A Forensic Accountant

Summary

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.

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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.

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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."

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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.

Transcript

[Dan Heath]

Chris Ekimoff is a forensic accountant. One day he got a call from a CEO who had discovered something about the company's chief financial officer, and it wasn't good.

[Chris Ekimoff]

It appears that he has been taking money from the business inappropriately, and I'd like to understand how much and how it happened.

[Dan Heath]

The company had been looking at its payroll numbers, and they noticed a discrepancy. The budget for employee salaries and benefits was $3 million, and the actual spend.

[Chris Ekimoff]

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. And so the cfo, when questioned about it by the CEO, didn't make up a story. He said, you know, I've been stealing from the company for three years.

[Dan Heath]

Okay?

[Chris Ekimoff]

And so the CEO is kind of gobsmacked, right? Like anyone would be. You've trusted this guy. He worked there for something like 15, 17 years.

[Dan Heath]

Welcome to the show. I'm Dan Heath. This is what it's like to be. On each episode, we profile somebody from a different profession. We chase our curiosity about what other people do at work. All day, every day, we try to walk in their shoes. Today we're chatting with a forensic accountant, Chris Ekimoff. We'll hear about a headmaster who stole from his own students. We'll learn about what sorts of clues you look for when you're scouring someone's records for evidence of fraud. And we'll hear how this wary outlook, always being on the lookout for people lying or cheating, affects your perspective in everyday life. I'm Dan Heath. Stay with us. So what is a forensic accountant, exactly?

[Chris Ekimoff]

So I use the shorthand in audit or general accounting services are a mile wide and an inch deep. You're not looking at every single transaction, but you're getting a general sense of how appropriate these transactions are. 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 are payments being processed in Uganda. Are the right people receiving the appropriate amounts of money? Are we interacting with government officials in compliance with our policy and with international law?

[Dan Heath]

So to circle back to that cfo, the one who'd been caught embezzling millions of dollars, how did he get away with it? Well, for years, he'd been charging personal expenses to the company as travel expenses. But beginning several years ago, Chris told me that was no longer possible.

[Chris Ekimoff]

The kicker, Dan, was 2020. The global pandemic happened and travel ended. And in that year, he could no longer code those expenses to travel because as all of us did in that day, you knew if travel expenses were the same as 2019, you're probably skirting a lot of the local laws and issues around Covid. So 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. So we tracked that activity through and he started coding it as an additional payroll expense, which was partly truthful.

[Dan Heath]

In his defense, it was. It was an extra payroll expense we.

[Chris Ekimoff]

Could spend in the next hour talking about the tax implications of that issue. Right. Because he was not reporting that income and the business recording that as payroll because it hadn't been done that way for the 10 years prior.

[Dan Heath]

So when you're brought in in a case like that, there's an anomaly, There's a suspicion of some kind. You're hired to come in. What's the first move? Like, where do you start?

[Chris Ekimoff]

You know, getting as robust a understanding of the circumstance is really where we can be most effective.

[Dan Heath]

And are you on site interviewing people or do they send you a pile of documents? Or like, how do you first get your head around the situation?

[Chris Ekimoff]

I think really to kind of break it down. Day one, CEO calls and says they're embezzling. What does the company do? What is the normal course of business? Right. What industry are they in? What kind of contextual things can I learn through my own research before I ever approach these target of an investigation or start reviewing documents? The second is really working internally with our team to brainstorm what types of insights are we trying to glean? What is our objective? What hypothesis are either confirming or refuting? And what financial information or other information do we need for that? And some of that too comes from a professional responsibility perspective. Most forensic accountants are certified public accountants, are certified fraud examiners. And we hold ourselves out to have a certain professional standard about the work that we do. Right. I'm not just going to take Johnny's answer to be like, no, I'm not embezzling, and then write a report that said Johnny said, no, we're done. We're going to kick the tires a little bit. Right. We're going to do some due diligence into the appropriateness of his conduct and what his response might have been to be able to answer that. Then to your question about being on site, sometimes you'll sit across the table from somebody you've known has stolen millions of Dollars and you'll do what's called an admission seeking interview. Right? You gather all your information, the classic cases, you interview the suspect last that you think did it, so you can have as much information as possible and sit them down and kind of say, all right, explain this to me. I see a check with your name on it, I see your signature on that check, I see it for $5,000 and I see no business reason for that to happen. Why was this check written and why did you sign it? And that can be a tough answer.

[Dan Heath]

And do most people cave in that situation when they realize you've got the evidence or. Or a lot of people still in deny, deny, deny mode?

[Chris Ekimoff]

Depends on the level of sophistication. You know, I've sat across from people who will never admit it, even though, you know, we've got an email that they sent that said, you know, I'm committing a fraud. Haha. This company is so dumb, right? Like, dude, you wrote this, you know, 18 months ago and now you're telling me it didn't happen. So there's always going to be that 5 or 10% that are denying or think they can get out of it or think they're smarter than you. But most of these people that admit or we're in an investigation sometimes even show a sign of relief. They say, you know, I've been living under this, you know, terrible cloud of stress and deception and lies and I feel so terrible, I'm glad I got caught. Right? And that that's not to minimize the punishment. They may go to jail, they may lose their license or their ability to practice or their job, but they just want to get out from under this huge albatross that's been over their lives. So in those interviews, and we don't have to get into the techniques of it, but it's really to give them an out to say, listen, this happens a lot. We understand. Was this a mistake? You know, did you think that this was appropriate? It's okay, you know, talk to me about what your thinking was. And that often leads to a better resolution for the company too. To know where they may have missed on a policy or on a signature or on an authorization request, beyond just someone denying to the nth degree and not wanting to talk to you, what.

