A Successful Career Transition to Forensic AccountingBy Eric A. Kreuter | October 29, 2019
Finding one’s career in a rut is sadly not uncommon in many professions, and accounting is no exception. Many CPAs’ first impulse is to expand their knowledge in their current area of practice. Sometimes, however, a transition to an entirely new subfield is called for. Done properly, this can reinvigorate one’s interest in the profession and possibly provide lucrative benefits to a firm. I myself transitioned into forensic accounting after a career spent mostly in tax and audit, and I hope that my experiences in this regard will prove instructive to others seeking to give their flagging career interest a boost.
Making the Switch
Years ago, CPAs typically had only two career choices—audit or tax. In my first two jobs, I worked for very small companies with a mix of audit, accounting, and tax responsibilities. One day I was writing an audit report; the next day I was preparing input sheets for both corporate and personal tax clients. Because the firms were so small, all members of the staff had to work in both areas. As staff moved into management, they had more opportunities to specialize.
In my own career, I moved more fully into audit, becoming a manager. After a relatively short period, I was assigned to handle an arbitration case involving economic damages, eventually testifying in the case. Although this assignment was stressful and there was little to no internal guidance from management, I developed an interest in litigation support work. From this experience, I developed a new practice area for the firm: doing collateral audits for asset-based lenders. This service took off, and we did work all over the United States as well as Canada and Russia. We hosted seminars for lenders and promoted our services in many ways; staff were recruited both from within the firm and from the outside. This new service also served as a vehicle to cross-train professionals previously only working in traditional service areas. In addition, fraud investigations and litigation support engagements came in as the firm expanded its contact base.
I was drafted by the managing partner into taking over what was then called the personnel department. The partner who handled this side of the firm was retiring, and because I had shown great interest in this area through suggestions made to the partners, I was recognized as qualified to assume the responsibilities of what became, under my direction, the human resources (HR) department. To be more prepared to handle this area, I enrolled in a master’s program in industrial psychology (the closest thing to HR the school had at the time) and graduated two years later. From there, I immersed myself in the field, eventually passing the credentialing exam to be certified as a Senior Professional in Human Resources (SPHR).
Eventually, I recruited a person to groom into becoming the HR manager so I could return to more technical work. I learned about the Association of Certified Fraud Examiners (ACFE), joined them, and earned the CFE (Certified Fraud Examiner) designation. The firm spun this into the acquisition of new clients requiring forensic services. As we gained experience, the new department gained traction in the marketplace.
I soon built a specialized team within the firm. As the litigation practice, which included forensics, was growing, I again perceived the need to advance my education further, so I enrolled in a doctoral program and earned my Ph.D. in clinical psychology. This education proved very beneficial to my work in litigation and forensics, as I was better able to interview witnesses and understand motivation and behavior. I then continued my current path in advisory services, and I recommend it to any professional interested in exploring such a future.
Adventures in Forensic Accounting
I found forensic accounting appealing because each case was different and interesting. Investigations allowed me opportunities to interview witnesses, including suspected wrongdoers. I liked writing forensic reports, testifying in cases, and interacting with clients and others regarding their concerns and devising prudent, cost-effective strategies to conclude engagements. I took great interest in exploring personality structures, eventually leading to my doctoral research into the psychopathic personality. My background in both audit and human resources provided greater insight into how people think.
Engagements usually begin with a client expressing concern over a finding or some missing money, which would lead to my study of the organizational chart, followed by very specific forensic procedures. Interviews were almost always included. In one case I was able to convince the target (a former CFO) to bring in personal financial records, which led to my finding in indicia of fraud (suspected embezzlement). The case proceeded to a criminal complaint, and I testified at the grand jury; the eventual result was a conviction and an order for full restitution. That was a very fulfilling engagement.
I found forensic accounting appealing because each case was different and interesting.
I start every forensic investigation with an interview with my clients, working with them to learn their concerns. Then I determine the level of access to business records and consider potential interviewees. I try to receive as much information electronically as possible in order to maintain control over documents received and considered. Excel and Word are used extensively; in addition, digital forensic experts mine large databases using keyword searches. We look for anomalies and patterns, odd adjusting journal entries, large rounded dollar amounts in disbursements or payroll, and unexplained analytic differences between budget and actual in the operating statement. Some of what I look for is, frankly, a gut feeling. I consider logistics and the expectations of the client together with those of outside legal counsel if any. I always ask the client to consider the retention of an attorney who would then normally retain me; this protects the attorney-client privilege. My tasks after retention are to uncover evidence that supports or contradicts the expressed concerns of the client. Following the review of documents and the interviews, I normally prepare a report or summary of findings and then proceed depending on the nature of the case.
