Certified Fraud Examiner (CFE)

What Is a Certified Fraud Examiner (CFE)?

A Certified Fraud Examiner (CFE) is a professional certification available to fraud examiners. CFEs are subject to periodic continuing professional education requirements (CPE) in the same manner as CPAs. The CFE designation is issued by the Association of Certified Fraud Examiners (ACFE), the world's largest anti-fraud organization, based in Austin, Texas. 

Understanding the Certified Fraud Examiner (CFE)

Certified fraud examiners are required to have a bachelor's degree (or equivalent) — no specific field is required — and at least two years of "professional experience in a field either directly or indirectly related to the detection or deterrence of fraud." Acceptable fields include auditing, loss prevention, law, and accounting. Qualifying is done according to a points system that "awards credit for education, professional affiliations, and experience." Applicants must have 50 points and pass a certification exam to receive the CFE designation. 

CFEs have a wide range of career options. Typical jobs include forensic accountant, internal/external auditor, compliance officer, state or private investigator, and law enforcement. A CFE can move into an executive position, such as a special agent, an inspector general, a chief compliance officer, a chief risk officer, or a chief audit executive. 

CFEs are subject to a code of ethics. For example, Harry Markopolos, the outside investigator who repeatedly warned the Securities and Exchange Commission (SEC) about Bernie Madoff's Ponzi scheme — to no avail — was a CFE. So is whistleblower David P. Weber, the former SEC assistant inspector general who stated that former SEC Inspector General David Kotz had personal relationships that tainted the SEC investigation of that scandal.

In 1792, the first fraud occurred in the United States. The secretary of the Treasury, Alexander Hamilton, rebuilt the finance industry by replacing outstanding bonds with bonds from the U.S. bank. The assistant secretary of the Treasury, William Duer, was given access to classified Treasury information. He alerted his friends about classified information before unveiling it to the public, and he knew it would increase the bond prices. Then, Duer sold the bonds for a profit. Hamilton spared the bond market by buying up bonds and acting as a lender. The 1792 bond crisis and the large volume of bond trading were the sparks for the Buttonwood Agreement, which started the New York Stock Exchange (NYSE).

The ACFE estimates that fraud costs the U.S. economy over $600 billion a year. New and changing regulations — and the development of the Consumer Financial Protection Bureau (CFPB) — have increased the employment of fraud examiners. The Bureau of Labor Statistics projects the employment of financial examiners, which involves the type of work done by CFEs ("ensure compliance with laws governing financial institutions and transactions"), to increase 7% from 2019 to 2029.