My good friend, here in Lynchburg, Ryan George Facebooked me a few months ago asking me to explain the difference between a forensic accountant, fraud examiner and the internal auditor. To most people these terms are more than likely used interchangeably or viewed as one in the same. While each is similar there are many differences. However, please note that, each field employs mostly CPAs and those with accounting backgrounds. Each field advises prospective entrants to develop a type of “sixth sense” called professional skepticism and to hone and trust their instincts, aka “trusting your gut.”
Fraud Examiner vs. Auditor
According to the ACFE, many fraud examiners have an accounting background and are employed as internal auditors by their organizations. While fraud examination and auditing are related, they are not the same. Here are the main differences:
- Timing – audits are conducted on a regular basis; fraud examinations are only conducted with sufficient predication.
- Scope – audits are a general examination of financial data; fraud examinations are conducted to resolve specific allegations.
- Objective – audits are conducted to express an opinion of the financial data; fraud examination’s goa is to determine whether fraud has/is occurring and to determine who is responsible.
- Relationship – auditing by nature is non-adversarial; while fraud examination is adversarial as the fraud examiner’s efforts are to affix blame.
- Methodology – audits examine financial data; fraud examination use techniques to collect evidence, review outside data (i.e. public records) and interviewing.
- Presumption – auditors are required to approach the audit with professional skepticism; fraud examiners approach the resolution of a fraud to establish sufficient proof to support or refute an allegation of fraud.
Fraud Examiner vs. Forensic Accountant
According to the ACFE:
Forensic accounting and fraud examination are different but related. Forensic accounting work is done by accountants in anticipation of litigation and can include fraud, valuation, bankruptcy and a host of other professional services. Fraud examinations can be conducted by either accountants or nonaccountants and refer only to anti-fraud matters (1).
As you can see while there are many similarities but there are distinct differences. The main reason why I prefer (and why I am studying fraud examination) is that it doesn’t require one to be an accountant; non-accountants can be equally successful.
(1) Wells, Joseph T. (Oct, 2003). The Fraud Examiner. Sleuthing careers bring CPAs personal and professional satisfaction. Retreived on June 10, 2011, from: http://www.acfe.com/resources/view.asp?ArticleID=35