What Caused Forensic Accounting to Gain Its Popularity?
I bet you no one has ever heard of ‘Forensic Accounting’ nor any professions such as forensic accountant some 30 years back. However today, if you get a survey company to feedback on the percentage of firms who really believe that having their own “Forensic accounting department” or “Forensic accountants” are essential and important for their company, you will be surprised by the positive and urging demands received.
The increase in the fraud epidemic in our country, as well as all over the world, has led to a dramatic increase for experienced investigators and forensic accountants. Forensic accountants are becoming more main-stream nowadays.
A recent poll done by some audit firms showed that almost two-thirds of the executives believe that accounting fraud will increase over the next two years. They attribute that increase to the economic downturn, specifically lower or non-existent raises and bonuses, reduced job security, and low morale among employees. Statistics tracked by the National White Collar Crime Center demonstrates that arrests for fraud and embezzlement go up during economic downturns.
Through the publication on some of the major fraud incidents happened lately, attorneys, executives, and managers of companies, especially large enterprises have learned that these professionals are the most ready personnel whom to seek help with their fraud matters. Companies no longer just get their internal auditors to look things over when management suspects fraud as these are not effective, instead they want specialists whom are well verse in dealing with accounting frauds of all kind, but better still, to have the professionals to have close eyes on their company’s accounting procedures and policies, as well as their financial transactions and numbers at anyone time.
As a company is attempting to develop its fraud prevention efforts rather than just having setup a task force for fraud investigations when any happened. The help from a true expert can make those efforts lots more effective. Help on the front end of the process will likely help the company in the long run will definitely reduce the need for help investigating fraud thereafter.
Companies are also more likely to pursue cost-cutting measures when the economy is tight. This has inevitably reduced some of the possible benefits (such as overtime allowance, shift allowance, housing allowance, or even travel allowance) or claimable bills which are made impossible now, or even cut some 10-20% of remaining employees pay across the board. In time of financial difficulties, one may get in some desperate state and they will try everything to get that extra money, even if it is through fraud activities as their lives need to continue on, and some of them have the whole family to support.
After considering the likelihood of increasing fraud cases in this bad economy situation, it is of no surprise on the increase demand of forensic accountants in these recent years.