by Seth Fineberg

New York - Detecting and preventing fraud seems to be on many CPAs’ menus these days, largely due to the current regulatory environment, and the American Institute of CPAs has responded in kind with an aggressive accounting agenda that may not waver any time soon.

While current AICPA offerings are considered by some to be very basic on the topic of fraud, the reception of several CD-ROM courses and webinars has been a bit overwhelming for the institute, and there is more to come.

At its spring Council meeting, the AICPA called on CPAs to dedicate 10 percent of their CPE to fraud. To assist, the institute offered a $119 CD-ROM self-study course on detecting and preventing fraud titled “Fraud and the CPA 2003.”

Also offered was a free, one-hour course (available in webcast and CD-ROM form) aimed at CPAs in industry called “How Fraud Hurts You and Your Organization.” The institute claims that it received and fulfilled over 100,000 requests for this course Ñ 70,000 of which were from U.S.-based CPAs. Both of these efforts were in conjunction with the Association of Certified Fraud Examiners.

Over the summer, the AICPA began targeting educators with its anti-fraud efforts, preparing teaching notes for lecturers and populating its Web-based anti-fraud resource center with over 20 case studies that walk through potential frauds and how to react. The resource center on the AICPA Web site purportedly receives an average of 15,000 hits per month.

All of the above makes AICPA vice president of professional services Arleen Thomas very happy, but she realizes there is much more to be done.

“There is no question that we will continue to not only help the practice fulfill their responsibilities, but those in industry and academia as well,” Thomas said. “This may be a large undertaking, but right now our priority is to develop the discipline of detecting fraud and making sure members have the right skill set.”

Thomas also quashed rumors that the AICPA is looking into offering its own credential process for CFEs, stating, “At some point, if we see a demand for such a thing, we will look into it,” and that its current agenda is enough for the institute to handle at the moment.

For one, the AICPA is working on internal controls and programs designed specifically to help management detect and prevent fraud. These programs may not see the light of day until later next year, as the institute is considering working with the Committee of Sponsoring Organizations on the project. Thomas expects that an exposure draft on this will be issued by next fall.

In addition, on Nov. 6 the AICPA is teaming up with the FBI to present a webcast called “Arresting Financial Fraud: The Inside Story from the FBI.” The program will explore lessons learned from real FBI cases. The webcast qualifies for two CPE credits.

Forensic accounting and fraud detection are among the fastest growing specialty services for an increasing number of CPA firms. Garden City, N.Y.-based Margolin Winer & Evens is one of them.

The firm has noted a significant increase in the number of partners seeking a CFE certification this year, most of which stems from client needs.

“Clients want us to provide assurances on internal controls, particularly private companies that want to adhere to the same standards as public companies even though they are not required to,” said Howard Fielstein, who heads up the firm’s litigation support and forensic accounting group. “We are finding more and more they want their internal controls looked at and to have fraud assessment reviews.”

As for the AICPA’s efforts, Fielstein is quite pleased to see what they are doing and is anxious for more.

“Clearly, with the crises that have befallen the financial markets, in addition to new regulations like SAS 99, there is a growing need for better-trained people, and I feel the AICPA is meeting that need and providing support,” he said.

The only real criticism CPAs seem to have of the AICPA’s programs is that they are late in coming.

“The AICPA is just not where they need to be in terms of their anti-fraud courses. I think they should have been doing this five years ago,” said Brad Newkirk, an audit partner in the Winston-Salem office of Dixon Odom. “They are offering some things like the application of standards, but not much else. I think eventually they will get to where they need to be, though.”

Newkirk said that he was pleased that the AICPA and the ACFE are working together, and has referred some partners to both organizations’ courses.

He also noted that Dixon Odom has also seen a significant increase in the amount of forensic accounting work it does, as well as the number of people in his firm interested in a CFE certification.

Practice management consultant Troy Waugh, president of Nashville, Tenn.-based Waugh & Co., sees aggressive accounting education as a good thing, but believes there is more to building public trust than just earning a CFE title.

“I personally come down on the side of principles-based accounting, rather than rules-based. Most of the aggressive accounting occurs when people are dodging the rules or finding legal loopholes,” Waugh said. “I believe the accounting profession will engender more trust by abiding by solid principles, such as substance over form.”

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