Category Archives: Continuing Professional Education

Another Sold Out Event!

Our Chapter wants to extend its formal thanks to our partners, national ACFE and the Virginia State Police, but especially to our event attendees who made this year’s May training event a resounding, sold-out success! As the rave attendee evaluations revealed, How to Testify, was one of our best received sessions ever!

Our presenter, Hugo Holland, CFE, JDD, brought his vast courtroom experience as a prosecutor and nationally recognized litigator to bear in communicating every aspect of a complex practice area in a down-to-earth comprehensible manner with no sacrifice of vital detail.

As Hugo made clear, there are two basic kinds of testimony. The first is lay testimony (sometimes called factual testimony), where witnesses testify about what they have experienced firsthand and their factual observations. The second kind is expert testimony, where a person who, by reason of education, training, skill, or experience, is qualified to render an expert opinion regarding certain issues at hand. Typically, a fraud examiner who worked on a case will be capable of providing both lay, and potentially, expert testimony based on observations made during the investigation.

Certified Fraud Examiners (CFEs) and forensic accountants serve two primary roles as experts in forensic matters: expert consultants and expert witnesses. The fraud investigator must always be prepared to serve as an expert witness in court and learning how best to do so is critical for the training of the rounded professional. The expert consultant is an independent fraud examiner/accounting contractor who provides expert opinions in a wide array of cases, such as those relating to fraud investigations, divorces, mergers and acquisitions, employee-employer disputes, insurance disputes, and so on. In a fraud case, the CFE could identify and document all fraudulent transactions. This in turn could lead to reaching a plea bargain with a guilty employee. Therefore, the CFE helps solve a problem before any expert trial testimony is needed.

In addition, CFEs and forensic accountants are called upon to provide expert consultation services involving testimony in such areas as:

• Fraud investigations and management.
• Business valuation calculations.
• Economic damage calculations.
• Lost profits and wages.
• Disability income analysis.
• Economic analyses and valuations in matrimonial (prenuptial, postnuptial, and divorce) accounting.
• Adequacy of life insurance.
• Analysis of contract proposals.

Hugo emphasized that the most important considerations at trial for experts are credibility, demeanor, understandability, and accuracy. Credibility is not something that can be controlled in and of itself but is a result of the factors that are under the control of the expert witness. Hugo expounded in greater detail on these and other general guidelines:

• The answering of questions in plain language. Judges, juries, arbitrators, and others tend to believe expert testimony more when they truly understand what the expert says. It is best, therefore, to reduce complicated, technical arguments to plain language.

• The answering of only what is asked. Expert witnesses should not volunteer more than what is asked even when not volunteering more testimony could suggest that the expert’s testimony is giving the wrong impression. It is up to employing counsel to clear up any misimpressions through follow-up questions. That is, it is up to counsel to “rehabilitate” his or her expert witness who appears to have been impeached. That said, however, experienced expert witnesses sometimes volunteer information to protect their testimony from being twisted. Experience is needed to know when and how to do this and Hugo supplied it. Our presenter emphasized repeatedly that the best thing for an inexperienced expert witness to do is to work with experienced employing attorneys who know how to rehabilitate witnesses.

• The maintenance of a steady demeanor. It is important for the expert witness to maintain a steady, smooth demeanor regardless of which questions are asked and which side’s attorney asks them. It is especially undesirable to do something such as assume defensive body language when being questioned by the opposing side.

• Attendees learned how to be friendly and smile at appropriate times. Judges and juries are just people, and it helps to appear as relaxed but professional.

• To remain silent when there is an objection by one of the attorneys. Continue speaking only when instructed to do so.

• Attendees learned how best to state the facts. The expert witness should tell the truth plainly and simply. Attendees learned how the expert’s testimony should not become more complicated or strained when it appears to be harmful to the client the expert represents. The expert witness should not try to answer questions to which s/he does not know the answer but should simply say that s/he does not know or does not have enough information to form an opinion.

• Attendees learned to control the pace. The opposing attorney can sometimes attempt to crush a witness by rapid fire questions. The expert witness should avoid firing back answers at the same pace. This can avoid giving the appearance that s/he is arguing with the examining attorney. It also helps prevent her from being rushed and overwhelmed to the point of making mistakes.

