Managing Client Emotions in Forensic Accounting and Fraud Investigation. Stephen Pedneault

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СКАЧАТЬ employees). She said she believed the coach's wife had a job, but did not know what she did or where she worked. She thought the coach had obtained a credit card in the school's name to use with the sports program, but she had never seen any of the credit card statements.

      She seemed to be getting nervous again, and she asked us if the coach was in trouble. We told her it wasn't her fault if someone did not bring in their records and that we were only seeking the bank statements and financial records for the school so we could review them. However, we now also needed to know why the coach had not brought the sports account records to the school as requested.

      We asked her to call the coach and tell him that the auditors were at the school and wanted him to bring the bank statements and financial records to the school that morning. We left her to make the call and went into a conference room to review the records that she had organized for us.

      About 45 minutes later, the administrative employee came into the conference room and said that the coach was in the lobby with a box of records. We went to meet the coach and introduced ourselves. He looked very nervous. We then asked the coach to join us in the conference room. We told him we were conducting a review of the school's finances and as such we needed all of the school's bank statements. He still looked nervous.

      Rather than diving right into things, I decided to take a different approach and see if his nervousness continued or diminished as we spoke. I asked him to tell us about the sports programs at the school. He described the various sports programs and teams and his family's involvement. He said that he and his wife had attended the school when they were younger, and now their children attended. During the conversation, his nervousness did not diminish. I asked him how the finances worked for the sports programs, and he told us about the fees and the nature of the program's expenses, like uniforms, field rental costs, and referee fees. Everything he said appeared straightforward and consistent, but he remained anxious.

We asked him if he'd brought all of the bank statements, paid invoices, and deposit records for the program, and he said that he had. When we asked him why he maintained the records at his house rather than the school, he said it had always been that way, and it was easier to keep everything together at his house. He said no one had ever asked him for the records in the past. We asked him why he hadn't brought them this morning as requested, and he said that he wanted to be able to explain them to the auditors when they reviewed them. His agitation grew.

      We thanked him for bringing in the records and told him that we would go through them, along with all of the other accounts, and would circle back with him if we had any questions. As we finished our conversation, we asked him one final question: When we went through the financial records for the sports program, would we find anything that could be a potential issue regarding the finances and how they were handled?

      He said that that was what he wanted to talk to the auditors about. He was now the most nervous he had been since we began talking. We asked him if he would like to tell us why he was so nervous. He said that when we went through the bank account, we would see expenses unrelated to the sports programs. We asked him to describe these types of expenses, and he said he wasn't sure if he should be talking with us. We told him that we understood and that we would get to the truth one way or the other once we reviewed the records. We also already knew about the credit card. We told him we weren't meeting with him to judge him, but rather we just wanted to get his side of the story about the school's sports program funds.

      When he heard that, his face relaxed a bit, and he said that the check payments and credit‐card charges were for personal and family expenses rather than school‐related expenditures. We asked him to provide some detail about these expenses and spent the next hour or so going month by month through the bank statements, having him identify the personal expenses he'd paid with the school's sports funds. He also detailed how not all of the sports fees collected had been deposited, because he and his family had needed the funds at times to pay their mortgage or other expenses. Then he took us through the monthly credit‐card statements, which revealed that the credit‐card activity had nothing to do with the sports programs.

      After reviewing all of the records, we thanked him for meeting with us. We told him he could have gone another way, by discarding all the records and declining to speak with us, but by being forthcoming, at least it was now all out on the table and we could work with the school, counsel, and him to resolve the issue of his misuse of school's funds. He looked much less stressed and nervous as we ended the meeting.

At the outset of this matter, we'd had no idea there was a problem with the school's sports funds. We knew there had been an issue with the finance manager and with tuition and fees not being receipted and deposited into the school's bank accounts. However, we had no idea there was a completely separate issue with the sports program's finances. By listening respectfully to the administrative employee's story – and then treating the coach the same way – we were able to uncover a completely separate problem that was easier to quantify than the original issue.

ROLLERCOASTER

      During a fraud engagement, individuals may become frustrated, angry, or depressed. They may break down and start crying during parts of their story and then turn angry during others. It is prudent to prepare for mood changes and expect a rollercoaster ride of emotions. Throughout it all, actively listen to clients and allow them time to regain their composure as needed. The impact of being a victim of fraud, or being accused of fraud, is very personal and the individual will likely be under a significant amount of stress. Their emotional state may be very unstable, and they may feel violated, especially if trusted family members or friends are involved in the matter, which is often the case.

      It is important to note that while I discuss the victim's perspective in this book, these points are equally valid when the fraud examiner meets with other individuals involved in the matter. Regardless of the individual's role in the matter, everyone is entitled to the same genuine, objective, nonjudgmental, and respectful approach, and they are entitled to tell their story. Remember, there are three versions of every story, and the fraud examiner's goal is to determine the most important one, the only version that matters: the truth.

      The role of the fraud examiner is to determine what happened, to the extent possible, given the limitations that arise in every case. Limitations often include missing information, lost or deleted files, and lack of access to key individuals involved in the matter. It is not the role of the fraud examiner to determine guilt or innocence. That determination is the sole responsibility of the trier of fact – the judge or the jury. Thus, to the extent practical, even in the most difficult matters the fraud examiner needs to set aside casting judgment and instead focus on obtaining the facts, which at times is easier said than done.

      However, in determining the facts, it is also important to recognize that fraud examiners are only human, and some matters involve very difficult details, especially when children and physical abuse are involved. I discuss strategies for the fraud examiner dealing with their own emotions later in the book.

Before we continue this journal of client emotions, I think a brief discussion regarding feelings versus emotions is warranted. Merriam‐Webster defines feelings as “one of the basic physical senses of which the skin contains the chief end organs and of which the sensations of touch and temperature are characteristic.”¹ Included in the definition is “an emotional state or reaction.”²

Merriam‐Webster defines emotions as “a conscious mental reaction (such as anger or fear) subjectively experienced as strong feeling, usually directed toward a specific object and typically accompanied by physiological and behavioral changes in the body, a state of feeling.”³ СКАЧАТЬ