It wasn’t murder charges that brought down Al Capone, it was accounting

It wasn’t murder, prostitution or bootlegging charges that finally brought down Al Capone.

It was accounting.

In 1931, agents from the US Internal Revenue Service compiled enough evidence to convict the notorious gangster on charges of tax evasion. The breakthrough came thanks to a forensic investigation of the figures by special agent Frank J. Wilson, a former accountant, who reviewed some two million documents to build the case.

Today, when law enforcement agencies need help spotting irregularities in financial documents, or want to trace the movements of stolen money, they call in the forensic accountants. These professionals combine an accountant’s numerical know-how with a detective’s investigative skills. They are also hired by large corporations, insurance firms and government agencies to winkle out wrongdoing.

Though forensic accountants don’t spend time preparing financial statements. In fact, they have to be as comfortable with letters as they are with numbers, preparing detailed written reports to be presented in court. While it’s important for them to have a detailed understanding of accounting, they draw on an entirely different set of skills.

“Effectively, we’re not doing accounting when we’re doing our job. That’s something to bear in mind if you’re thinking about coming into the profession,” says Tom Havers, an associate in the London offices of international forensic accounting firm HSNO. “We’re not really accountants in the sense of what we do, but we’re qualified and happen to understand it all very well.”

Between 2010 and 2015, members of the Network of Independent Forensic Accountants reported a 45 percent  increase in cases. While the group partly attributes the rise to a larger number of member firms, it believes the uptick reflects a growing awareness of the need for forensic accountants. This certainly appears to be the case in the US where industry revenue grew an average of 7.1 percent a year between 2011 and 2016.

The 2008 recession  drove demand, as the higher number of bankruptcy filings required the attention of financial investigators. However, forensic accountants aren’t just called in to handle corporate disasters. They get involved in many types of litigation, from insurance claims to divorce disputes. Often, a forensic accountant will specialise in dealing with a certain category of case.

“There are three core industry streams: litigation support, insurance support and investigations,” Havers explains. “They all intermingle a lot, but people tend to specialise in one of them.”

No matter what their focus, forensic accountants must quickly get to grips with a client’s unique financial circumstances. This can mean having to rapidly absorb new information on unfamiliar topics. Unlike traditional accountants, who generally follow the financial calendar, investigators may have to conduct complex analyses in short time frames.

“To understand the context of the case you’re working on, sometimes you have to understand the internal workings of an industry, at least to some extent,” says Gena Melnychuk, forensic analyst at HSNO. “When I first started, I was dealing with a fire at a factory, which made a really complex product. I had to understand what they did before I could do the analysis.”

A forensic accountant’s involvement in a case can vary wildly, from reviewing all the juicy details to simply offering written commentary. “Sometimes you get to see everything,” says Melnychuk. “You go to meetings with an entire legal team and get to listen in on how they’re building their case. Other times, you do your report and that’s it.”

Qualified accountants seeking a challenging new role should know that there is no single path into  forensic accounting. Several UK universities, such as the University of South Wales and Sheffield Hallam, offer forensic accounting degrees. However, an accounting qualification is the only diploma you need and some firms will even take on trainees who are in the process of completing their qualifications.

“Sometimes there will be formal interview processes, sometimes you’ll have to go up through the ranks of the firm before you can even get into their forensics department,” says Havers. “In larger firms, you might join their risk stream, but that doesn’t mean you’ll end up being a forensic accountant.”

Not every forensic accountant will bring down an infamous criminal like Capone, but their expertise can be crucial in settling major financial disputes. Forensic accounting takes more than numerical aptitude; you’ve got to have a detective’s eye and the storytelling skills of a crime reporter, coupled with a full knowledge of accounting practices. Unlike detective fiction, the answers in financial crime cases are rarely elementary.

Jesse Onslow Norton is a writer, editor and communications consultant at Flibl. A former coder, his editorial work focuses on fintech, digital transformation, policy and regulation. His clients include corporations, governments, startups and SMEs from across the world. Follow him on Twitter @JesseOnslow.

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