20 May

Former Law Enforcement Working as Forensic Accountants

A comment on an old article here inspired me to resurrect the topic today. Do former law enforcement officers make better forensic accountants? I think that having “former law enforcement” in your LinkedIn profile lends some credibility to the forensic accountant, but does it really mean as much as people think it does?

Certainly, experience in law enforcement (especially a lengthy career) can be helpful. There are skills that are learned and developed over time. But the question for the forensic accountant is: How much of that law enforcement experience was gained doing financial investigations? Were the investigative techniques relevant to private sector investigations? I’ve learned that digging through databases and resources available only to law enforcement isn’t the same thing as doing a deep dive into the numbers to unravel a complex fraud scheme.

It’s easy to pick on Internal Revenue Service (IRS) special agents.  There are some very good ones, but the idea that they are the best of the best is a myth. I’ve found many more private sector forensic accountants to be much more effective at investigating, reporting, and testifying. Why might that be the case? I chalk it up to the depth of experience in financial investigations.

The latest numbers from the IRS show 2,500 special agents. In fiscal 2017, they opened 3,019 new investigations. That is 1.2 cases per agent per year that is opened. Some cases are fully investigated, some are not. But how much experience does a financial investigator gain by starting one new investigation a year? Sure, the IRS cases may be more complex than the average private sector investigation. But I contend you can’t get deep experience with different industries and fraud schemes at that pace.

In contrast, over the last 20 years, I’ve opened an average of 15 to 20 new cases per year. Some of them were small, some of them were large, and lots were in between. What that has allowed me to do is get experience with a wide range of financial fraud schemes and industries.

What does this all boil down to? You have to look at much more than just the jobs that an investigator had. Don’t be wowed by fancy sounding things. Dig into the history of the expert and look at the substance of the experience. Ask lots of questions about the forensic accountant’s experience. Look at sample reports if you can. Consider how many times the expert has testified.  Seek references and talk to former clients of the forensic accountant to find out what you can expect. Don’t just rely on the apparent credibility that the “former law enforcement officer” title seems to lend.

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