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Study Compares Forensic Accounting Organizations

By Michael Cohn
April 5, 2012

A new study calls into question the position of forensic accounting professional organizations and says they more properly should be labeled “corporations.”

The study, which appeared in the Journal of Accounting, Ethics and Public Policy, was written by Wm. Dennis Huber, a professor at Minneapolis-based online Capella University and a lecturer at the University of Miami. Last year, Huber also wrote another academic paper calling into question the legal status of the American Accounting Association (see American Accounting Association Defends Legal Status).

In the new article, Huber examined the status of organizations such as the National Association of Certified Valuation Analysts and the Association of Certified Fraud Examiners.

“To call entities that issue certifications in forensic accounting ‘organizations’ camouflages their true nature and results in misunderstanding what they really are,” he wrote. “They are corporations. Recognizing them as corporations enables forensic accountants who hold their certifications to assess more realistically the costs and benefits of their certifications. A survey reveals that a significant number of forensic accountants believe it is important for forensic accounting corporations to have qualified officers and directors. There are also a significant number who mistakenly believe that the forensic accounting corporations that issued their certifications have qualified officers and directors. However, several forensic accounting corporations do not have qualified officers and directors. Forensic accountants also believe forensic accounting corporations have a duty to disclose the qualifications of their officers and directors, but several do not disclose the qualifications of their officers and directors which violates their Codes of Ethics.”

Huber’s paper compares the forensic accounting corporations, their corporate history and the qualifications of their corporate directors and officers. He recommends that an independent agency be established to oversee and accredit forensic accounting corporations.

“As a matter of public policy regulators cannot let this situation continue unabated,” he wrote. “If an independent agency cannot be established, then, as a matter of public policy, states should enact statutes or adopt regulations to regulate forensic accounting corporations.”

ACFE spokesman Scott Patterson said his group was pleased with the study. “While we don’t have a response specific to the article, we are pleased to note that the results of Professor Huber’s research reflect extremely positively on the Association of Certified Fraud Examiners and the CFE credential," he wrote. "Prof. Huber’s survey ranked ACFE first among forensic accounting certifications in terms of overall value, difficulty of obtaining the certification,  difficulty of certification exam, strictness of Code of Ethics, and strictness of Standards of Practice. Member satisfaction is of the utmost importance to the ACFE and is crucial to our continued growth and success. We will continue to work hard to ensure that we meet the high standards expected of us from CFEs, associate members and other anti-fraud professionals worldwide.”

Joshua K. Roberts, an attorney representing the Center for National Threat Assessment, Inc., formerly Management Executives, Inc., the governing entity that manages the American College of Forensic Examiners International, argued with some of the points in the article. "I have reviewed the article and not much in it warrants a response," he wrote in an emailed response. "It contains several factual misstatements that are of no consequence.  I would note that the article implies that ACFEI misrepresents its affiliation with the Institute for Credentialing Excellence (ICE). By design, its parent corporation in a member of ICE and such affiliation with ACFEI is affected through said entity."


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