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Fraud & Forensic Accounting Ed confab roundup

June 2, 2010

“Accountants on steroids.”

That’s how FBI special agent Bob Herndon described forensic accountants at the opening keynote of the 2010 Fraud and Forensic Accounting Education Conference. Herndon, a CPA, called forensic accounting the fastest growing segment of the accounting industry.

Herndon was a key investigator in the landmark Archer Daniels Midland (ADM) price fixing case, immortalized in the book and Matt Damon movie “The Informant.” He shared information about that case and others in which the level of corruption strained the imagination.

“I have job security because people do crazy things,” he said.

He said that putting a fraud case together is similar to preparing an audit for a client, except that it requires a naturally suspicious mind and critical thinking skills to see and analyze what others might not notice.

“We’ll train you how to shoot a gun,” he said, but implied that you can’t teach people the deductive reasoning skills necessary to be a good investigator.

Herndon says he joined the FBI when he realized he could compile financial statements for the rest of his life, or “save the world from evil and destruction.” He chose the latter. His address included tips on the importance of character, attitude and a positive tone at the top in preventing fraud. He also shared many details of the ADM investigation, such as how the same green lamp, fitted with a hidden video camera traveled room to room, hotel to hotel and continent to continent during the ADM case – without once being noticed.

He also shared tips for working with suspects in an investigation.

“When I confront somebody about a crime I already know what they did,” he said. “My focus is on how they’re gonna go forward – if they’re going to cooperate.”

When faced with the evidence, he said, most suspects do cooperate. One, he said, began to confessing to everything he’d done wrong since elementary school.

Herndon was one of dozens of high-level speakers at the conference. They tackled topics including Ponzi schemes and feeder funds, mortgage and insurance fraud; issues related to IFRS, procurement and divorce; legal pitfalls in fraud investigations; risk management for financial institutions, and what local officials can expect when the FBI enters investigations.

Accounting firm Porter Keadle Moore and Georgia Southern University, in conjunction with the Center for Forensic Studies in Accounting and Business, sponsored the event in Atlanta May 13 to15.

Other highlights:
•    Former FBI Special Agent Joe Dooley, now with KPMG, recapped the international investigation against bizarre conman Martin Frankel
•    Francine McKenna, of Web site “re: The Auditors,” shared figures showing that auditors failed to exercise due professional care in 71 percent of SEC enforcement cases. She also noted that many auditors sanctioned by the SEC continue working at their firms.
•    Assistant U.S. Attorney Barbara Nelan gave an inside look at the types and incidences of mortgage fraud.
•    LECG Managing Director Ken Yormark filled in the group on the Foreign Corrupt Practices Act. He also pointed out that while “grease payments” (payments to secure or speed government action) are legal, more businesses are refusing to pay them.
•    Conference chair Don Berecz, the fraud and forensic accounting program’s first director at Georgia Southern University, shared a model to launch similar programs at other universities.

Terri Thornton is the owner of Thornton Communications, a PR and social media firm serving clients in accounting, law and real estate. (Clients include Porter Keadle Moore in Atlanta.) She is also a freelance editor for Strategic Finance and Management Accounting Quarterly, published by the Institute of Management Accountants.

Comments (1)
to view a partial list of crimes committed by FBI agents over 1500 pages long see
forums.signonsandiego. com/showthread.php?t
Posted by msfreeh | Wednesday, June 02 2010 at 12:43PM ET
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