• Most importantly, Hugo imparted invaluable techniques to survive cross examination. Attendees learned how to testify effectively on both direct and cross examination, basic courtroom procedures, and tricks for general survival on the witness stand. Attendees were told how to improve their techniques on how to offer testimony about damages and restitution while learning to know when to draw the line between aggressive testimony and improper advocacy. All our attendees walked away with more effective report writing and presentation skills as well as benefiting from a solid exploration of the different types of evidence and related legal remedies.

Again, thanks to all, attendees and partners, for making our May 2019 training event such a resounding success!

Fraudsters, All Too Human

Our certified Chapter members often get questions from clients and employers related to why a fraudster who’s victimized them did what he or she did. Examiners with the most experience in the process of interviewing those later convicted of fraud comment again and again about the usefulness to their overall investigation of a basic understanding of the fraudster’s basic mind set. Such knowledge can aid the examiner in narrowing down the preliminary pool of suspects, and, most importantly, assist in gaining an admission in a subsequent admissions seeking interview. ACFE experts regard fraud (and the process of interviewing) primarily as human constructs, and especially within the content of the interview process, to be able to tie in the pressure that the individual might have been under (as they perceived it) to the interview process; to understand that individual with regard to their rationalization as they were able to affect it, significantly increases the possibility of getting the compliance and cooperation that the examiner wants from the interviewee.

During your investigation, it’s important to remember that people do things for a reason. The fraud examiner might not understand the reasons a fraudster commits his or her crime, but the motivations certainly make sense to the perpetrator. For example, a perpetrator might commit fraud because her life has spiraled out of control, although it might not be out of control under a objective, reasonable person’s definition. But in the perpetrator’s view, her life has become so problematic that fraud is the only way she can see to restore balance. And during the fraud examination, if the examiner can get the suspected perpetrator to talk about the lack of control in her life, the examiner can often use this information to compel the fraudster to admit guilt and provide valuable insight into ways that similar frauds might be prevented in the future.

As a continuation of this line of thought, the examiner should consider possible human motives when examining evidence. Motive is the power that prompts a person to act. Motive, however, should not be confused with intent, which refers to the state of mind of the accused when performing the act. Motive, unlike intent, is not an essential element of crime, and criminal law generally treats a person’s motive as irrelevant in determining guilt or innocence. Even so, motive is relevant for other purposes. It can help identify the perpetrator; it will often guide the examiner to the proper rationalization; it further incriminates the accused, and it can be helpful in ensuring successful prosecution.

The examiner should search relevant documents to determine a possible motive. For example, if a fraud examiner has evidence in the form of a paycheck written to a ghost employee, she might suspect a payroll employee who recently complained about not receiving a raise in the past two years. Although such information doesn’t mean that the payroll employee committed fraud, the possible motive can guide the examiner.

ACFE experts also agree that interviewers should seek to understand the possible motives of the various suspects they encounter during an examination. To do this, interviewers should suspend their own value system. This will better position the interviewer to persuade the suspect(s) to reveal information providing insight into what might have pressured or motivated them and how they might have rationalized their actions. In an interview situation, the examiner should not suggest reasons for the crime. Instead, the examiner should let the individual share his motivations, even if the suspect reveals her motivations in an indirect manner. So when conducting an interview with a suspect, the interviewer should begin by asking questions about the standard procedures and the actual practice of the operations at issue. This is necessary to gain an understanding of the way the relevant process is intended to work as opposed to how it actually works. Additionally, asking such basic questions early in the interview will help the interviewer observe the interviewee’s normal behavior so that the interviewer can notice any changes in the subject’s mannerisms and word choice.

Always remember that there are times when rational people behave irrationally. This is important in the interview process because it will help humanize the misconduct. As indicated above, unless the perpetrator has a mental or emotional disorder, it is acceptable to expect that the perpetrator committed the fraud for a reason. Situational fraudsters (those who rationalize their right to an illegal enrichment and perpetrate fraud when the opportunity arises) do not tend to view themselves as criminals. In contrast to deviant fraudsters, who are more proactive than situational fraudsters and who are always on the alert for opportunities to commit fraud, situational fraudsters rationalize their crimes. Situational fraudsters feel that they need to commit fraud to regain control over their lives. Thus, an interviewer will be more likely to obtain a confession from a situational fraudster if she can genuinely communicate that she understands how anyone under similar circumstances might commit such a crime. Genuineness, however, is key. If the fraudster in any way detects that the interviewer is presenting a trap, he generally will not make any admission of wrongdoing.

