Since our lives have migrated to the online arena, incidents of fraud and large fraud events have expanded at a rapid pace. Current estimates show that fraud is costing the economy $600 billion each year. This means that there is an increased demand for risk watchdogs, to ensure that public and private entities don't fall prey to bad actors. This demand has been fueled in no small part by the creation of the Consumer Financial Protection Bureau (CFPB). Those with a degree in accounting who wish to specialize their practice should consider fraud examiner training through the Association of Certified Fraud Examiners.
The ACFE certification provides accountants with a way to identify themselves as experts in the field of fraud examination. Fraud specialists focus on fraud prevention, detection, and deterrence of fraud, and a host of small tasks to support those goals. In fact, the credential opens up a variety of career options. Certified fraud Examiners (CFE) are found working for the government and private industry with career paths such as compliance officer, forensic accountant, internal/external auditor, private investigator, and even in legal careers. They deal with a variety of types of fraud and work toward improving loss prevention, stopping identity theft, providing security services, protecting intellectual property, and lowering overall fraud risk with their expertise and professional experience. There are even top-level executive career options available for those with fraud examiner training including chief compliance officer, chief risk officer, and audit executive.
What is a Certified Fraud Examiner (CFE)?
A fraud examiner is a sort of accountant who is an expert in uncovering and rooting out fraud and the bad actors who perpetuate that crime. They are specially trained and certified to provide fraud risk assessment, detect, investigate, and conclude fraud cases. Their work helps to protect people and organizations to avoid losing precious revenue and data from financial transactions to local, national, or global fraudsters. They also work with the authorities to make sure that they have the evidence they need to try the perpetrators in a courtroom.
What Does a Fraud Examiner Do?
A certified fraud examiner is a professional who is a white-collar, office worker with special fraud examiner training in anti-fraud and in discovering, investigating, and resolving fraud cases. They are found working for a variety of employers and some even work independently. In fact, CFEs may be found working for police, corporations, as private investigators, or even for the U.S. government.
CFEs who work with police or other similar group might primarily work on their computers in an office. However, they might also spearhead investigations in which they are called upon to collect evidence from a site, interview suspects, brief undercover agents, and otherwise perform the duties of a detective. Sometimes, CFEs work undercover to collect evidence and uncover suspected fraud. CFEs are found in all areas of law enforcement including the federal, state, and local level. However, more than your fraud examiner training will be required to join and earn a job title in this sector; you'll also need extensive experience in fraud, the appropriate degree program, and to stand up to rigorous ethical standards and a code of ethics.
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CFEs in the corporate environment often scrutinize their employer's books to discover any possible cases of embezzlement or other theft. In these positions, CFEs are often referred to as auditors. Many fraud examiners work as forensic accountants who analyze financial data to investigate possible money laundering, insurance fraud, embezzlement, and more.
Investigators and attorneys often employ CFEs as a way to uncover how their clients may have been defrauded by way of financial malfeasance. Many divorce cases, for instance, require that a CFE discover where certain assets and equities may have gone. In fact, a CFE might attain an additional credential to operate a practice for private investigations and establish it centered on forensic accounting and fraud investigations.
Education Requirements to Become a CFE
- Degree Necessary
In order to sit for the fraud examiner exam and gain fraud examiner certification, test takers must first be members of the anti-fraud organization in good standing and have completed a bachelor's degree program or equivalent professional experience. That is to say, candidates can substitute experience for a college education. To satisfy this requirement, each missing year of a four-year degree as a student is worth two years of experience. Thus, a candidate who has never completed any college should expect to log eight total years of experience in the field in order to apply without meeting the education requirements. It is therefore more expedient for aspiring CFEs to study for a degree than to accrue experience. In fact, there are many programs that offer specialized courses in forensic accounting, criminology, and related topics.
- Subject Focus
The fraud examiner exam covers the four primary areas of a CFE's professional life:
- Financial Transactions and Fraud Schemes:
This portion of the test will include accounting terms and theory, fraud schemes, controls to thwart fraud schemes, and other auditing and accounting fundamentals.
To be effective as a fraud examiner, candidates should understand the rules of evidence, applicable civil and criminal law, the rights of the accused and accuser, and the importance of expert witness testimony.
Fraud examiners should be able to demonstrate knowledge of how to conduct an investigation, including how to research public documents, take statements from suspects and witnesses, interviewing techniques, clues for detecting deception, and how to prepare a thorough and effective report.
- Fraud Prevention and Deterrence:
CFEs should understand the motivations behind fraud and then the basics of fraud detection and how to prevent it. This portion of the exam covers the causes and conditions for white collar crime, conducting a risk assessment, and the ACFE Code of Professional Ethics.
- Financial Transactions and Fraud Schemes:
If, for some reason, a candidate cannot satisfy the technical requirements and thus needs to take the test in person, arrangements can be made. The ACFE is also a provider for in-person review courses covering the CFE credential throughout the year. Candidates can take the course and then complete the fraud examiner exam in a proctored environment. The ACFE's calendar reflects available dates.
How is the CFE Exam Scored?
To pass the certified fraud examiner exam, takers must pass all four parts with a score of 75% or better. This score is calculated by computer and results are returned to candidates within 3-5 business days of the test. Even review course attendees receive their results in this time frame. All candidates have three chances to pass each portion of the exam and gain fraud examiner certification.
