Podcast Summary: "What It's Like To Be... - A Forensic Accountant"

Podcast Information

• Title: What It's Like To Be...
• Host/Author: Dan Heath
• Episode: A Forensic Accountant
• Release Date: November 14, 2023
• Description: Curious about what it’s like to walk in someone else’s (work) shoes? Join New York Times bestselling author Dan Heath as he explores the world of work, one profession at a time, interviewing people who love what they do. From couples therapists to stadium beer vendors, discover the intricacies of various professions through engaging conversations.

Introduction to Forensic Accounting

The episode opens with Dan Heath introducing Chris Ekimoff, a forensic accountant, who recounts a pivotal case involving a CEO who discovered discrepancies in the company's payroll numbers. The situation revealed that the chief financial officer (CFO) had been embezzling funds for over three years.

Key Quote:

• Chris Ekimoff [00:28]: "That year was four and a half million dollars. That's a, you know, 50% increase over budget, which you don't have to be accountant to know. That's massive."

Understanding Forensic Accounting

Chris Ekimoff explains the distinction between general accounting services and forensic accounting. While traditional auditing is "a mile wide and an inch deep," forensic accounting is "a mile deep but only an inch wide," focusing intensely on specific transactions to uncover fraud.

Key Quote:

• Chris Ekimoff [01:42]: "Forensic accounting is the inverse. It is a mile deep, but only an inch wide. And that's because you're specifically looking at how payments are being processed."

The CFO Embezzlement Case

Chris delves into the CFO case, highlighting how personal expenses were initially charged as travel expenses. However, when the global pandemic struck in 2020, travel expenses became scrutinized, leading the CFO to disguise his embezzlement as additional payroll expenses in 2021.

Key Quote:

• Chris Ekimoff [02:15]: "He actually stopped stealing in 2020, and then in 2021 went back to start stealing again, but knew that the business was still not traveling to the degree they were in 19 and prior."

The Forensic Accounting Process

Dan inquires about the initial steps taken when investigating a potential fraud case. Chris outlines the importance of understanding the company's operations, brainstorming with the internal team, and formulating hypotheses to guide the investigation.

Key Quote:

• Chris Ekimoff [03:37]: "Getting as robust a understanding of the circumstance is really where we can be most effective."

Interviewing Suspects

Chris discusses the technique of conducting "admission seeking interviews," where the forensic accountant confronts the suspect with evidence to elicit a confession. While some individuals deny wrongdoing despite clear evidence, many express relief upon admission, desiring to lift the burden of deceit.

Key Quote:

• Chris Ekimoff [05:20]: "Most of these people that admit or we're in an investigation sometimes even show a sign of relief."

Legal Implications and Recovering Funds

The conversation shifts to the interplay between forensic accounting and the legal system. Chris explains that not all cases result in financial recovery due to factors like how the stolen money was spent. In some instances, leveraging assets such as property can aid in restitution.

Key Quote:

• Chris Ekimoff [10:39]: "There's a whole closet full of very expensive HDMI cables."

Emotional Engagement and Memorable Cases

Chris shares a particularly impactful case involving a headmaster who embezzled over a million dollars from a private school, leading to its closure. This case underscores the profound personal and institutional harm caused by financial fraud.

Key Quote:

• Chris Ekimoff [09:01]: "This was not taken from a multi-billion dollar corporation. It's a rounding error."

Prevalence of Fraud in Businesses

Dan asks about the incidence rate of fraud in companies. Chris references the Association of Certified Fraud Examiners, stating that approximately 5% of a business’s revenue can be attributed to fraud losses, encompassing everything from minor expense report manipulations to significant embezzlement schemes.

Key Quote:

• Chris Ekimoff [16:30]: "Their running statistic is that top line revenue of a business, 5% of that can be attributed to fraud loss."

Detecting Fraud: Red Flags and Verification

The discussion moves to the practical aspects of identifying fraudulent activities. Chris emphasizes the importance of scrutinizing invoices for inconsistencies, such as irregular pricing or non-standard formats, which can indicate manipulation or deceit.

Key Quote:

• Chris Ekimoff [18:32]: "If I pick 11 random invoices from business A and they're numbered 101 to 112 and they happen throughout the year, my question is, how is this business still open?"

Recommendations for Aspiring Forensic Accountants

When asked about recommending forensic accounting as a career, Chris highlights the value of variety and dynamic interactions with different clients and industries. He notes that the profession is ideal for those who thrive in ever-changing environments and can handle diverse challenges.

Key Quote:

• Chris Ekimoff [21:38]: "I would ask people to look inside themselves and say, are you okay with getting yelled at by a different client every week."

Lightning Round: Professional Insights

In the concluding segment, Dan engages Chris in a lightning round of questions, uncovering unique aspects of the forensic accounting profession.

1. Specialized Terminology:

   • Chris Ekimoff [23:39]: "Sienter is the legal term for a fraudulent intent."

2. Most Famous Forensic Accountant:

   • Chris Ekimoff [25:06]: Mentions Frank Wilson from Elliot Ness's team, instrumental in capturing Al Capone through tax fraud. He also references the fictional forensic accountant portrayed by Ben Affleck in "The Accountant."

3. Phrase That Strikes Fear:

   • Chris Ekimoff [26:35]: "Here's something I should have given you at the beginning of the investigation." This indicates a client acknowledging potential oversights or missed information that could complicate the investigation.

Host Reflections and Conclusion

Dan reflects on the episode, particularly highlighting the paradox that trusted individuals are often the ones committing fraud due to their access and authority. He likens financial controls to societal measures like locking up razor blades, which, while creating inconvenience, help prevent larger issues caused by a minority.

Key Quote:

• Dan Heath [14:29]: "...it's usually the most trusted individuals who are the ones most responsible for fraudulent activity... because trusted people are the only people with the access and the wherewithal to pull off the crimes."

Dan concludes by praising the forensic accounting profession for its role in using mathematical skills to combat financial crime, underscoring the importance of professionals like Chris Ekimoff in maintaining organizational integrity.

Notable Quotes with Timestamps:

• Chris Ekimoff [00:28]: "That's a, you know, 50% increase over budget, which you don't have to be accountant to know. That's massive."
• Chris Ekimoff [01:42]: "Forensic accounting is the inverse. It is a mile deep, but only an inch wide."
• Dan Heath [14:29]: "...the most trusted individuals who are the ones most responsible for fraudulent activity."
• Chris Ekimoff [23:39]: "Sienter is the legal term for a fraudulent intent."

Final Thoughts This episode of "What It's Like To Be..." offers an in-depth exploration of the forensic accounting profession through Chris Ekimoff’s experiences. It sheds light on the meticulous nature of fraud investigation, the emotional toll of uncovering deceit, and the crucial role forensic accountants play in safeguarding businesses from financial misconduct. Whether you're intrigued by the analytical challenges or the detective-like aspects of the job, Chris’s insights provide a comprehensive understanding of what it truly means to be a forensic accountant.