Month: August 2018

Why Is It So Easy to Commit Fraud?

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It sometimes seems like it’s easy to commit fraud at work. Why is that so?

One of the main reasons is that employers must put trust in their employees and give them access to data and assets. It’s also important to remember that employers give responsibility to people who are trusted. If someone wasn’t deemed trustworthy enough to take money to the bank, she or he wouldn’t be handed the bank deposit. That trust inherently means that opportunities to commit fraud are handed to employees each day.

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Tax Returns and Divorce Cases

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One of the most common documents utilized in a financial investigation is the income tax return. It’s a key document in any divorce case, so the personal income tax return is always examined. And if there is a business, the tax return for that entity should be examined too.

What can we learn from the tax return? Maybe more than you imagine. Today I’m going to walk through the lines on the personal tax return (Form 1040) and some ways that these items can be analyzed to search for hidden income and hidden assets.

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What to Do After a Fraud Investigation

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After a fraud investigator is done with her work and has issued the expert report, company management and retained attorneys must decide what to do with the information presented. If the case is already in litigation, the use of the report is obvious. If the company has not yet taken action, a few options should be considered.

Internal Discipline

It is natural to want to dismiss an employee as soon as it is apparent that the person has committed a fraud. It is often safer for the company to have the suspect off-site, so that no more fraud can occur, but it is important to realize that this may also hamper the gathering of information. For this reason, some companies decide not to immediately terminate the employee. If the employee is still actively employed by the company when the fraud investigator’s report is issued, a decision must be made about her or his future. The company could decide to do nothing if sufficient evidence is not available or if the evidence exonerates the employee.

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Net Worth Method of Proof for Unreported Income

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When an IRS auditor or criminal investigator suspects that a taxpayer has unreported sources of income, he or she looks for ways to calculate that unreported income. One way is the net worth method of proof. Forensic accountants and fraud investigators can use the same method to calculate unreported income in other types of cases, … Read more Net Worth Method of Proof for Unreported Income

Skills of a Fraud Investigator

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How do I become a fraud investigator? What skills does a forensic accountant need? I get asked these questions a lot, so today I’m going to give my thoughts on some of the important qualifications and skills a fraud investigator might have.

The educational background of a good fraud investigator can fall into a wide range of disciplines. Fraud investigators have degrees in accounting, finance, police science, law, and criminal justice. There is no widely accepted course of study for fraud investigators, although those degree programs that offer a strong foundation in accounting and finance seem to prepare students well for the numerical component of investigations.

Many excellent fraud examiners have a work history that is far more important than their educational background. On-the-job experience as a police detective, federal agent, insurance claims analyst, financial statement auditor, or financial analyst can lend itself well to a career in fraud investigations. It’s not unusual for practical experience in the field to play a much bigger part in the fraud investigator’s skills than any type of classroom training. The field of fraud examinations has an extremely varied range of educational and work experience. Other careers often have a few well-defined career paths, but the road to success as a fraud investigator can lead in many directions.

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Behavior of Upper Level Executives Who Commit Fraud

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A while back we talked about behavioral red flags of fraud, which are the signs that someone might be involved in a fraud at work. Some of the most common red flags are living a lifestyle that exceeds a person’s earnings and unusual attitudes on the job (being combative, possessive of their work, etc.) The … Read more Behavior of Upper Level Executives Who Commit Fraud

Faces of Milwaukee: The Face of Forensic Accounting

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From the Faces of Milwaukee 2018 special feature in Milwaukee Magazine:

It wasn’t an accident that Tracy Coenen became a forensic accountant. She always had an interest in the criminal justice system, with an eye toward becoming a prison warden.

While attending Marquette University, a specialty class in the criminology program called Financial Crime Investigation was enough to hook Tracy.

She worked as a financial statement auditor at the “Big Six” firm Arthur Andersen before moving to a small forensic accounting firm to learn the art of fraud investigations. Tracy stepped out on her own more than 18 years ago to start Sequence Inc., where she works exclusively in the area of forensic accounting.

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Why My Clients Work With Me

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It’s important to think about why your clients work with you. It can guide your marketing efforts and it can help you refine your service offerings.

My clients like the fact that what they see is what they get. I’m the forensic accountant who will do all the work on their project. They don’t have to worry about someone inexperienced learning the art of forensic accounting on their dime or possibly even botching their case. Experience is key, and my clients know that they get my experience.

My clients also like that:

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Interviewing in Fraud Investigations

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Interviewing witnesses and suspects is a critical part of any fraud investigation. There are tons of resources out there to help fraud investigators learn how to be effective interviews. There are books, videos, courses, and certifications.  I’m going to quickly cover some of the high points of interviewing here.

Fraud investigators are continually in question-and-answer mode when trying to understand a company, its operations, the players, and the suspected fraud. Much of this is done informally, with an information exchange between employees and investigators.

A big part of interviewing involves having the right demeanor and body language. People who are uninvolved in the fraud and are giving you information want to feel comfortable doing so, and they want to know that the investigator is listening. That has to be accomplished while directing the discussions so that time is not wasted on much unnecessary commentary. There must be a focus on the items that will help solve the case.

The best interviewers are able to connect with those being interviewed in a way that makes them want to help and provide information. They have a way of guiding the discussion while listening to the person giving information. They do not interrupt a lot, and even when they need to focus the interviewee, they do it in a way that does not seem like an interruption. Excellent interviewers have the ability to put the interviewee at ease. They are professional in their demeanor, yet relaxed enough that the interviewee feels comfortable sharing information.

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