A Helpful guide: What is Forensic Accounting? What does a Fraud Examiner do?
by: Nicholas Miller, CFE, CSAR, MBA
With the popularity of television shows and movies surrounding the fields of forensic accounting and fraud, two main labels have emerged for professional titles; Forensic Accountant and Fraud Examiner. Although both professional titles perform similar functions, they should not be construed as identical. If you thought that they are interchangeable or the same, the following article will explain the similarities and differences between both professional titles as well as if you need to employ one and how to choose the right one.
Simply put, someone who specializes in Forensic Accounting is one that describes an engagement resulting from actual litigation or is performed in anticipation of litigation. Examples of these engagements include: Economic Damages Calculations, Bankruptcy, Insolvency, Reorganization, Matrimonial Disputes, Business Valuation and other financial disputes. Forensic Accountants focus on the Financial Statements and financial records of a company or individual in their engagement. A Forensic Accountant typically possesses a degree in accounting as well as being a Certified Public Accountant (“CPA”).
A Certified Fraud Examiner (“CFE”) is one that focuses on the prevention, detection and deterrence of financial and non-financial fraud. A CFE can specialize in digital forensics to health care fraud to Intellectual Property frauds. The CFE is taught not only about financial frauds, but those types of frauds that are non-financial. The CFE possesses the knowledge about various types of fraudulent schemes. A CFE is often called upon to prove or disprove if Fraud has occurred. Like a Forensic Accountant, CFEs work with engagements resulting from actual litigation or performed in anticipation of litigation. A CFE may have a degree in accounting and/or a degree in Finance, Criminal Justice, Law, or Information Sciences.
Which one do I need?
Depending on what your scenario is, you may need a Forensic Accountant and a Fraud Examiner. The Forensic Accountant is able to reconstruct the books and records within a suspected fraud, while the Fraud Examiner will be able to prove or disprove if a fraud had been committed. Many lawsuits involving financial accusations may be suitable for a Forensic Accountant, whereas if you suspect that a fraud has taken place, a Fraud Examiner is most suitable.
How do I choose?
Choosing a Forensic Accountant of Fraud Examiner is not always an easy process. Many Forensic Accountants and Fraud Examiners work side-by-side with attorneys. The following recommendations should be considered when deciding which professional to hire:
- If you have initiated a lawsuit, ask your attorney if they have used a Forensic Accountant and/or Fraud Examiner in the past and if so, how did they like them.
- Make sure the Forensic Accountant or Fraud Examiner has the proper credentials. Do you prefer if your professional possess a designation such as a CPA, CFE, CFF or possesses other certification(s).
- Search the internet for individuals and/or firms specializing in Forensic Accounting or Fraud Examinations in your area.
Ask the potential professional for a Resume and a Curriculum Vitae (“CV”) which is a more detailed presentation of the professionals experience, affiliations, honors, publications and cases.
- Last but not least, make sure that the professional you choose can relate the intricacies of accounting, law and fraud into information you can understand. You may need the professional to testify before a jury and/or judge who knows very little about the areas of accounting and fraud.
Whether it’s a business dispute, marital dispute, bankruptcy, or in need of any other financial issues, a Forensic Accountant and/or Fraud Examiner may be of great assistance. If you have questions regarding your need for a Forensic Accountant and/or Fraud Examiner, please contact our firm for a free consultation. Larry L. Bertsch, CPA & Associates specializes in various accounting related legal issues as well as bookkeeping and tax related matters as well.
Larry L. Bertsch is a Certified Public Accountant and Certified in Financial Forensics. Mr. Bertsch has been appointed numerous times as a Court Appointed Receiver, Special Master and Examiner in the Federal and State Courts. He works extensively with Attorneys regarding their needs for a Forensic Accountant or expert witness.
Nicholas Miller is a Certified Fraud Examiner and a Certified Asset Recovery Specialist. Mr. Miller has assisted in multiple Court-Appointed Receiverships, Special Masters, and Examiners on the Federal Court and District Court levels. He is active in the Digital Forensics field and works with various attorneys in deciphering their financial and digital forensics needs.