As the annual price tag for fraud at American business soars to nearly $1 trillion, the demand for CPAs that provide forensic accounting services has increased exponentially - a spike that appears in no danger of waning over the next several years.

Estimates of the number of CPAs who currently provide forensic accounting hover between 20,000 and 30,000 practitioners, while the American Institute of CPAs said that in less than two years, it has awarded more than 3,500 Certified in Financial Forensics credentials, more than four times the number initially projected when it rolled out the CFF designation in June 2008.

Meanwhile, the National Association of Certified Valuation Analysts last year unveiled its Forensic Accounting/Investigation Methodology, a software-based civil and criminal forensic accounting methodology that it augmented with a series of forensic workshops and seminars throughout the country.

Forensic accounting encompasses collecting, analyzing and evaluating evidence, and then interpreting and communicating the findings in courts, boardrooms or other venues. Not surprisingly, attorneys tend to be the primary clients of forensic accountants.

However, despite the burgeoning demand for forensics, the skill sets that establish a solid foundation for the more traditional audit and tax work do not always transition seamlessly to forensics services.

Toward that end, the AICPA queried forensic CPAs, attorneys and academics on what they felt were the essential skills needed to detect financial fraud, and subsequently analyzed the responses in a report, Characteristics and Skills of the Forensic Accountant.

All three groups in the survey overwhelmingly cited analytical ability as the most essential characteristic of a forensic accountant, as voted on by 90 percent of academics, 86 percent of CPAs and 78 percent of attorneys.

There were differences, however, in how the three disciplines rated the core skills.

Attorneys believed oral communication to be the most important skill, reflecting the need to express an opinion effectively in a court of law. CPAs, on the other hand, identified critical and strategic thinking as most important, with written and oral communications as second and third, respectively. Academics agreed with the CPAs that critical and strategic thinking was the prime skill, but rated auditing skills and investigative ability as second and third.

"There are huge opportunities for CPAs in forensic accounting in this tough economic climate," said Mark Koziel, director of specialized communities and firm practice management at the AICPA. "Our report is essentially a roadmap for CPA firms so they can train their people appropriately and build their forensic accounting practices. A key component of the report is the insight it gives into how attorneys, who are the hiring community, evaluate the qualifications of forensic accountants."

In total, the institute received responses from 126 attorneys, 603 CPAs and 50 accounting/auditing professors.

"We reached out to the three critical constituencies in forensic accounting to confirm we're meeting the marketplace's wants and needs," said Michael Ueltzen, a forensic CPA who chairs the AICPA Certified in Financial Forensics Committee. "We want to encourage more CPAs to enter forensic accounting."

With regard to the performance of forensic accountants, the legal respondents indicated that the top two reasons for ineffectiveness were the inability to simplify information and ineffective oral communication, while the CPAs cited the inability to identify key issues and lack of investigative intuitiveness as reasons for ineffectiveness.

With regard to areas of specialty of a forensic accountant, attorneys ranked financial statement misrepresentation as the No. 1 specialty area, while CPAs and academics cited fraud prevention, detection and response.

The institute said that one of the key objectives of the study was to help guide academics on what a forensic accounting curriculum needs to encompass, and to draw younger people into the field. Currently about 50 colleges offer graduate and undergraduate degrees in forensic accounting or certification, five times as many as did five years ago.

The report is available online at

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