This is one article in a series of interviews with firms that are members of the International Group of Accounting Firms (IGAF).
Ray Dunkle started his accounting career like many CPAs, by getting a degree and then putting in years as an auditor. But, he admits, this wasn't exactly the life he envisioned. Then one day, as he was starting a new job as an auditing supervisor, his career took a quick right turn and ended up on a path much more suited to his liking. Now he's the guy who looks under rocks and peers into dark corners when assets vanish, trying to figure out who-dunnit and how they dunnit. With economic pressure mounting and nerves wearing thin, businesses face even greater vulnerability. As the director of forensic accounting and business valuation for Brockman, Coats, Gedelian & Company (BCG& Co.) , he has a big job to doâ¦ but he's up to the challenge.
About the firm
BCG & Co. was started in northeast Ohio by three partners, David Brockman, Jim Coats, and Tom Gedelian, and a mere staff of seven. Today the firm also has offices in Tennessee and Georgia, two affiliates, and a staff of about one hundred. When they needed a slogan that would reflect the core of the firm's mission and culture, they adopted this tagline: "Caring People. Shaping Futures." For a company that not only focuses on high-quality work inside the office but also carries that commitment outside to serve the community, that says it all. As the economy tilts, that kind of attitude is more important than ever.
For four years in a row, BCG & Co. has received the Northcoast 99 award for being one of the top 99 places to work in northeast Ohio. Insiders believe that what has truly set them apart from their competitors is the attitude of making things better, putting their hearts into their work to improve the future for their clients and their community. These are also the reasons why Dunkle is a good fit within the culture of BCG & Co.
As chief sleuth, he has high expectations of himself and his staff. For him, the evidence of his commitment is in the long list of acronyms after his name. Besides being a CPA, he is also an accredited senior appraiser (ASA), is accredited in business valuation (ABV), a certified valuation analyst (CVA), a certified fraud examiner (CFE), and is certified in financial forensics (CFF). That's a lot of acronyms... but on the lighter side, Dunkle says that all those letters roll into one title that really suits himâ¦ that is, N-E-R-D. If being conscientious, hard-working, and placing high value on integrity and service makes him a nerd, he's more than okay with that.
Besides his day-to-day work, he also serves as a board member and advisor to the Auditor of the State of Ohio's Special Investigation Unit â apart from state employees, he is the only private practicing CPA on the committee. He's been called to serve as an expert witness before the Supreme Court of Ohio. And a few years ago, he was asked to author a chapter on business valuation in the sale of small businesses, for a book entitled "Make the Leap: From Mom and Pop to Good Enough to Sell," by Genevia Gee Fulbright (Infinity Publishing, 2005).
What does it take to succeed as a forensic accountant?
In his interaction with aspiring CPAs, Dunkle is often asked how they can follow in his footsteps. His advice? Become a good auditor first. For him, auditing was not his ultimate goal, but he says it is a great training ground where accountants learn to dig deeper, go further and drill vertically and sideways if necessary to trace problems to their origins. For accountants who don't quite fit the stereotype of CPAs, forensic accounting may be a good choice.
In addition, he advises would-be forensic accountants to learn to make tough judgment calls. With auditing and accounting, answers are generally black and white. There is always a right and wrong answer. When you're dealing with fraud, things are not what they seem.
For Dunkle, this was a good career choice. "I'll have wonderful stories to tell my grandchildren someday," he says. But it hasn't been all fun and games. After all, the people he sometimes investigates don't take kindly to having the spotlight turned on them. He's been threatened, even to the point of having to get a restraining order in the course of the job. "There's a lot of anger out there. When you start digging you never know who you will offend," he says. That also explains why, though he's a dedicated family man, he is reluctant to talk about his wife and kids. In other words, this isn't a glory job.
Fraud happens: Forensic accounting in an economic downturn
As the economy continues to slow, it's an unfortunate fact that the need for fraud detection and fraud prevention will only increase, says Dunkle. Not long ago, the median fraud loss to small businesses was about $90,000... enough to cause some companies to close the doors forever. In their 2008 annual report, the Association of Certified Fraud Examiners said the median loss has jumped to $200,000. Even more dramatic, the report reveals that the most likely perpetrator can be found in the accounting department (28.9 percent).
The second most common fraud perpetrator is the executive or member of upper management (about 18 percent). "You hire them to guard the henhouse, but nobody is guarding the guards," says Dunkle. These facts point to a common problem within forensic accounting, that is, business owners simply don't want to believe that fraud will happen within their ranks.
"It takes three conditions for fraud to occur," he says.
- Opportunity, which is most often available to insiders in the accounting department or upper management.
- A breakdown of integrity.
- And pressure, such as financial hardship.
Dunkle's key focus at BCG& Co. is on trying to educate business owners about the crucial need for fraud prevention instead of just calling him in after the fact. "You almost need a psychology degree," he says, to get them to understand how critical it is to close the loopholes before thieves venture through them. Dunkle likes to explain it this way. "The most I've ever charged to help a business avoid fraud is less than the least I've ever charged to help investigate it." And, he adds, that doesn't include the damages. You can't get much clearer than that.
"Any business has fire insurance, which they need," says Dunkle. "But the likelihood they will ever use that insurance is slim to none. On the flip side, the chance of falling victim to fraud, is significantly greater. Yet few business owners want to invest time and energy into fraud prevention." Now as segments of the general public are facing greater financial pressure, those who are inclined to compromise their integrity anyway and who have the opportunity by virtue of their employment may be even more willing to try a little creative financing of their own, says Dunkle. That's why the FBI is doubling its staff of financial crimes agents.
For firms that offer significant forensic accounting services, the challenging economy drives up revenues, which proves there is an upside to everything. But if Dunkle and the partners in BCG & Co. had one wish, it would be that business owners would lock the doors before the horse gets away. In most cases, prevention is far cheaper and less intrusive than the cure. Until then, Dunkle will keep looking under rocks and shining a light into dark corners, helping businesses recover when fraud happens.