So, in your examinations, never lose sight of the human element; that by definition, fraud involves human deception for personal gain. Why do people deceive to get what they want, or in some cases, what they need? Most humans commit deceptive acts to protect themselves from various consequences of the truth. Avoiding punishment is the most common reason for deception, but there are other reasons, including to protect another person, to win the admiration or respect of others, to avoid embarrassment, enjoy the thrill of accomplishment and to avoid hard work to achieve goals. When people feel that their self-security is threatened, they might resort to deception to preserve their image. Further, people can become so engaged in managing how others perceive them that they become unable to separate the truth from fiction in their own minds.

The ability to sympathetically cast oneself into the human situation of others is one of the most valuable skills that a fraud examiner can have in our efforts to determine the truth.

Lifelong Learning

lifetime-learningby Rumbi Bwerinofa, 2016 Central Virginia ACFE Vice-President

I’ve written before about how I struggled when I first started training in the profession of accounting. What I ‘d learnt, and what made sense, when I studied economics didn’t seem to work in accounting. As well as I’d generally done academically, I just couldn’t initially seem to get things to fall in place when it came to accounting. This made me afraid that I’d fail and I was additionally frustrated because, when I asked questions, others didn’t seem to understand why I didn’t understand.

In an attempt to get a handle on things and to gain understanding, when directed to do work, I would ask for a lot of detail – what exactly was I to do – because it was almost never clear what it all meant. I would get answers like – test bank to make sure it’s not overstated. That kind of answer was as clear as mud and so I responded – what do you mean? Sometimes the answer involved me going to prior year work papers and following the approach laid out there. You can imagine how I’d really feel like idiot when even looking at prior work papers often didn’t readily   make things fall in place.

Why was I supposed to take the steps that I was being asked to take? How would this give me any assurance that, for instance, bank was not overstated, whatever that meant. There were times when my supervisors lost patience with all the questions that I asked. I don’t blame them; there were times when I was frustrated by all the questions that I had. When under pressure to get the work done, there was the temptation to just follow the Same as Last Year (SALY – an acronym uttered with disdain by anyone seemingly worth their salt) approach and move on. After all, my reasoning went, the work done last year had passed muster so, even if I didn’t get it, it worked, right? Going through all this, it would have been very easy to blindly follow what had been done by others before me and, at a time when my ego was already taking a beating, not ask any more questions likely to be greeted with a sigh and impatient words. Instead, I just kept asking and (lo and behold) finally started getting answers that made sense.

Recently, I’ve worked on projects where I’ve trained staff, from interns to those with several years of experience and again been reminded of the importance of effective training to our profession. I’ve also been reminded of just how challenging the real world training process can be as we’re almost always working on projects with very tight deadlines and budgets. Through it all, I’ve had to be mindful that maintaining the integrity of the work we do means an even increased focus on training, most especially when the pressure mounts to just get the job done. It’s at times like that that important issues can be missed because people become overly focused on getting things signed off. Prior work is generally helpful as guidance but isn’t an etched in stone instruction as to what will invariably work now. Inevitable changes in how a client does business will require changes in the approach we take when working with them. Also, an on-going review of prior work may show items that were missed or that could be improved upon as we go about our work. All that said, the best tool we have in identifying the changes and improvements that need to be made to our work is by making sure that all involved in the work know what they are doing and, more importantly, why they are doing it.

Practicing as a Certified Fraud Examiner (CFE) or as Certified in Financial Forensics (CFF) practitioner involves, first of all, the application of relevant experience. Those of us in these professions must take the steps to make sure that those looking to become CFEs and CFF’s are not just logging hours but actually learning how to look at their work objectively, ask questions and developing and in depth understanding of the work at hand. By creating a strong foundation where knowledge and comprehension are seen as vital to what we do, we can have an environment where discussions and brainstorming are productive within an environment where we constantly seek to improve. This is especially important in our line of work where fraudsters and the ethically challenged are constantly innovating to improve the scenarios they employ to cheat and exploit vulnerable others. I don’t know about you but I’m excited when I have the opportunity to work with others explaining an issue or approach and my trainees get it. I can see how motivated that training makes them and how they in turn share what they just discovered with others. It’s a great bonus when those trainees then come up with suggestions to improve our processes and approaches.

So it’s up to each CFE to take life time professional learning seriously and not let the on-going pressures of what we do each day keep us from making sure that we and those we train maintain the highest standards envisioned by our credentials.