Managing Client Emotions in Forensic Accounting and Fraud Investigation. Stephen Pedneault
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      I have also used generic terminology to refer to the other actors in a fraud investigation. Individuals encountered during fraud engagements include not only victims but also suspects, witnesses, family members, spouses, friends, and business associates. Throughout my book, I often refer to “client” emotions, but the term client is meant to encompass anyone involved in the engagement, not just the individual or organization for whom the fraud examiner performs fraud‐related services.

      Finally, a fraud investigation can be referred to by many names: a fraud examination, a fraud case, a fraud matter, or a fraud engagement. While the terminology may differ, each name refers to the same basic concept – a type of fraud scenario that requires the services of a fraud examiner. In my book, I use the terms case, matter, and engagement interchangeably.

      In my experience, in nearly every fraud matter the fraud examiner will encounter a wide range of client emotions, from rage to denial to depression. Dealing with client emotions can be challenging at times, and conducting fraud engagements without addressing the emotions of the different parties involved hampers progress. Choosing to embrace rather than ignore clients’ emotions can often make the difference between successfully resolving a matter or allowing it to continue in perpetuity.

      Every fraud examiner should seek out training in this area and develop practical strategies he or she can use for dealing with client emotions. There is a pressing need to discuss this aspect of fraud investigation and forensic accounting with individuals entering the field, as well as those with minimal experience. Even experienced individuals will benefit from witnessing how the success of an engagement often hinges on how fraud examiners address client emotions.

      The discussions in the following chapters are based on my 31 years of experience working as a certified public accountant (CPA), specializing as a certified fraud examiner (CFE) conducting fraud investigations and forensic accounting engagements. Working in the context of public accounting, I have mainly been brought into client situations from the outside, rather than working internally within an organization or for a governmental agency. Thus, while many of the discussions apply to any context, fraud examiners may have to adapt them to their particular context.

      I truly hope you can learn a thing or two from my experiences and apply this knowledge in your fraud examinations.

      And to those experienced fraud examiners, I trust you will be nodding along as you read my stories, as you too have had many similar experiences in your own client matters.

      Enjoy the read.

PART ONE Why Address Client Emotions?

      EVERY CLIENT HAS A STORY

      Every fraud engagement starts with a story. It is critical that the fraud examiner obtain this story, knowing there are at least three versions to be had: the version provided by the party retaining the fraud examiner; the version provided by opposing parties, such as the individual suspected of committing fraud; and the truth. As more parties are added to the matter, the number of versions increases, but in the end there is only one version that matters: the truth.

      In order to start off my discussions about client emotions, I will start with a story. Sadly, I have seen many similar stories, and this one is a great example of how client emotions become intertwined with a fraud examination.

      I set up a time to meet at the attorney's office to review the records and information he had been able to collect, as well as to meet his clients. The attorney ended our conversation by warning me that the sister was very emotional and her brother had a serious drinking problem and could become hostile.

      When the day of our meeting arrived, I drove to the attorney's office with one of my staff members. We were greeted at the door and brought into an empty office where the attorney met with us privately prior to introducing us to his clients. He said he had been meeting with the sister and brother for an hour or so and that the brother had become quite agitated toward the trustee. The attorney warned us again that the brother could be a bit of a loose cannon.

      Next, the attorney brought us into his conference room, where the sister and brother were sitting at the table. The sister, a well‐dressed, mild‐looking woman with a petite frame, sat next her brother, a middle‐aged man dressed in jeans, a flannel button‐down shirt, and sneakers. She was sitting upright and attentive, with papers neatly stacked in front of her, while he was slouched back in his chair at a 45‐degree angle. The attorney introduced us to the siblings, and we started the meeting.

      The attorney provided his rendition of what had happened from the time the siblings’ mother had died to the present, identifying the difficulties he had encountered in obtaining information and answers for his clients. As part of his story, the attorney noted that the mother was divorced from his clients’ father, who had since died, and that she had remarried a man named Tim. That made Tim his clients’ stepfather, although his clients were well into their fifties when their mother remarried.

      Sometime between the mother's marriage to Tim and her death, their mother had redone her estate planning, changing the terms, beneficiaries, and distributions, which had previously been a simple estate left solely to her son and daughter. The new estate planning designated all of the mother's assets to be transferred into a trust for the benefit of her son and daughter. The mother named her accountant as the independent trustee over her trust and provided him with broad authority over the management and use of her trust's assets until Tim's death. Upon Tim's death, the trustee was to distribute the remaining trust assets to the son and daughter.

      The trust provided two additional provisions. First, during Tim's lifetime, the trustee was to distribute a specified amount each calendar year to the son and daughter. Second, the trustee was to allow Tim the exclusive use of the mother's residence until his death, with the provision that the trustee had the right to inspect the property at any time, provided he gave Tim advance notice of the inspection.

      The trustee, who was retirement‐aged, was a certified public accountant (CPA), as was his son, who was 20 years his junior. The son was СКАЧАТЬ