Tracy on the Where Accountants Go Podcast

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Yesterday I appeared on Mark Goldman’s “Where Accountants Go” podcast. Mark owns MGR Accounting Recruiters, a company that matches employers with job seekers in the accounting and finance arena.

We spent 30 minutes talking about my work as a forensic accountant, with a focus on how I got into the specialty and how I developed my forensic accounting practice. Mark and I talked about things like: Continue reading

Testifying in Court as an Expert Witness

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While waiting in the hallway outside the courtroom to testify as an expert witness, I thought of all the ways my testimony could go wrong. I had hours to contemplate opposing counsel’s questions for me.

It was my first time testifying, and I didn’t want to blow it. But I relaxed as I eased into the witness chair and stole a glance at the jury. They were ordinary people who were just hoping to understand my calculations. I led them simply through the financial matters. From the looks on their faces, I think they understood.

In my testimony, I closely followed the main points of my prepared report. The counsel who retained me showed large exhibits from my report, which illustrated my points. We easily walked the jury (and the judge) through the numbers. Opposing counsel tried but failed to confuse the jury members. I knew I had hit a home run when I saw the foreman nodding each time I made a point. His new understanding of the issues would prove invaluable during jury deliberations.

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Competent and convincing expert witnesses are a vital part of cases involving economic damages and other financial calculations. Traditional accounting, financial and fraud examination skills just aren’t enough when it comes to litigation. A financial expert witness must be able to qualify as an expert in court and then effectively communicate in a written report and oral testimony to an opposing lawyer, a judge, and a jury who probably aren’t accountants or fraud examiners. Continue reading

Red Flags of Occupational Fraud

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When attempting to prevent corporate fraud, management must be aware of the warning signs and be willing to identify operational risk factors and implement effective solutions to the problems.

Operational red flags are among the most important red flags of fraud to be aware of. These are ways that the company’s operations may make it easier for someone to commit fraud and get away with it. Operational red flags of fraud can include some of the following:

  • Operating in “crisis mode” or “fire drill mode”: When companies don’t establish “normal” operations because there is always a crisis, it becomes next to impossible for employees to determine when something out of the ordinary is going on. A constant state of chaos means that it’s hard to pay attention to details, and things that might otherwise be considered unusual won’t be flagged.
  • No clear lines of authority: Employees must understand the pecking order within a company. If they do not, they will be unclear about who receives complaints, and they may be less likely to report suspicious behavior. Even in companies that utilize the “team” concept throughout, there is still a chain of authority that should be clear in case of trouble.

Continue reading

Do-It-Yourself Divorce Financial Analysis

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Hiring a forensic accountant for your divorce is expensive. If you can’t afford a forensic accountant, what can you do when you receive all the financial discovery in your divorce case?

First, the documents you’ll need:

  • Tax returns and W-2s
  • Pay statements or stubs
  • Bank statements, deposit tickets, canceled checks, check registers (hard copy or software like Quicken)
  • Brokerage account statements
  • Credit card statements
  • Loan documents and statements

Here are some steps you can take to analyze these financial documents so you can understand the finances and figure out if any money is missing: Continue reading

Sources of Information for Fraud Investigations

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Without information, a fraud investigation goes nowhere. There are abundant sources of information on people and companies, and the availability of personal information on the internet continues to grow.

Doing a thorough fraud investigation often goes beyond just analyzing documents produced by the client. The best forensic accountants and fraud investigators are able to find additional sources of information to help crack the case. There is plenty of art to finding clues in an investigation, and it all starts with knowing what to look for and where to find it.

Private records
Fraud investigations rely heavily on the availability of private records. In the typical business fraud case, helpful internal records could include financial statements, tax returns, sales and receivable records, expense documentation, proof of payments to vendors, or other information from a company’s accounting system. Continue reading

Stopping Employees From Stealing

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It might be hard to believe, but each and every day companies are losing money because they not only give employees opportunities to steal, they encourage it.

How? By not providing adequate oversight. A clerk, for example, sees that an error in an account wasn’t caught by anyone. A purchasing manager notices that no one is watching over his vendor relationships, and won’t know it if he establishes a fake account. Employees are not stupid. They know when they are being monitored and when their work is being checked. They know when they are working in an environment ripe for fraud.

But you have honest employees, you say? You’re probably right. If we thought job applicants were criminals, we wouldn’t hire them. But situations occur where the temptation to steal simply becomes too much. Imagine owing money to a hospital or having an expensive (and necessary) car repair that you can’t afford. What if your child needs clothing or food? There may come a day in your life when your morals are challenged because you have a financial need and an opportunity at the workplace that seems too good to pass up. Continue reading

The Largest Consumer Fraud: MLM (on the Investigation Game Podcast)

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Last week I joined Leah Wietholter of Workman Forensics in Tulsa, OK on her podcast The Investigation Game. We talked about one of the largest consumer frauds: multi-level marketing (MLM).

You may know MLM by other names such as: direct sales, network marketing, affiliate marketing, consumer-direct marketing, or home based business.

MLM is not a business. You’re not an entrepreneur. You’re not a boss babe. You’re a participant in a pyramid scheme. The products are overpriced. And the whole point of the company like Mary Kay Cosmetics, Amway, Herbalife, Beachbody, Melaleuca, Monat, Primerica, etc. is RECRUITING new people into the scam. Very little money is made by selling products. The goals is to recruit new people and sell them inventory packages that ensure big commissions for the people at the top of the pyramid.

You’ve heard this from me before. I’ve been researching MLMs for more than 20 years. Enjoy the episode!

Hiding Money in Divorce Using Cryptocurrency

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Everywhere you go, people are talking about cryptocurrency as an investment. From Bitcoin to Etherium to Dogecoin, there are a whole bunch of different cryptocurrencies that consumers can invest in. More people are starting to use cryptocurrency to pay for things and it is also gaining wider acceptance as an investment (albeit a very volatile one that isn’t for the faint of heart).

If you’re getting divorced and your spouse is knowledgeable about investing, you need to be aware of cryptocurrency as a way to hide assets. Experts say that more than 20 million Americans own cryptocurrency, and it can be difficult to divide in a divorce.

But first you have to find it. Continue reading

Lifestyle Analysis in White Collar Criminal Defense

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Both civil and criminal cases often involve an element of proving or disproving income of an individual or business. It is not unusual for a divorce case to include allegations of hidden income or assets. In contract disputes alleging the loss of sales or profits, an accurate determination of income is critical.

In criminal cases, the issues surrounding the income of an individual or business have even higher stakes. These cases are quite often tax-related matters, but cases involving white collar crimes and drug trafficking usually include questions about income too. Continue reading