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From the Corner Office
From the Corner Office 2013 Archives
From the Corner Office 2013 Archives
The Opportunity to Commit Fraud Doesn’t Have to Be There
By A. Christine Davis, CPA/CFF, CVA
As an experienced forensic accountant, I’ve been retained to investigate allegations of employee embezzlement and quantify potential losses to the company. Sadly, the misappropriation of assets by employees is a fact of life. Future and newly-minted CPAs should be aware of the “fraud triangle,” a visualization of the three factors typically found to exist within or around the perpetrator when a fraud was committed:
: The motive for committing the fraud, like the need to pay insurmountable medical bills.
: Relates to the perpetrator’s defending or justifying the act, like “the company doesn’t pay me enough anyway.”
: Relates to the “opening” that the perpetrator sees, like a weakness in internal control. Of the three factors, opportunity is the one factor that a company can manage. Therefore, be cognizant of the realities of the fraud triangle in your company.
The opportunity to steal from the company in the normal course of business arises from internal control-related issues. For example, there could be a lack of proper segregation of duties, an absence of a direct interface between one accounting system and another such that manual intervention is required (thereby creating the opportunity to manipulate data), or a toxic combination of both.
Assume an employee who handles cash receipts is also authorized to prepare and post the journal entry recording revenue. The opportunity to steal cash and book a correspondingly lower debit to the cash account is present. In a different scenario, assume there is no direct interface between the company’s accounts payable system and its bank’s cash payment system (assume the company pays vendors by wire transfers); therefore, a manual upload of disbursement information to the bank—including vendor bank accounts—is necessary for payment processing. However, the opportunity to replace a valid vendor’s bank account number with someone else’s bank account number is present.
If you’re in a position to do so, take a look at whether there is a lack of proper segregation of duties in processes and evaluate the risk. In addition, take note of whether there is no direct interface between two significant systems—meaning someone needs to manually transfer sensitive information from one to the other, creating the risk of error. Having your antenna up for these scenarios may keep the fraud triangle from taking shape under your purview.
_“A. Christine Davis, CPA/CFF, CVA”:mailto:firstname.lastname@example.org is the director in-charge of litigation consulting and forensic accounting at DZH Phillips CPAs and Advisors.
Follow Your Passion
By Jeff Lenning, CPA, CITP
You want to know the thing I like about CPAs? No, it’s not that they can answer tax questions or quickly add stuff up in their head. It’s that CPAs are everywhere, in every industry and in every company. We’re doing all sorts of different things, for all sorts of different people. As modern CPAs, we have wide latitude in type of work we can do. We are able to work on things that are important to us and things we are passionate about. That’s what I did.
Growing up, I guess I was always considered a nerd. I mean, that’s what the kids would call me. I wasn’t very good in sports, I was in the band and I went to an after-school computer programming class. I loved computers—a lot. I was totally passionate about them. In fact, in my sixth-grade yearbook, I wrote that I wanted to be a computer specialist when I grew up. A friend of mine recently posted a copy of the yearbook page on Facebook, which I’m happy to share with you.
As a CPA, my work is not limited to debits and credits and tax returns. In fact, I don’t do any traditional CPA work: no tax returns, no audits, no financial statements … and, for me, that’s great! My firm specializes in IT consulting. I get to show CPAs nationwide how to get their work done in less time by properly using Excel. How fun is that!
Being a CPA, I’m able to follow my passion and make a living doing work I love. I believe that when you do the stuff you love, you’ll be better at it and more successful. So, I would encourage you to find the industry, company or type of work that you love. And follow your passion.
Jeff Lenning, CPA, CITP, is the founder of Click Consulting.
By Carisa Wisniewski, CPA
First, let me congratulate you on choosing to be a CPA and part of one of the most respected and dynamic professions. It’s important to always remember it’s an honorable profession that requires leadership at every level. You cannot opt out of leadership solely because you are the newest person or not in charge. To have made it into the accounting profession you had to work hard learning how to record activities or interpret the results and what it means to be a CPA. As professionals we hold ourselves out as having high ethical standards, and those we interact with expect us to be proactive in doing “the right thing” even when it is difficult.
There is an emphasis in the auditing profession on the importance of “professional skepticism.” I believe it’s not just applicable to auditing but to all practicing CPAs, including those in private industry or who provide tax and other advisory services. We’re trained to have specialized technical skills and, in many situations, have to deal with complex situations and circumstances. It’s our role to strike an appropriate balance within our interpersonal skills providing a service (and we all provide a service whether external or internal at an organization or with services to individuals) without ever compromising our professional responsibility to understand the facts of any situation.
One of my earliest jobs was at Disneyland (I worked in the Haunted Mansion), and there I learned valuable lessons about taking care of the park’s clients (guests) while still maintaining safety. These lessons have carried over to form many of my deepest-held philosophies on servicing clients in public accounting while maintaining the highest level of professional skepticism and safety.
We have implemented a program in the San Diego office of Moss Adams based on a book by Dennis Snow, “Lessons from the Mouse.” This book focuses on how to make a difference in your service approach while maintaining extremely high standards. As CPAs we have a responsibility to the public, to clients and to our colleagues. It’s important to emphasize that having a proactive, engaging approach to client service does not mean you compromise your professionalism.
I believe we each have a responsibility to our profession to maintain our professionalism by demonstrating personal leadership in even the most challenging situations.
Carisa Wisniewski, CPA, is partner-in-charge at Moss Adams LLP.
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