Reference no: EM13325613

Case Study - Forensic Accountants: Fraud Busters

When most people think of accountants, they usually don't think of crime fighters. But that's exactly what forensic accountants are. People who work in this growing field investigate such white-collar crimes as business fraud, improper financial reporting, and illegal investment schemes.

Forensic accounting is accounting performed in preparation for legal review. Forensic accountants take the skeptical view, investigating below the surface of an organization's accounting system to find out what actually happened. They may also testify as expert witnesses if a case goes to trial. The job requires a bachelor's degree in accounting and CPA certification, with further training in investigative techniques for certification as a certified fraud examiner (CFE) or a certified forensic accountant (CrFA).

When the energy giant Enron Corporation collapsed, forensic accounting investigations revealed that for several years, company executives had issued false financial statements that exaggerated the company's earnings and thereby increased the firm's stock prices. The statements painted a rosy picture of steady profits those met earnings expectations. In reality, Enron's own investments were doing badly, and its profits were nonexistent. The company was actually losing money. Even after the truth began to leak out and the company's stock prices fell, the executives continued to issue false financial statements in the hope of slowing the fall. In federal trial, two former executives were convicted of conspiracy, wire fraud, and securities fraud.

Forensic accounting is a rapidly growing profession. Each year, conferences are help around the nation focusing on issues faced by forensic accountants. RGL Forensics recently posted 10 percent growth during one year and has been named the fastest-growing forensic accounting firm in the United States. "Growth in accounting is dependent on changing with the market," notes RGL Forensics CFO Angie McPhee.