The state of the union of forensic accounting from both sides of the 49th parallel

Fraud surveys consistently find expense reimbursement fraud to be one of the most common methods to carry out fraud, as such schemes are generally easy to carry out and tend to stay below the radar.

To our colleagues, friends and loyal readers, greetings and salutations!  Notwithstanding that the summer of 2013 will go down on record as one of the wettest in recent years, I hope that everyone found ample opportunity to enjoy some downtime with family and friends.

As we ‘slip-and-slide’ our way into the fall, we are undoubtedly chartering through some interesting times, as concerns about fraud remain one of the top-ten ‘stay awake’ issues for management and boards alike.  Fraud surveys consistently find expense reimbursement fraud to be one of the most common methods to carry out fraud, as such schemes are generally easy to carry out and tend to stay below the radar. 

I have come across many organizations whose expense reimbursement policies and procedures are robust, from requiring itemized lists of expenses to original receipts, and everything in between. However, certain organizations fall short when their managers/supervisors blindly review the actual expense reports submitted by employees, without sufficient scrutiny of the underlying support provided or reconciliation to company policies; employees realize this and take advantage.

Over the last few months, we have witnessed Canadian’s Senators’ expenses coming under the ‘electron’ microscope; even the Royal Canadian Mounted Police (RCMP) has taken a heightened interest in the Senators’ expense practices.

It’s critical that organizations have ironclad employee contracts and policies that protect both employer and employee rights, particularly when discipline and dismissal issues arise.

The perception that nobody is immune to fraud allegations seems to hold true, whether you are the Chief Financial Officer (CFO) of a privately held business or high profile executive, such as the eccentric and outspoken real estate mogul, Donald Trump.  The illustrious University bearing his name is alleged to have engaged in a phoney scheme that bilked students for up to $35,000 U.S. each; such allegations have yet to be proven in court.

Forensic accountants and the professionals with whom we work recognize that the rapid advancements in technology and consciousness of the environment require an adaptation to new investigation methods to ensure that we properly identify and secure all potential sources of evidence. 

Investigators further recognize that technology has enabled fraudsters to seamlessly move funds between international jurisdictions.  The effectiveness—or lack thereof—for forensic accountants, in conjunction with available legal remedies, to identify bank accounts and other assets, trace funds and freeze assets, is critical to the success of the investigation. This can represent the difference between a fraud victim being able to recover misappropriated funds or not.

The use of technology in conducting investigations has become commonplace, in order to effectively and efficiently process large volumes of data that exist in most organizations today; from data analytics to demonstrative evidence tools that are particularly useful in court, to computer forensics. 

Recognizing the changing face of forensic investigations and the evolving role of the forensic accountant from lead investigator to investigative consultant, Brad Sargent, my co-author of this blog, and I will be moderating an engaging panel of seasoned professionals at the upcoming AICPA Forensic and Valuation Services Conference, offered by the American Institute of Certified Public Accountants (AICPA) in association with CPA Canada, to be held November 10-12, 2013 at Caesars Palace in Las Vegas, NV.

In addition to two forensic accountants from Canada and the U.S. (representing the Leafs and Blackhawks, respectively), the panel will comprise two U.S. attorneys, one Canadian employment lawyer and a computer forensic professional who citing recent cases will cover a variety of “hot topics” impacting the North American investigative and forensic accounting community.  

As the title of this blog indicates, the theme of the panel is “The State of the Union of Forensic Accounting from both sides of the 49th Parallel.” 

We will be addressing current trends in the world of asset recovery, including answering the following critical questions:

  • How are fraudsters using technology and false identities to conceal illicit activity and seamlessly moving proceeds of crime all over the globe? 
  • What are some of the current strategies being used by forensic accountants, together with lawyers/attorneys, to help clients trace and recover misappropriated assets? 

Like other experts who testify as witnesses in court, the role of the forensic accountant has evolved over recent years, as courts have taken specific and aggressive steps to weed out the ‘hired guns’.  AICPA Conference participants will hear from the perspective of a U.S. litigation attorney, including getting answers to the following questions:

  • How has the voir dire process changed and what impact does this have on forensic accountants?
  • What strategies are lawyers/attorneys using to discredit expert witnesses?
  • How can forensic accountants prepare themselves for such increased scrutiny/examination?

As indicated earlier, the role of technology in today’s investigations has changed dramatically.  A seasoned computer forensics professional will share his insights based on experience from recent investigations, including addressing the following key questions:

  • How are forensic accountants and computer forensic professionals dealing with the key challenges faced today insofar as the identification, collection and preservation of electronic evidence?
  • I heard that file attributes and meta data were the same thing—is this true?

Our panellists will also address the impact on forensic investigations vis-à-vis the discipline and dismissal process, from the perspective of a Canadian employment lawyer.

While I hope to see you there, Brad and I also plan on sharing a few highlights and learnings from the conference in our upcoming posts.

For more information or to register go to:

AICPA Forensic and Valuation Services Conference l November 10-12, 2013 l Caesars Palace, Las Vegas, NV

Benefit from much more insight into the most current and relevant topics in forensic accounting today and take advantage of special pricing. 

This was originally published by one of CPA Canada's legacy bodies.

About the Author

Edward Nagel, CPA, CA•IFA, CBV

Forensic accountant