ACCT 410610: Forensic Accounting

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ACCT 410/610 Forensic Accounting

• An NDSU course developed taught by
• Thomas A. Buckhoff, Ph.D., CFE, CPA
• EideBailly Professor of Forensic Accounting
• Class Session 10
• October 31, 2001

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Quote for the Day 1

• A good interview requires a lot of forethought,
  skillful execution, and an ability to convey what
  happened during the interview to others.
• Source IRS text, p. 231.

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Quote for the Day 2

• Conduct the interview in a professional manner.
  Be friendly but not familiar or social. Remember
  that you are seeking the truth, not trying to get
  a confession or conviction.
• Source Fraud text,
• p. 196.

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Quote for the Day 3

• Fraud, like death or serious injury, is a crisis.
  People who are involved in or knowledgeable
  about a crisis generally have a predictable
  sequence of reactions to the crisis.
• Source Fraud text, p. 189.

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Quote for the Day 4

• Lying is hard work. Telling a significant lie in
  an interview or an interrogation is tough. Good
  interviewers can recognize a suspects
  struggling, halting, and laboring.
• Source Fraud text, p. 201.

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Quote for the Day 5

• Many frauds are solved, and many confessions and
  restitutions are obtained, because of good
  interviewing skills. Many other fraud
  investigations are blown because of interviewing
  mistakes.
• Source Fraud text, p. 189.

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Importance of Interviewing

• Those skilled in effectively conducting
  interviews will uncover more fraud than those
  without such skills.
• Case study
• Cenex gas station/ convenience store

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Resolving Discrepancies

• Identify discrepancy
• Review source documents and other records
• Employ other investigative procedures
• Interview suspect(s)

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Successful Interviews

• The success of an interview is dependent on
• The interview itself and,
• The person conducting the interview.

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Characteristics of a Good Interview

• Should be of sufficient length and depth to
  uncover relevant facts.
• Excludes irrelevant or useless facts.
• Can complicate or confuse the issue.
• Is objective and impartial.
• Is conducted on a timely basis.
• Should end on a positive note.

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Characteristics of a Good Interviewer

• Are people persons who are easy to talk to--not
  intimidating.
• Does not interrupt the subject.
• Displays interest in subject and what is being
  said--listens to understand.
• Phrases questions in a non-accusatory manner.
• Is professional in both appearance and action.

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Question Typology

• Introductory questions
• State reason for the interview and
  establish rapport.
• Informational questions
• Should be nonaccusatory.
• Closing questions
• Review facts and solicit additional
  information from subject.
• End on a positive note.

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Question Typology

• If subject becomes a suspect, two other types of
  questions should be asked
• Assessment questions
• Establish the credibility of the subject.
• Reading nonverbal cues is important.
• Admission-seeking questions
• Distinguish innocent from guilty.
• Obtain a valid confession.

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Beyond the Numbers

• Internal fraud at an electronics retailer
• Featured criminals
• Will and Lincoln
• Dominique
• Scott Barefoot, CFE

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Will and Lincoln

• Case involves shortages from the warehouse.
• Discrepancy between count of inventory and
  records.
• Will and Lincoln work on the loading dock.

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Dominique

• Case involves discrepancies between sales returns
  and inventory
• Dominique, a cashier, is a suspect
• High sales returns
• Suspect signatures

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Scott Barefoot, CFE

• His objective is to determine if employees are
  responsible for the inventory shortages

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Dominique Epilogue

• Confessed she embezzled 7,000
• Was terminated but not prosecuted
• Did not pay back the money
• Works somewhere else today--is she embezzling?

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Summary

• Interviewing is an extremely effective
  investigative method.
• Fraudsters can generally be persuaded to admit
  what they did.
• Fraud assessment questioning is useful in both
  fraud prevention and detection.
• Use the reverse proof approach in a hostile
  interview.

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Fraudwise, LLC

• Specializing in fraud detection, investigation,
  and prevention consulting services
• Senior Investigators
• Thomas Buckhoff, Ph.D., CFE, CPA
• Thomas OHalloran, MBA, CFE, EA
• 2974 Southgate Drive
• Fargo, ND 58103-3524
• 701-282-8443
• www.fraud-wise.com