007,” saw a rise in the number of alleged accounting fraud cases investigated by the U.S. Securities and Exchange Commission.
There were 347 cases, compared with 294 in the decade before. But the real growth was in the dollar amount involved per case. With high-profile, high-cost cases like Enron, Tyco International and WorldCom, the mean dollar figure rose to nearly $400 million per case, as compared with $25 million in the prior 10 years.
Almost all companies are susceptible to risk, according to the Association of Certified Fraud Examiners, which publishes an annual report. Its global study, the “2010 Report to the Nations on Occupational Fraud and Abuse,” estimated that the typical organization loses 5 percent of its annual revenue to fraud. Based on the 2009 gross world product, that figure translates to potential fraud loss of more than $2.9 trillion.
“Financial fraud impacts everyone by increasing the cost of living, raising the costs for goods and services and adding the need for corporate procedures to prevent and detect fraud to the cost of doing business,” said Don Berecz, director of the Center for Forensic Studies in Accounting and Business at Georgia Southern University.
Many universities offer one or two forensic courses now in their accountancy programs. “Few have a program as extensive as ours,” said Berecz. Georgia Southern offers a 10-course forensic accountancy program with two tracks. Undergraduates from a variety of majors can take five courses to complete the fraud examination track. Accounting majors can take an additional five courses as part of their Master of Accountancy degree with a specialization in forensic accounting.
The center and PKM also sponsor a Fraud and Forensic Accounting Education Conference each year. Experts from the field will gather in Savannah on June 2-4 this year.
Berecz, a former financial investigator with the FBI, said that students who want to learn the investigative process need to be curious, pay close attention to detail, and have a never-give-up attitude and good people skills.
“The fraud examiner track is interdisciplinary, and we’ve drawn students from criminal justices, IT, political science, even hotel and restaurant management, because fraud permeates all areas of society,” he said.
His graduates go on to work at accounting firms, corporate security and risk management divisions, law firms, financial consulting firms and government agencies such as the FBI or IRS.
“Forensic accountants and fraud examiners have a tangible and practical skill set that makes them very valuable in today’s market,” said Greg Esslinger, an Atlanta managing director with FTI Consulting, a global business and economic advisory firm.
A lawyer with financial skills, Esslinger spent almost six years with the FBI working in international counterintelligence and financial-related investigations.
“These skills are needed because corporations have a growing legal responsibility towards the public, their employees and shareholders to police themselves and their financial records,” said Esslinger. “Corporate accountability has grown, and the government has gotten more sophisticated about what it requires through financial reform legislation.”
The Sarbanes-Oxley Act in 2002, passed to prevent future Enron debacles, and the more recent Dodd-Frank Wall Street Reform and Consumer Protection Act of 2010 have spurred growth in accounting and auditing fields. Demand is projected to grow by 22 percent through 2018, according to the Bureau of Labor Statistics. The U.S. Sentencing Guidelines for fraudulent crimes have standardized penalties in the court system, encouraging prosecutors to go after more fraud offenders.
“As companies become more global, their obligation to ferret out fraud expands exponentially, and it creates greater challenges to be accountable across global markets,” he said.
“That means that forensic accountants and fraud examiners are going to be around for a long time and have an increasingly wide choice of career paths. Consulting firms, like ours, and accounting firms are hiring. The pay straight out of college is respectable, and the opportunities for advancement are significant,” said Esslinger.
He advises anyone interested in the field to talk to someone working in it, learn the trends and tailor their education accordingly. “This industry is complex and rapidly changing,” he said, “but I enjoy it a lot. There’s rarely a dull day.”
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