Sensational Fraud Stories | AccountingWEB

Sensational Fraud Stories

OOOH – That’s bad

I fell for it again. I was attending a governmental conference and decided to stay for the general session where an FBI agent went into the gory details of a huge fraud case he worked on last year. He went as far as to share excerpts from phone conversations where they dropped the f bomb so much, it was like watching GoodFellas or something. He even went as far as to call one of the fraudsters “The Godfather.” 
And the whole audience sat there riveted. “Oooh – that is bad.” “Wow, I can’t believe that.” The audience sounded like they were watching fireworks… Oooh. Ahhh. Wow….   
When he started talking about how one of the fraudsters, who in addition to stealing massive amounts of money, also had child pornography on his computer, I got up and left.
Was I being edified by this information or just disgusted? I felt like I had just read something sordid in The National Enquirer about Britney Spears
Auditors are so fascinated by the topic of fraud that we actually hire ex-fraudsters to speak to us at conferences. In an effort to ‘get in the heads’ of fraudsters, we reward those fallen from grace by paying them thousands, sometimes tens of thousands of dollars to tell their fascinating story. Who is getting ripped off now?
Yes, yes, I know fraud is real. Yes, yes, I know it is important. But do we have to talk about it all the time? At every conference?
Our addiction for sexy fraud stories has made the Certified Fraud Examiner designation super popular among auditors. And as far as I can tell, very few of us ever encounter fraud in our work lives. Some of us wish we would – that way we could act like those cool investigators on TV. Maybe like a CSI.
I hope we all realize that we are not on TV. 
While we are lapping up this drivel over and over and over – we are failing to learn new auditing techniques. We aren’t sharing with each other the most effective way to sample. We don’t hear from the experts about what sort of things really hang clients up when it comes to federal grants… I could think of a dozen topics that I would find more useful. I went to one session at the conference about preparing for an orange (red book and yellow book combined) peer review and I learned a few wrinkles in the standards that I didn’t catch on first read. Now that is useful information.
And, although I have been told several times that I am wrong – and expect to hear it again – how can we have a professional designation without any standards?   Why does the CFE refuse to tell its members what a fraud report should contain? Maybe that doesn’t matter.
What the CFE has shared with us is the fraud triangle and the fraud tree. Both are very useful and help identify what fraud looks like. That is great. I’ve got it. Seen both, know what they say. 
Now it is time to move on to another topic - maybe something to do with IT. I feel like our lack of knowledge regarding this topic is really going to bite us in the butt down the road. IT will be the next big auditing scandal and we aren’t doing anything to prepare for it. Why? Maybe because we are wasting valuable conference time being distracted by sexy, redundant, stories of fraud. 
 I think we should stop expecting our conferences to be filled with tantalizing, firework like fraud stories and instead use them as an opportunity to share what works and how to get better. I also would love it if we could drop the whole ‘faciliated panel’ idea…all that means is no one on the panel has to prepare… and it usually shows.

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Governmental auditors unite! Leita Hart-Fanta, CPA, CGFM, and CGAP is the author of “The Yellow Book Interpreted” and owner of a website devoted to training for governmental auditors. Whether you are an internal auditor or monitor for a government entity or a CPA doing grant audits, you will enjoy Leita’s humorous take on the complexity of auditing in the government environment.

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