Business Administration - Fraud Examination
What is the difference between forensic accounting and fraud examination?
Joseph T. Wells, CPA, CFE, and the founder and chairman of the Association of Certified Fraud Examiners in Austin, Texas, may provide the best distinction between the two fields in his article "The Fraud Examiner," which appeared in the October 2003 issue of the Journal of Accountancy. Wells states, "Forensic accounting and fraud examination are different but related. Forensic accounting work is done by accountants in anticipation of litigation and can include fraud, valuation, bankruptcy and a host of other professional services. Fraud examinations can be conducted by either accountants or nonaccountants and refer only to antifraud matters."
To further clarify, a forensic accountant is a person who is actively searching and trying to detect fraud within a company while a fraud examiner is called in once fraud has been suspected. Forensic accountants typically hold an accounting degree and may have earned the certified public accountant (CPA) designation. Fraud examiners may or may not have an accounting background and degree.
Forensic accountants not only look at the numbers but also conduct interviews to gain information on the issues at hand. After examining financial statements and conducting interviews, a forensic accountant will submit his or her report and findings.
Fraud examiners are thought of as financial detectives and are called upon once a forensic accountant has suspected fraud. Fraud examiners conduct fraud examinations to gain further evidence based on the forensic accountant's findings to either prove or disprove that fraud has occurred by an individual or company.