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Adding value with a specialized graduate business degree
With the divestment of consulting arms by the big four auditors, forensic accounting services have become the preserve of many second-tier practices. But the potential is there for small practices in small business and partnership disputes that are often referred by solicitors to the biggest accounting firms. Ken James is looking to turn that situation around by introducing forensic services into his practice. He says, “success will depend on experience, exposure and recognition,” and for him the first step was to get a recognized qualification, essential to assert credibility in court.
According to Professor D. Larry Crumbley, founder and editor of the Journal of Forensic Accounting, a staggering 6% of all organizational revenue is lost to fraud. Most often, fraud is only uncovered by accident or because the perpetrator’s colleagues tip off the organization. Internal and external audit provide the most reliable method of uncovering and tracing fraud but auditing, unlike forensic accounting, isn’t undertaken with evidence standards and legal outcomes in mind. Providing reports that will stand up in court and delivering those reports as an expert witness is the job of the business forensics specialist.
Fraud is only one of the reasons for business forensics experts to get out of bed each day. Determining economic loss and business valuations arising from commercial disputes are also part of the business forensics portfolio. Investigating fraud, forensic accounting work is like a coronial investigation – looking for small pieces of evidence that might indicate criminal malfeasance. It’s not quite CSI but an investigative mindset and preparedness to think like a criminal are a part of the role. The real substance of the business forensics role, though, is preparing reports for court and acting as an expert witness. If auditing reports or valuations appear to be based on assumptions, they will not stand up in court.
Forensic services use accounting, auditing and investigative skills primarily to provide advice on legal matters. Typically, the advice sought from forensic specialists is used to determine economic loss and/or business valuations arising out of commercial disputes or criminal behaviour. If these matters come before the courts, as they often do, the forensic specialist may be called to appear as an expert witness. According to Wikipedia, “Forensic accountants utilize an understanding of business information and financial reporting systems, accounting and auditing standards and procedures, evidence gathering and investigative techniques, and litigation processes and procedures to perform their work.”
Business forensics specialists usually come from an accounting or auditing background. The skills and knowledge they require lie in the intersection between accounting, auditing, law and criminology. Specific understanding of legal processes, business valuation methods, investigative techniques and information technology are all important first and second tier accounting firms are facing increasing demand for forensic services so many auditors are facing forensic work demands. In the Australian context, forensic accounting is currently taught at graduate certificate or Masters level for practitioners and degree-qualified accountants at QUT, with a Master of Business (Forensic Accounting), University of Melbourne Graduate with a Certificate in Business Forensics, the University of Wollongong, Graduate Certificate in Forensic Accounting and a Master of Forensic Accounting.
So, it seems that now is the time to specialize and access new career paths and interesting new areas in the increasingly diverse field of business and management. Not only do new graduate degree programs appear every year, but business opportunities in related areas follow.
