The TV series "CSI-Crime Scene Investigation," has brought forensics to the attention of popular culture. But in recent years a new type of forensics investigation has burst on the scene in response to the AP fraud epidemic. This new kid on the block is Forensic Accounting.
The Forensic Accountant is, of course, an accountant. But they must also be a skilled investigator, able to follow the clues they find in the numbers to the desk of the perpetrator.
Craig Greene is typical of the new breed. A Partner in the Chicago accounting firm of Rome Associates, he acknowledges that Forensic Accounting has become the sexy side of the accounting profession.
"All of a sudden, instead of putting numbers in boxes, we're playing corporate James Bond and chasing down criminals," he says.
But it's not all glamour and romance. "The reality is you spend lots of time hunched over a computer."
Yet, sometimes one item "one clue" will point the way to the criminal. One case Greene was hired to investigate involved a Florida firm that had received an anonymous tip that one of its executives was receiving kickbacks from a vendor. He went through the invoices and checks and almost immediately saw something that caught his investigator's eye. The address of one of the vendors looked wrong to him - it seemed to be in a residential section, not a business area.
He poured over maps of the area and discovered, in fact, the address was in a townhome complex. Reverting to the time honored procedure of the investigator "legwork" he went to the address. He found the vendor's mother living there. A little friendly persuasion and he had the books and the cancelled kickback checks.
Greene says coming up with such overwhelming evidence is not unusual. "The evidence we put together is usually so damning, it's just "Let's make a deal.""
When he's not following numbers to unearth a scheme, Greene is an instructor at the Association of Certified Fraud Examiners (ACFE), one of several associations that teach and certify forensic accountants. The ACFE is headquartered in Austin, Texas, and has chapters around the country.
Other related organizations are the American Board of Forensic Document Examiners, in Houston; the American College of Forensic Examiners, which provides a Certified Forensic Accountant course, in Springfield, Mo; and the Association of Certified Fraud Specialists in Sacramento.
Forensic Accountants are the niche specialists among Document Examiners, whose work may also include handwriting analysis, forged documents and signatures, altered records, and related materials. The Forensic Accountant may also analyze such records in his search for the source of an AP scam. For instance, he may look carefully at invoices to determine if they are originals or copies, if they've been altered, or are for the same delivery. Often they examine checks to determine if they've been altered, or are made out to the proper vendor or account.
But forensic accounting is not merely a matter of plodding through the documents. Sometimes, the investigation can create a little anxiety.
Susan Henry, a senior manager with BDO Seidman in Chicago, drew the job of investigating employees in a U.S. company's Mexican factory. The company was certain one of the U.S. nationals was embezzling, but they didn't know how, or how much. They did, however, have a pretty good idea who.
"They knew some employees were living high on the hog," Henry says. Henry and her associates were introduced as auditors in to do an audit. Nothing was said about ferreting out a thief.
It didn't take long for Henry to finger a prime suspect. And that's when the problem arose. "We couldn't take a rental car across the border, so one of the managers drove us to the factory each day," she notes.
As it turned out, their driver was what forensic accountants call their "target" - the prime suspect. Henry says there were some anxious days until they confronted the target and he confessed.
The embezzler is now in prison.
Forensic accountants follow "the paper trail." Michael Kessler, of Michael Kessler and Associates in New York, a forensic accounting and investigation firm, says it isn't difficult to find a paper trail in Accounts Payable.
"Accounts Payable fraud creates a tremendous paper trail. Today's sophisticated computer databases make it simple to track down the fraud. The problem is, by the time we (the forensic accountants) get there, hundreds of thousands of dollars may have been stolen."
The solution, he emphasizes, is to put systems and processes in place that can prevent fraud, or at least tell you immediately when something is amiss.
