Chapter 2

Careers in Fraud Examination and Financial Forensics

Forensic Accounting and Fraud Examination

by Mary-Jo Kranacher, Richard Riley, Joseph T. Wells

Prepared by Richard J. Campbell

Copyright 2011, Wiley and Sons

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Learning Objectives2-1 Discuss employment trends in fraud examination and financial forensics and the reasons for these trends.

2-2 Identify employment opportunities for fraud examination and financial forensics specialists and other related professions.

2-3 Define the role of fraud examination and financial forensic skills related to management and those charged with corporate governance responsibilities.

2-4 List professional organizations that support fraud examination and financial forensics professionals and their certifications.

2-5 Discuss international opportunities in fraud examination and financial forensics.

2-6 Describe the role of education in fraud examination and financial forensics.

2-7 Explain the role of research in the fraud examination and financial forensics professions.

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2-1

Background

Learning Objective 2-1

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2-2

Recent corporate accounting and financial scandals have led to increased legal and regulatory requirements, such as the Sarbanes–Oxley Act of 2002 and the Emergency Economic Stabilization Act of 2008 (EESA).

There is also a growing demand for forensic and litigation advisory services.

The demand for students who have specialized qualifications in fraud and financial forensics has grown significantly and is likely to continue to grow.

PLACES WHERE FRAUD EXAMINERS AND FINANCIALFORENSIC SPECIALISTS WORK

Learning Objective 2-2

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2-3

Professional Services Firms Public and Private Companies Regulatory Agencies Government and Nonprofits Law Enforcement Agencies Law Firms

Career Paths

Learning Objective 2-2

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2-4

Figure 2-1

Related Professions

Learning Objective 2-2

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2-5

Law Psychology Sociology Criminology Intelligence Information Systems and Computer

Forensics Information Systems Governance and

Controls

Related Professions (continued)

Learning Objective 2-2

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2-6

Cyberforensics Digital Evidence Electronic Detection and Investigation Cybercrime

Related Career Titles

Learning Objective 2-2

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2-7

BUSINESS ADMINISTRATION, MANAGEMENT,AND CORPORATE GOVERNANCE

Learning Objective 2-3

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2-8

Boards of Directors - One of the primary roles of the board of directors in corporate America is to create a system of checks and balances in an organization through its authority to hire and monitor management

Audit Committees - The audit committee is a subcommittee of the board of directors and has the primary responsibility of monitoring the financial reporting and auditing processes

Senior / Executive management - Management is primarily responsible for the quality, integrity, and reliability of the financial reporting process

BUSINESS ADMINISTRATION, MANAGEMENT,AND CORPORATE GOVERNANCE (continued)

Learning Objective 2-3

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2-9

Internal audit - Internal auditors are an important part of corporate governance and, if assigned, can be tasked and positioned to help ensure a reliable financial reporting process

External (independent) auditors - Financial statement fraud has been, and continues to be, the focus of the auditing profession

Regulators and governing bodies - Regulatory reforms in the United States are aimed at improving the integrity, safety, and efficiency of the capital markets while maintaining their global competitiveness

PROFESSIONAL ORGANIZATIONS AND THEIR RELATEDCERTIFICATIONS

Learning Objective 2-4

Association of Certified Fraud Examiners (ACFE) - The ACFE is the world’s premier provider of antifraud training and education.

Certified Fraud Examiner (CFE) - The CFE credential denotes expertise in fraud prevention, detection, and deterrence

American Institute of Certified Public Accountants (AICPA) - The CPA is still one of the most recognized and valued professional certifications of any profession and is the standard bearer for accountants working in the United States

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2-10

PROFESSIONAL ORGANIZATIONS AND THEIR RELATEDCERTIFICATIONS (continued)

Learning Objective 2-4

Accredited in Business Valuation (ABV) - The ABV credential program allows credential holders to brand or position themselves as CPAs who are premier business valuation service providers.

Certified Information Technology Professional (CITP) - A Certified Information Technology Professional (CITP) is a certified public accountant recognized for technology expertise

Certified in Financial Forensics (CFF) – this credential combines specialized forensic accounting expertise with the core knowledge and skills that make CPAs among the most trusted business advisers.

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2-11

PROFESSIONAL ORGANIZATIONS AND THEIR RELATEDCERTIFICATIONS (continued)

Learning Objective 2-4

Forensic Certified Public Accountant (FCPA) - An individual must be a licensed CPA, CA (Chartered Accountant) or another country’s CPA equivalent to be eligible to take the five-part certification test and receive the FCPA designation.

Information Systems Audit and Control Association (ISACA) - ISACA has become a pace-setting global organization for information governance, control, security, and audit professionals

Certified Information Systems Analyst (CISA) Certified Information Security Manager (CISM).

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2-12

PROFESSIONAL ORGANIZATIONS AND THEIR RELATEDCERTIFICATIONS

(continued)

Learning Objective 2-4

Institute of Internal Auditors (IIA) – sponsors the Certified Internal Auditor.

National Association of Certified Valuation Analysts (NACVA)

Society of Financial Examiners (SOFE)

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2-13

A Continuum of Knowledge, Skills, and Abilities

Learning Objective 2-4, 5

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2-14 Figure 2-2

Prerequisite Knowledge and Skills

Learning Objective 2-6

Basic accounting concepts Basic auditing concepts Transaction processing cycles and

control environment Basic finance and economics Business law concepts General business communication skills

and business ethics Basic computer skills

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2-15

In-Depth Course Material

Learning Objective 2-6

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The Role of Research in a Profession

Learning Objective 2-7

The long-term success of any professional endeavor is derived from three sources: research, practice, and education.

Research questions include:• Is the incidence of fraud increasing, or decreasing?

• What types of fraud are being committed?

• What is the cost of fraud?

• How is fraud committed?

• How is fraud detected?

• What are the victim profiles?

• What are the perpetrator profiles?

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Copyright

“Copyright © 2011 John Wiley & Sons, Inc. All rights reserved. Reproduction or translation of this work beyond that permitted in Section 117 of the 1976 United States Copyright Act without the express written permission of the copyright owner is unlawful. Request for further information should be addressed to the Permissions Department, John Wiley & Sons, Inc. The purchaser may make back-up copies for his/her own use only and not for distribution or resale. The Publisher assumes no responsibility for errors, omissions, or damages, caused by the use of these programs or from the use of the information contained herein.”

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