By Christine Graf
Of the approximately 675,000 CPA’s in the United States, less than one percent are certified to practice as forensic accountants. In addition to investigating financial crimes, forensic accountants work with companies to develop internal controls intended to prevent and detect these types of crimes.
While many business owners believe that it is the job of internal or external auditors to detect financial crimes, that is not the case. The job of an auditor is to ensure that a company is adhering to generally accepted accounting principles (GAAP), the default accounting standard used by companies based in the United States.
The savings and loan scandal of the 1980s and 1990s was a driving force behind the creation of the field of forensic accounting, but it was Internal Revenue Service CPA Frank Wilson who is considered the father of forensic accounting. In 1930, after reviewing more than two million documents, Wilson found evidence that notorious mobster Al Capone has committed tax fraud. The following year, after being found guilty, Capone was sentenced to 11 years in prison.
During the past decade, the field has evolved, with firms specializing in forensic accounting opening their doors throughout the country. One of these firms, FAZ Forensics, is located at 268 Broadway in Saratoga Springs.
“We specialize in forensic accounting and valuation work mostly in a litigation environment,” said partner Stephen Ferraro. “We’ve all done traditional accounting and tax work, but now we focus 100 percent in this area.”
FAZ Forensics was founded seven years ago after two CPA firms that had merged decided to split.
“When that happened, our forensic group went independent,” he said. “At the time, there were six of us who spun off and started FAZ, and we currently have 16 people.”