The Madoff Ponzi scheme, financial crisis of 2007-2009, ongoing mortgage fraud and other scandals, and laws like Sarbanes-Oxley and Dodd-Frank that were passed to counter the fraudsters, send a clear message: fraud investigation is a can't-miss career track and valuable expansion to an accounting or law practice or to the C-suite's bean counters.
Here's a little extra persuasion: According to the 2014 global fraud study by the Association of Certified Fraud Examiners (ACFE), the typical organization loses 5 percent of annual revenues to fraud—a projected global fraud loss of almost $3.7 trillion if the 2013 estimated Gross World Product is applied.
The median loss caused by fraud in the study was $145,000. And another 22 percent of the cases involved losses of at least $1 million.
Most cases are reported in banking and financial services, government and public administration, and manufacturing sectors. The largest reported median losses, however, are in mining, real estate, and oil and gas industries, according to the study. There are clearly opportunities in many sectors.
What's the CFE Designation About?
First, let's correct a common misconception: Forensic accountants and certified fraud examiners aren't the same creature.
Forensic accountants prepare court cases while fraud examiners conduct a financial investigation for a company's managers or top executives. "That's a big difference", says ACFE co-founder and president James Ratley, who headed fraud investigations at a forensic accounting firm before establishing the ACFE.
CFEs, however, do testify in court cases as expert witnesses to express opinions based on their areas of fraud expertise, he says.
While some universities have added forensics to their accounting curriculum, they'll carve out fraud examination as a separate study or certification track. Southern New Hampshire University, for example, offers a graduate certificate in fraud examination and accounting.
Roosevelt University in Chicago began preparing accounting majors to become CFEs in 2012 through the ACFE exam protocol.
The ACFE's CFE program is a five-step process: become an associate member, study for the exam, submit the exam application with proof of education and recommendations, pass the exam (it tests you in financial transactions and fraud schemes, law, investigation, and fraud prevention and deterrence), and gain approval from the certification committee.
It's not a slam-dunk. Eligibility is based on a point system that gives you credit for education, affiliations and experience. In order to be certified, for example, you must have at least two years of professional experience and 50 points. Education points are awarded if you attended a recognized school. If you've got more than 40 points but less than the required 50, you can apply to take the exam but you won't be certified until you hit the 50 points mark and two years of professional experience.
While more than half of ACFE's members have an accounting background, their employers represent a wide variety of businesses, Ratley says. Besides Fortune 500 companies and law enforcement agencies, the healthcare, manufacturing, education and insurance sectors—even religious groups—hire CFEs.
"Anybody who has an asset that's available to steal has a need for a CFE", he says.
About Terry Sheridan
Terry Sheridan is an award-winning journalist who has covered real estate, mortgage finance, health care, insurance, personal finance, and accounting and taxation issues for newspapers, magazines, and websites. A Chicago native and former South Florida resident, she now lives in New England.