THE HOTTEST JOBS For College Grads

FORENSIC ACCOUNTANTCombines accounting, auditing and investigative skills: $30,000-$150,000

LOGISTICS MANAGER Plan, implement and control flow of goods or services: $35,000-$118,000

CORPORATE LIBRARIANMore companies need specialists to manage information: $37,000-$93,000

EMERGING MEDIA SPECIALISTManagers in Web content and online marketing need communication skills and tech savvy: $26,500-$100,000

PHYSICAL THERAPISTAging baby boomers will drive the increasing need: $34,600-$74,000

INFORMATION SECURITYWorkers plan, implement and support network security: $47,000-$122,000

FORENSIC ACCOUNTING

FORENSIC ACCOUNTINGFORENSIC:Refers to items used in debate or argument.In commerce or business, things forensic are

generally those things that relate to a legal forum or court.

ACCOUNTING:“The language of business”. Quantifying data for financial purposes;

accounting refers to many activities that relate to financial accounts.

WHAT IS FORENSIC ACCOUNTING?Forensic accounting refers to:The use of accounting for legal purposes.The use of intelligence-gathering techniques and

accounting to develop information and opinion for use by attorneys involved in civil litigation and give trial testimony if called upon.

Identifying, recording, settling, extracting, sorting, reporting, and verifying past financial data or other accounting activities for settling prospective legal disputes or using such past financial data for projecting future financial data to settle legal disputes.

FORENSIC AUDIT V. FINANCIAL AUDITFinancial audit is generally a sampling activity

that does not look at every transaction. A financial audit relies heavily on a company’s

internal control system.An auditor expresses an opinion as to whether

or not the financial statements are presented in conformity with GAAP.

Forensic audit looks at the detail of a specific aspect of the records.

Forensic accountant usually brought in when fraud is suspected.

BACKGROUNDBefore financial statements were audited by

an independent auditor, the courts were often the only place where challenges were made and accounting experts were brought in to give testimony on the disputes in question.

In North America, forensic accounting can be traced back as far as 1817 to Meyer v. Sefton, a Canadian case, that allowed an ‘expert witness’ to testify in court.

FAMOUS FORENSIC CASEor

HOW AN ACCOUNTANT NABBED AL CAPONEAl Capone, bootlegger and gangster, seemed to

be impossible to arrest and convict on any crime.Although he made millions from his illegal

activities, he had never filed a tax return.The IRS ushered forensic accounting into the

modern age in the US when they went after Al Capone.

An IRS agent from the Special Intelligence Unit found enough evidence to convict Capone of income tax evasion.

Capone received an 11 year sentence.

FORENSIC ACCOUNTING COMES OF AGE

In the 40s and 50s, Forensic accountant becomes an investigative accountant, not just an expert witness.

During WWII, FBI employed 500 agents who were accountants.

In the 60s, J. Edgar Hoover emphasized fraud detection.

Today, there are more than 600 FBI agents with accounting backgrounds.

The Financial Crimes Section investigates money laundering, internet crimes, financial institution fraud and other economic crimes.

WHAT DO FORENSIC ACCOUNTANTS DO??

Investigate occupational fraud and abuse.Investigate fraudulent financial reporting.Serve as a litigation services specialist and

expert witness.Trace assets in bankruptcy or divorce cases. Consulting.Work for government agencies such as IRS,

FBI, SEC, law enforcement agencies, corporate security specialists.

Occupational Fraud and AbuseLosses from occupational fraud and abuse

has been estimated to run in the billions.Many cases are never reported.Actual cost unknown.Difficult to discover because it’s an inside

job.When fraud is suspected, the forensic

accountant may be called in to investigate.

Fraudulent Financial ReportingIn the 80s, Crazy Eddie’s.In 2001 and 2002, several major financial

statement frauds resulting in billions of dollars of loss.

Adelphia: Rigas family defrauded the company out of 3.1 billion.

Enron: more than $1 billion.Merck: $12.4 billionBristol-Myers Squibb: $1.5 billion.WorldCom: $3.8 billion.Prison time for many of the perpetrators.

Typical White-Collar CriminalLikely to be marriedMember of a churchEducated beyond high schoolNo arrest recordAge range from teens to older than 60Socially conformingEmployment tenure from 1 to 20 yearsActs alone 70% of the timeBottom Line: Given the right pressures,

opportunities and rationalizations, many people are capable of committing crime.

GOVERNMENTAL FORENSIC ACCOUNTANTS

Most common: IRS agents.Look for unreported income or disallowable

expenses.Techniques include income reconstruction and

“follow the money trail”.DEA, FBI, CIA and other governmental agencies

use forensics accountants also.Treasury department agents work hand-in-hand

with the DEA. They carry a badge and pack iron.Who better to “follow the money” than an

accountant?

COMPUTER FORENSICSAnalysis of electronic data and residual data

for the purposes of discovery, legal preservation, authentication, reconstruction, and presentation to solve or aid in solving technology-based crimes.

Most financial fraud involves a computer.Forensic accountant needs to be

technologically savvy!May employ services of a tech person to

assist in investigation.

CYBERCRIMESFraudulent spamFinancial fraudsUnauthorized accessIndustrial espionageIllegal use of encryptionCyberstalkingDenial of serviceDamaging networks or computersIllegal use of resources obtained from hacking

activities.

CYBERCRIME STATUTESInternational law: No international laws per

se, each country responsible for its own legislation. Many countries have no such laws on the books.

US Federal LegislationSee:

http://www.usdoj.gov/criminal/cybercrime/cclaws.html.These laws: outlaw “counterfeit” access devices that

are used for fraudulent purposes; deal with fraud in connection with computers, communication lines, interception of electronic communications, etc.

USA Patriot Act, passed in 2001, strengthened US cyber laws and expanded cybercrime definitions. Under the Patriot Act, an activity covered by the law is considered a crime if it causes a loss exceeding $5000, impairment of medical records, harm to a person or a threat to public safety.

STATE LEGISLATION Unique to each state.Arkansas Code Sections 5-41-203 and 5-41-

206 cover computer related crimes.

KSAs FOR FIGHTING CIBERCRIMEKSAs: knowledge, skills and abilities.Ability to build an internet audit trail.Skills needed to collect “usable” courtroom electronic

evidence.Basic understanding of the information that can be

collected from various computer logs. Ability to place a valuation on incurred losses.Technical familiarity with the internet, web servers,

firewalls, attack methodologies, security procedures, and penetration testing.

Understanding of legal protocols to prevent employee rights violations.

ROLL OF FORENSIC ACCOUNTANTWhen fraud is suspected, may be called in to

investigate.Gathers evidence.May interview witnesses.Determines suspects.Estimates losses.Serves as expert witness.CANNOT AND DOES NOT HAVE AUTHORITY TO

ACT AS LAW ENFORCEMENT OFFICER UNLESS HE/SHE IS A LAW ENFORCEMENT OFFICER.

KNOWLEDGE BASEObviously, need strong background in

accounting.Investigative auditing.Law, legal system, courts and courtroom

procedures.Criminology, criminal law and criminal

procedure.Computer skills, including computer auditing.Oral and written communication skills.

SUGGESTED COURSESMajor accounting courses.Financial statement analysis course.Taxation and business law.Technical writing.Criminology.Computer forensics.PsychologyBusiness ethics.Business valuation.