Why Tax Pros Are Ideally Suited to Niche in Forensic Accounting

Practice Management solo tax practitioner

Throughout my career in the accounting profession, I have worked exclusively as my own boss, and as a result, I have pursued one of the most exciting niches: forensic accounting.

As a tax preparer, the tax seasons that come by every year cause many preparers to burn out, work with confused taxpayers, and not necessarily reap the financial rewards for hard work and expertise. However, tax preparers have the knowledge it takes to work in the forensic market. Think about it: just as a medical professional performs blood spatter analytics, we can perform financial spatter analytics. The ability to understand proper categorization, legitimate tax write-offs, and trends and patterns within the tax return prepares us to naturally shift into the world of forensic accounting.

It is also important to note that a fraud examiner and a forensic accountant are extremely similar in the type of work required for case work. Case work can be defined as civil and criminal tax representation; tax issues and solutions; and fraud in business, bankruptcy, insurance, marriage and many other financial matters. A fraud examiner is trained to identify the warning signs and red flags that indicate the evidence of fraud. According to the Association of Certified Fraud Examiners (ACFE), the main focus is to help protect the global economy by uncovering fraud and implementing processes to prevent fraud from occurring.

A forensic accountant uses accounting, auditing and investigative skills to conduct an examination into the finances of an individual or business, while forensic accounting provides an accounting analysis suitable to be used in legal proceedings. The key difference between the two is that forensic work is typically used in anticipation of a legal proceeding, whereas fraud examinations are conducted and typically related to fraud matters.

As a tax preparer, you already have the tools to involve yourself in forensic accounting. These tools include, but are not limited to, discovery of irregularities in items such as income, expenses and other financial transactions. When preparing a tax return, a preparer is able to identify irregularities in the books and records of a business, as well as irregularities in deductions and credits. Therefore, as a tax preparer, you have what it takes to assist an attorney in a legal proceeding when it comes to financial data and transactions that may be fraudulent in nature and misleading in its interpretation.

Forensic accounting is fun, rewarding and profitable. If you haven’t begun your journey into this exciting niche, start today. Visit the ACFE website for more information, find yourself an attorney who handles financial types of case work and make it happen!

Editor’s note: Read our article about “Tax Firm Niches You May Have Overlooked” on the Intuit Tax Pro Center.

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