Training to be a contender in forensic accounting: Have a well-rounded repertoire

Forensic accountants are the mixed martial artists of the accounting world.

Hello, northern neighbours:

All feels right in the world … my beloved Hawks sit atop the NHL and all Canadian clubs are enjoying excellent seasons. However, I would like to turn my attention to another favorite sport, Mixed Martial Arts (MMA). My favorite mixed martial artist, by far, is Montreal’s own Georges “Rush” St. Pierre AKA “GSP”. GSP is a world-class striker, kick-boxer, jiu jitsu artist, and karate and wrestling expert. What, you ask, does this have to do with forensic accounting? The answer is simple; Forensic Accountants are the mixed martial artists of the accounting world.

GSP started as a champion in karate and jiu jitsu. With diligence, training and experience he expanded his skill set to include the other disciplines. Forensic accountants typically start their careers and develop expertise in one specific area. These areas could include auditing, tax, financial planning and even information technology. This base skill set is critical to success but the development of world class skills in the other areas of forensic accounting are just as important. Two areas in particular have become increasingly valuable in forensics: information technology (IT) and interviewing skills.

For the last decade, the accounting profession has pushed the “paperless office”. Accounting software programs not only do much of the thinking and analytics but also store much of the data. For a forensic accountant who relies on data to find facts, the ability to acquire the data and interpret the data is a must. The field of computer forensics and electronic discovery is the single fastest growing niche in forensic accounting. Accountants like the aspiring mixed martial artist must train and develop their IT skill sets in order to compete successfully.

Armed with thorough knowledge of accounting information systems, the forensic expert has insights into ways to circumvent internal controls. Additionally, the forensic accountant can understand how a series of seemingly innocuous journal entries can have a material impact on the financial statements. Advanced IT in the form of computer forensics identifies metadata; the data surrounding the properties of an electronic document. For example, the questions “who created this file, who has access to this file, who has changed this file, and when did this all occur” can be answered in the metadata. This “world-class” level of forensic accounting bears world class results in getting to the facts.

These days, a mixed martial artist who excels in only a few areas risks having his weaknesses exposed. Similarly, the forensic accountant has to know more than just debits, credits and “IT”. You must be versatile and excel in all facets of the sport. Interviewing techniques are a key component of any financial investigation. My mentor, a 25 year government agent, taught me that an effective interview can save thousands of dollars in number crunching. The ability to ask the right person the right question at the right time can lead to information that makes or breaks the investigation. Identifying the right witnesses is crucial and keep in mind that IT and interviewing techniques intersect when you interview the one witness who never lies – the computer. Training in investigative techniques is available and these skills need to be applied to develop a well-rounded repertoire.

There are many other areas of training that a forensic accountant can acquire. I have focused on two critical areas that I use daily in my practice, but I also need to have advanced knowledge of business valuation, income tax, economics, psychology, sociology, and of course I must be fluent in guidelines and standards for all areas of accounting.

As I have previously stated, it is critical that a forensic accountant has the core strength of accounting. Knowing your debits and credits, financial reporting and income tax implications are a given in forensic accounting. If you really seek world class status you have to become an expert in many areas. MMA commentators unanimously agree that GSP, with no background in wrestling, with his innate athletic ability (his core strength), could now compete for an Olympic medal based on the skills he has acquired to further his career. As accounting frauds become more ingenious and complicated, the true forensic professional has to raise their game to meet the challenge. So if forensics is a field that you are considering, be prepared for continuing, extensive and rigorous training.

While there is no “undisputed world champion” in forensic accounting, the thrill of uncovering and prosecuting fraud definitely rivals a knock-out or submission. 

What training and expertise to you think today’s forensic accountant needs to succeed?

Brad

About the Author

Brad Sargent, CPA, CFF


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