In a recent arbitration case, I was qualified as a forensic accountant on direct examination by counsel for the plaintiff and then cross-examined by counsel for the defendant. There I was able to withstand a barrage of questions over my report, in which I found indicia of fraud. Even the arbitrator asked questions about my findings in a way that led the plaintiff’s counsel and me to feel very positive about the direction of the case. My first testifying experience was also positive, albeit with much more insecurity and anxiety. The attorney for whom I was working was very helpful and encouraged me to relax and state my findings, which resulted in a victory for my client.
What Forensic Accountants Need to Succeed
The skills needed to be a successful forensic accountant include an ethical mindset, a strong sense of determination and passion for the work, and very strong written and verbal communication skills. Experience is the key to developing these skills.
Emerging candidates should consider additional education and training opportunities. Targeted CPE classes are a good place to start. The ACFE offers a one-week training program where a portion of the CFE exam is administered each evening after the day’s lecture. Formal academic courses or degrees in forensics and graduate studies in forensics, computer forensics, and other related courses will augment any career in accounting. Such courses can be found at an increasing number of colleges and universities, and many are now offering courses through distance learning. Classes in communication and psychology will also help round out an academic program in accounting.
Many of the courses in my advanced education inform me better in my present work, including how best to manage a team.
It is important to consider a long-term strategy of learning and CV-building, including writing articles and making presentations to further one’s presence. Joining a regular networking group is an excellent way to self-promote and generate new business. I suggest seeking the CPA and CFE credentials at the outset and then continuing with other related credentials. NACVA (National Association of Certified Valuation Analysts) offers the MAFF (Master Analyst in Financial Forensics) credential, while the AICPA offers the CGMA (Certified Global Management Accountant) and the CFF (Certified in Financial Forensics). I hold these designations, but respect others as well. There is an overlap here, so I suggest choosing one’s own direction wisely.
I chose to return to college for two advanced degrees because of a belief in lifelong learning, as well as to open new doors within my career. I feel, based on my years of experience and studies, my many publications, and my teaching experience in graduate school programs, that I am fully capable of understanding the mindset of both the victim and the perpetrator of the fraud. Both help me do my work with greater effectiveness and greater sensitivity. My doctorate in clinical psychology has helped shape my understanding of human behavior, with my chosen research focus on the psychopathic personality and the vulnerability of the victim. Many of the courses in my advanced education inform me better in my present work, including how best to manage a team.
Typical activities include writing articles, soliciting new work by expanding the firm’s outreach to centers of influence (mainly attorneys), and development of skills. In litigation and forensics, we often write reports, affidavits, and letters. These need to be succinct yet detailed and supported by accurate schedules and charts. Demonstrative exhibits provide counsel with resources to use in court or settlement meetings to highlight certain key points of the case.
Anyone interested in forensics should develop their Excel skills, as well as their writing skills. Reading expert reports and practicing writing and articulating professional opinions are excellent ways to develop good writing and presentation skills. Taking advanced Excel courses will also help.
Fortune Favors the Bold
As a way of approaching a career impasse, remobilizing to a different practice area within the firm or field can spark new career opportunities. Meeting with the HR department about an emerging interest can help one pursue and attain new credentials and new experiences. Another tactic is to read specialty journals, books, and articles about the new interest; still, another is seeking out CPE courses that explore it. Talking to peers in other practice areas and offering to participate on a rotational basis in other practice groups, if allowed by the firm, can add to the interest in a new area.
Giving voice to an emerging interest can ensure a lifelong career of excitement and prevent early burnout. Learning new things is an excellent way of keeping the mind young and supple, and adding credentials increases one’s value to one’s firm and its clients, as well as the ability to be an effective mentor and, eventually, a business developer.
For true career pioneers, those with an entrepreneurial spirit, leading the firm in a new direction could generate significant new billings, leading to lucrative financial benefits. With risk comes reward; sometimes the best ideas are those shared with the team, so they can be converted to salable services with strong economic potential. Most firms will embrace new services as long as they are projected to be accretive to earnings.
This article originally appeared in the October 2019 issue of The CPA Journal.
About Eric A. Kreuter
Eric Kreuter, Ph.D., CPA, CGMA, CFE, CBA, is a Partner in the Advisory Services group at Marks Paneth LLP. He specializes in litigation and forensic services, including commercial damages and fraud investigations. His background also includes management, human resources and other consulting services. He is well-versed in all facets of the construction industry. Dr. Kreuter has worked in professional services firms since 1983 and was also a founding shareholder in a CPA firm. He has... READ MORE +