Fraud without Frontiers: Accountants Face a Changing Global Issue

IMGCAP(1)]Long ago, after obtaining my CPA license and spending two years in public accounting, I was appointed a special agent of the Federal Bureau of Investigation. Over the next decade, I investigated at least a thousand fraud cases. Despite their variety, there was a common thread — nearly all began and ended in the United States of America. But that was then and this is now.

  • Last year, the Securities and Exchange Commission charged Computer Sciences Corp. with falsifying its financial statements by manipulating profits on business in the United Kingdom, Australia and Denmark.
  • Recently, Hewlett-Packard subsidiaries in Russia, Poland and Mexico paid nearly $4 million in bribes to public officials. This resulted in fines and penalties of more than $108 million.
  • Several large U.S. companies in the metals, nuclear power and solar products industries have now become targets of cyberattacks that are believed to have been orchestrated by Chinese state-owned organizations.

Such crimes can have a major impact on the auditor’s ability to attest to the fair presentation of financial statements. In 1933, when the Securities and Exchange Act required that all U.S. public companies be independently audited, most of their business was domestically based. Conducting an audit in a foreign country was, well, foreign. But that was then and this is now.
Complicating the current state of affairs are U.S. corporate tax laws where American companies are increasingly choosing to be domiciled offshore. According to a 2015 study by Citizens for Tax Justice, more than $2 trillion is being held in tax haven countries.



Truly international U.S. companies are almost always audited by large global firms. So at least those auditors in America can rely on their colleagues in Uzbekistan to observe inventory or count cash. But most CPAs don’t work for international firms, nor do they typically have colleagues abroad that can assist them. They are small practitioners, like Philip Levi of Quebec-based Levi & Levi, who practices both in Canada and in the U.S.

“I’ve had a number of cases where I was required to seek help outside North America,” Levi said. “If it is a fraud matter, the Association of Certified Fraud Examiners is a global organization where I can readily locate anti-fraud experts around the world. But if it is strictly an accounting issue, I must rely on the international contacts I’ve developed over the years. For those CPAs who don’t know who they are dealing with, that can be very tricky.”

Ronald Durkin of Indico, Calif.-based Durkin Forensics, another small practitioner, agrees. “It’s all about relationships,” he said, “and all accountants are not equal. To work in an international environment, an American CPA might have to know what information he or she is entitled to have under foreign laws or privacy restrictions.” But Durkin says there is no tried and true formula: “It has taken me years to develop the right contacts abroad. Frankly, those relationships are one of my firm’s most valuable assets.”



In the ideal situation, small CPA practitioners will start developing those global relationships before they are needed. Here are just a few ideas:

  • Check with your American colleagues who do business internationally. Send introductory letters to those abroad who have been highly recommended. Follow up at least annually with reminders that also mention the services you can provide to them; international business is a two-way street.
  • When traveling overseas for business or pleasure, take time to seek out other accounting professionals and introduce yourself. Buy them coffee or lunch.
  • Consider joining one or more alliances of international accountants. There are several available, including the newly proposed venture between the American Institute of CPAs and the English-based Chartered Institute of Management Accountants, which could show promise.
  • If you do forensic work, membership in the ACFE may be of value, as 40 percent of members live outside the United States. Even as a non-certified (associate) member, you can have access to a vast global network.
  • Sign up for professional seminars and conferences abroad. There is simply no substitute for peer-to-peer networking. Remember, it is better to develop these contacts early.



The nature of fraud is ever-evolving but the working definition isn’t. Fraud is essentially a lie with a special purpose: to deprive an innocent victim of money or property. Thirty years ago we could never have imagined that the culprits could be scraggly kids from the Ukraine, the steely-eyed military from China or worse — even global corporations. But that was then and this is now. Realize when you need help in international waters and get in the boat. Because when it comes to fraud, the times — they are a-changin’.

Dr. Joseph T. Wells, CFE, CPA, is founder and chairman of the Association of Certified Fraud Examiners, based in Austin, Texas, and the author of numerous books and award-winning articles on fraud. Reach him at

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