What is a forensic accountant and what do they do?

Forensic accountants can be thought of as financial detectives, investigating fraud or financial irregularities, and advising on the financial aspects of disputes (“forensic” means suitable for use in court). Accountants in this area combine their knowledge of accounting and finance with legal investigative techniques to determine if an activity is illegal.

The work of a forensic accountant ranges from fraud investigations to quantifying losses and analysing damages arising from breach of contract. They often assist in professional negligence claims where they use their experiences and analytical skills to assess the work and performance of other professionals. They may also be involved in valuing a business (or other assets) as part of a commercial negotiation or dispute, assisting with data protection issues or helping companies that have suffered (or want to prevent) cyberattacks.

Key responsibilities

Responsibilities will vary, but examples include:

  • conducting forensic analysis of financial data
  • performing research to trace funds and identify assets
  • performing interviews to extract and verify information
  • preparing reports and findings
  • preparing data for litigation
  • giving expert advice at trials.

Why are they important?

Following the financial crash of 2008, the forensic accounting career has become more prevalent. The role is likely to increase in prominence as the business environment becomes more complex and there is a greater demand for accountability as companies seek to demonstrate their commitment to financial reform.

Skills needed for this role

Excellent numerical, analytical and problem-solving skills are essential for this role, as is the ability to be discreet and objective. Forensic accountants also need to have strong communication skills and a high level of attention to detail.

Strategic Professional Options examinations linked to this role

Advanced Audit and Assurance

Career opportunities presented by this role

Compensation for the role is very good and the opportunity to set up as a sole practitioner allows for flexibility. In addition, whilst Investigations can start in the UK, enquiries may lead to international sources, meaning global travel is a possibility.

Competencies

High level competencies required include:

  • Audit and assurance

    A. Advises on and communicates effectively the role and scope of audit and assurance engagements to relevant stakeholders.

    B. Applies regulatory, legal, professional and ethical standards relating to audit and assurance engagements.

    C. Plans and prepares for audit and assurance engagements.

    D. Performs effective audit, and assurance engagements.

    E. Reviews and reports on the findings of audit and assurance engagements.

    F. Guiding efficient and effective operations.


     

  • Corporate and business reporting

    A. Prepares financial statements, corporate financial and integrated reports for external stakeholders using appropriate technology.

    B. Leads effective decision making through analysing, evaluating and communicating performance and position of entities.

    C. Prepares financial statements for groups of entities using appropriate technologies.

    D. Monitors, critically evaluates, and advises on the relevant accounting standards, regulations, conceptual and financial reporting frameworks.

     

  • Data, digital and technology

    A. Identifies strategic options to add value, using data and technology.

    B. Analyses and evaluates data using appropriate technologies and tools.

    C. Applies technologies to visualise data clearly and effectively.

    D. Applies scepticism and ethical judgement to the use of data and data technology.