Note that each of the four parts take two hours to complete, so examinees should set aside a full day for the exam. If a retake is necessary, candidates can request a new test and they will receive a key for the new test within 3-5 business days. Note that the ACFE does not provide review for incorrect responses.
Study Resources and Preparation for the Fraud Examiner Exam
The ACFE provides ample resources for any member to prepare for the certification examination. Perhaps the most common test preparation method is the computer based CFE Exam Prep Course. This course can be taken at the candidate's leisure and thus does not require any special travel or time out of one's schedule. Another option is to purchase the deluxe CFE Exam Prep Toolkit that includes the Prep Course plus other resources such as the Fraud Examiners Manual, a test-prep flashcard app, and the CFE Exam Study Guide to help you learn where your strengths and weaknesses for the test are.
For those who prefer the structure and focus of an in-person session, the AFCE offers four-day training sessions that includes the opportunity to take the exam with a live proctor. Official AFCE sessions are limited to select cities in the United States. In a recent year, there were three sessions scheduled, one each in Washington, D.C.; New York City; and Austin, TX. Candidates outside of the US can take the course through authorized, independent third parties in major cities throughout the world. Attendees who are eager may take the exam on the first day of their studies.
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As if that weren't enough, the AFCE offers additional resources that help future CFEs prepare for their exam. The CFE Exam newsletter, for instance, provides study tips, motivators, and other guidance to help ensure a passing score on the professional exam. There are other resources available online, such as the CFE Exam Prep LinkedIn page, which is loaded with tips and tricks. The ACFE also maintains an online community full of discussions related to the test, and more.
The CFE examination is not considered to be terribly difficult. However, most in the field do suggest that potential examinees purchase study courses and other materials in advance of their test. While some take as much as a full year to prepare, including four months of intensive study, others follow the guidelines set forth in the study guides and complete their preparation in either 30, 60, or 90 days, depending on their individual need.
Perhaps the more difficult part of attaining CFE credentials is the education and experience portion. That is, aspiring CFEs will need to spend a minimum of four years in college or up to 8 years in the field working in fraud and risk. Consider that some CFEs start out with a two-year associate degree in accounting and then work for four years prior to attaining their credentials.
It is not necessarily cheap to become a CFE. All candidates must first pay dues to become members of the ACFE. To satisfy the experience or educational qualifications, future examiners spend either many thousands on a bachelor's degree or are able to land a job in fraud examination and thus spend their time and energy to qualify. Prior to sitting for the exam, candidates will want to purchase preparation materials or attend a traditional classroom course.
The fees for these options are as follows:
- CFE Exam Prep Course - $796 for members; $995 for non-members
- CFE Exam Review Course (with live instructor) - Fees TBA by the association
- CFE Exam Prep Toolkit – $956 for members; $1,195 for non-members
- CFE Examination Cost – $400 or $300 with purchase of the CFE Exam Prep Course
Career & Salary
- Where Might You Work?
Certified fraud examiners work in a variety of environments. Some may work for federal law enforcement agencies such as the FBI and investigate high-level corruption such as money laundering in casinos, organized crime, and other offenses. Others might work for state or local law enforcement, private-sector corporations, or as private investigators.
Some CFEs work independently as investigators and contract with attorneys or individuals who may feel that they have been defrauded. These professionals can then work from their own offices or even their own homes. Independent CFEs may even be called to audit a company's books and then may spend that time working in the client's offices.
- Career Outlook
Unfortunately, financial malfeasance seems to be on the rise. However, this is good news for fraud examiners who are seeing growth in their field. The Bureau of Labor Statistics does not specifically address fraud examiners, but the Occupational Information Network (OIN) shows that the field of financial specialists is slated to grow along with the economy, or 4-6% between the years 2018-2028.
The salary figures for financial specialists is likewise healthy with OIN reporting a median salary of $82,000 in 2019. Future CFEs should keep in mind that salary figures often omit other parts of a professional's compensation package. Bonuses, health insurance packages, and travel expense reimbursements may add significantly to one's overall income picture. Furthermore, CFEs who work independently may report their income under different employment classifications, such as consultant.
According to the AFCE, who surveyed 5,678 examiners, their certified professionals earn 31% more than their non-certified peers. This can calculate to total career earnings that exceed non-CFEs by as much as $600,000. AFCE members can request more detailed career reports for specific job descriptions through their website.
Certified fraud examiners have a wide range of career paths to choose from.
Here is a brief list of the opportunities that open up for credentialed examiners:
- Law Enforcement:
Not many accountants get to carry a badge and a revolver, but CFEs do. This career can involve undercover work, witness interviews, providing court testimony, and more law enforcement functions that go past spreadsheets. The BLS lists information for police and detectives, stating that the profession earns just over $65,000 per year.
- Accountants and Auditors:
CFEs audit companies and individuals in search of malfeasance where standard accountants are seeking efficiency and to improve the business itself. The BLS shows professionals in this career earning $71,000 per year.
- Financial Examiners:
These professionals ensure that their employer remains in compliance with the laws that regulate financial matters. The duties of a CFE with this job title are focused towards avoiding fraud or misdeeds rather than seeking out fraud. The BLS shows an average salary of $81,000 for financial examiners.
- Private Investigation:
Often, individuals find that they need a private investigator to discover whether or not they have been defrauded. Divorce attorneys in particular may contract with fraud examiners to determine whether martial assets have been mishandled. The BLS shows this job title earning $50,000 per year.
- Law Enforcement: