Accountants need to stress ethics, says ACFE prez
Accountants and other financial professionals need to stress ethics in the workplace to succeed in deterring financial fraud, according to James Ratley, president of the Association of Certified Fraud Examiners.
Speaking at a conference Friday at Pace University sponsored by the New York chapters of the ACFE and the Institute of Internal Auditors, Ratley discussed both personal and organizational ethics. “If the organization you work for does not have the ethical structure you want, it’s time for you to move on,” he said. “The only way you’re going to be able to stay there is to change your ethical makeup, and that’s not the right answer.”
He noted that he sometimes gets phone calls from financial professionals who are concerned when they notice internal controls have not been followed in an organization, a red flag of potential fraud. Sometimes when they go to see their manager, they will be told to leave it alone. They may then feel prompted to leave the organization, and some have left the financial industry and gone into other fields, even the construction industry. However, ignoring internal controls could lead to fraud, as in the case of one company where managers routinely made single-source purchases as a way of getting around contracting requirements until someone exploited the loophole for their own benefit.
Ratley talked about how his career as a Dallas police officer eventually led him to the Dallas Police Department’s Internal Affairs Division and eventually to the ACFE. At the ACFE, he has instituted strict policies to protect the integrity of employees, the hiring process, and the organization’s own internal controls.
“One of the things I’m really proud of when I took over as president of the ACFE is I’ve really tried to make sure that we do everything we promote on the road,” he said. Soon after Ratley became president, he changed the way the organization issued bank checks to put in an extra level of protection, saving $6,000 in the first week.
He also makes sure employees are able to cover their monthly expenses, and he instituted a strict policy against bullying or harassment.
The ACFE often presents convicted fraudsters as speakers at its conferences, but it has policies against paying them for their speeches. Ratley has seen a high incidence of recidivism among the fraudsters he has dealt with over the years. “We will not pay a fraud perpetrator for what they do,” said Ratley. “None of them receive a nickel from us. Of the people I’m showing you here, over half of them have re-offended. Half of them are back in jail.”