Tenacity, focus and preparation: Don’t get lost down the rabbit hole

There are key moments when tenacity is critical within the lifecycle of any forensic engagement.

News Flash: The Chicago Blackhawks win the 2013 Stanley Cup!  OK, so now that THAT is out of the way, let’s talk about forensic accounting.  I use sports analogies all of the time (as you may know by now) and this column does not differ. There’s a characteristic that all successful sports figures have in spades and is required for any successful forensic accountant: tenacity. Both the Hawks and Bruins faced elimination in the playoffs, found ways to win, and advanced to the Cup Finals. Lesser teams were dealt the same deficits and fell.  This level of tenacity, self-confidence and perseverance is what separates champions from mere contenders. 

There are key moments when tenacity is critical within the lifecycle of any forensic engagement:

  • gathering and reviewing (often massive quantities of) data;
  • conducting various (and numerous) analyses of the relevant data (after determining which data is relevant);
  • interviewing key witnesses;
  • compiling the results into a cogent and compelling report (often under shifting deadlines not in your favour); and
  • testifying (defending) to the report and facing cross-examination.

On a pragmatic note, there is a fallacy in thinking that tenacity can be measured by the amount of time devoted to a pursuit. The value of completing the above actions must be constantly measured and weighed against the cost (using a “cost-benefit” approach) or the project will be doomed to severe overruns and a very brief lifespan. Make sure you understand any and all budgetary concerns before launching into a “deep dig.”

Forensic accountants are rarely engaged on a project at the very onset. Typically, we are brought on board as data is being gathered, either by en entity’s management in an internal investigation or as part of the discovery process in litigation. If working on an internal matter, the forensic accountant likely enjoys access to all relevant data directly from management. If in a litigious context, the forensic accountant must sift through data provided by the opposing party. One of the oldest tricks in the book is to provide far more data than requested (none of it related to the request). I once worked on a matter where the other party gave us eight copies of the same set of documents, yet no copies of the documents we requested!  Even when reviewing documents that appear compliant, such as bank statements, the tenacious forensic accountant must focus on the details. For example (and from another “real-life” case of ours), we realized during data review that three years of monthly bank statements were all missing page two. This page contained the deposit history of a certain account and the opposing side was incented to hide sources of income and cash from us. In this case, we presented our findings to counsel and they subsequently received sanctions against the opposing party. While gathering and reviewing data, keep in mind that tenacity means working through the material quickly and with an eye for anomalies.

I conduct the vast majority of financial analysis using spreadsheets and database tools. Advances in analytical software have made data analytics faster and far more concise. Once I know I have the right data to work with (complete and accurate), I really love crunching the numbers. This is the thrill of the hunt; unwinding transactions and identifying data that indicates fraudulent activity. This is also an area where scope creep on a forensics project can occur. Looking through data can lead to new avenues of exploration – sometimes these are fruitful pursuits, oftentimes they are not. Many well-intended novice forensic accountants will tenaciously analyze everything, leaving no stone unturned and as a result run up substantial fees. Running down rabbit holes may have suited Alice well; it will cause your team and clients great anguish. Another tenacious way to analyze data is to consider all sources for cross-referencing. For example, though bank statements are factual and clearly identify sources and uses of cash, one may need to consult the general ledger to find the purpose of the transaction … or the stated purpose!

Anyone who has faced cross-examination from a skilled attorney knows that quitting is simply not an option. The single best antidote for testimony jitters is preparation. Tenacious preparation. One should never be comfortable under cross-examination, but having a command of the facts and all facets of a case is the way to quell nerves and score points as the expert. I have faced opposing counsel and felt what being down 3-1 in a best-of-seven is like. Not fun. Facing a 2-1 deficit with 1:30 left on hostile ice, my beloved Hawks showed the heart of a champion and scored twice in seventeen seconds. Less tenacious teams would have imploded and given in to the Bruins sheer strength. Forensic accounting can be a lot like hockey, eh?

Do you think forensic accountants need to be tenacious? What other skills and traits make a great forensic accountant?


About the Author

Brad Sargent, CPA, CFF