A crime fighter might not immediately come to mind when most people think about the role an accountant plays in everyday business. Yet the rapidly growing field of forensic accounting involves investigating white-collar crimes such as business fraud, improper financial reporting, and illegal investment schemes.

Forensic accounting is performed in preparation for legal review. Forensic accountants investigate an organization's accounting system to reconstruct suspicious transactions to find evidence about what actually happened. They 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 energy giant Enron Corporation collapsed, forensic accounting investigations revealed that for several years the company had issued false financial statements, which exaggerated company earnings, thereby increasing the company's stock prices. The statements painted a picture of steady and rising profits that met earnings targets andexpectations. However, in reality, Enron's own investments were performing poorly, and the company was actually losing money. Even after the truth leaked out and the company's stock prices tumbled, top management kept issuing false financial statements, hoping to camouflage the truth. In a federal trial, two former executives were convicted of conspiracy, wire fraud, and securities fraud.

Increased regulations have helped the forensic accounting services industry grow, particularly over the past decade. Forensic accountants who are able to use newer software and technology tools to identify fraudulent business practices will bring the most benefits to clients. The tools in the forensic accountant's toolkit have become much sharper.

Questions for Critical Thinking

1. Demand for forensic accountants has grown over the past decade since the economic slowdown, and following a notorious series of scandals such as those involving Enron and Bernard Madoff. Based upon the past, what would you say the industry can predict for the future?

2. How is the role of a forensic accountant different from that of an auditor? How might forensic accounting change the world of business?