[Dan Heath]

Is the interface between what you do and civil or criminal law? Like when someone does confess in a moment like that, do you refer them to the authorities or is that outside the scope for what you do or how does it work?

[Chris Ekimoff]

It goes hand in hand. It's not 100% in one direction or another. Like I talked about that embezzlement investigation over a 10 year period for $7 million. We were hired by the legal counsel for the business. So they're attorneys are considering are we going to be able to recover any of this money? Short answer is really no because he spent most of it on travel. Right. You're not going to get a flight back. Right. A private jet expense back from the the private jet company. But they consider and advise the company on what a recovery might be in terms of theft or embezzlement. They talk about the message they want to send to other employees or other businesses out there that they're not going to put up with fraud, whether it's $5 or 500,000 as well as, you know, listen, the cost of litigation and bringing things to court is not zero. So if you're not going to get a big recovery from someone and you know you're going to have to pay attorneys a lot of money to try the case, it might not be a good idea to file criminal or civil charges because it's really a zero sum or a cost benefit analysis. It's not in the company's favor.

[Dan Heath]

And is there a tendency of companies, you know, like with hacks, for instance, a lot of companies won't disclose hacks because they're afraid it's going to surface their lack of good IT policy. Like do you sometimes encounter companies that want to sweep fraud under the rug because they don't want people to know how bad their controls were?

[Chris Ekimoff]

Yeah, and I'll say that too. One of the areas we see that a lot is a non for profit area because their business, for lack of a better phrase, is based on reputation. You know, we're doing good work to meet our mission, whether that's to serve underprivileged communities or provide food for those in situational issues or or house survivors of domestic violence. Being an organization that can't keep their own shop in order can really hurt. Grants, donations, things like that. And again, we're not saying that these companies are purposefully lying to people about what happened, but they're less likely to report that to the news or maybe bring a criminal or civil action because some of the reputational harm might weigh into there as well.

[Dan Heath]

Looking back, what's the engagement that you've felt most emotionally engaged with?

[Chris Ekimoff]

So I've done some work for attorneys who represent higher education institutions and must have been four or five years ago. Now one of the attorneys down in the the Southeast Part of the US was representing a, a day school, a private school for kids in elementary and high school at which the headmaster stole. God, I'll put a number on it, somewhere in the low seven figures. You know, this is a school where tuition's about 15, $20,000 a year for these kids. Ended up walking away with more than a million dollars and you know, denied all aspects of the front.

[Dan Heath]

My God.

[Chris Ekimoff]

And that to me really rung true because it was taking a legitimate service for people of means attempting to better themselves to, to learn and grow and walking away from it. Right. This was not taken from a multi billion dollar corporation. It's a rounding error. This, you know, closed the school.

[Dan Heath]

Oh, wow.

[Chris Ekimoff]

And so our work, what they could reclaim from the individual, what they could recover from an insurance policy against a fraud loss and really try to be as efficient and effective because the school does not have the wherewithal to have a multi year investigation. Right. They're not going to be able to pay attorneys and accountants forever. So how do we do this quickly, how do we do it meaningfully and how do we get to a result that's going to help these kids recover some of the money they paid for this school that no longer exists to get them back on their feet and maybe to another school or to another situation. So there's times that you can get, you know, emotionally attached isn't the right way to say it, but I feel more connected to the work when I can see the obvious good it may do if we get to a good answer.

[Dan Heath]

And in a situation like that, like, is there any way to claw back some of that money from the person who absconded with it?

[Chris Ekimoff]

There is. Right. That's why the civil and criminal court system exists. In those examples, I think that he had funded a lifestyle probably with about 50% of it that he took, but also improved a home that he lived in. And so that home could be sold at auction or he could give that up, then those monies could be distributed to some of the victims there and back to the school administration. So that's one of those cases too where the investigation as a fact witness is really important. John took $1,000 check from the school. He wrote it to himself from the checking account. That same day he paid $1,000 to a contractor who was building his new kitchen. One of the things we did in the embezzlement case was look at the payments made to the college funds of the embezzler of his children. And it was very clear that his payroll check donated you know, $50 or $100, whatever the number was, to each of his kids college funds. But then his embezzlement led to thousands more being put in there. And so we got into a, a pretty, you know, aggressive discussion with the opposing attorney representing him saying this money was not just kind of his regular salary funding his kids college, this was stolen funds. And we had to make a decision about whether to go after innocent kids college funds to see if we could help reclaim some of the debt that amounted from the embezzlement.

[Dan Heath]

Dumb question, but why do you have to establish where people spent the ill gotten gains? Isn't it enough that they just took more than they were supposed to take from the company? Even if they gave it to charity, it would still be a criminal or civil violation, wouldn't it?

[Chris Ekimoff]

Yeah, I mean I'll give you the, the worst answer ever. It all depends, right? Facts and circumstances based. But in certain cases, and I had the, the benefit I guess, and it's a little bit of macabre benefit of working on the Madoff matter. Right. And so Bernie Madoff, famous Ponzi schemer.

[Dan Heath]

I mean that's got to be like the Everest of forensic accounting.

[Chris Ekimoff]

No, I say that, but also, I mean this is a, a multi billion dollar case. It's very hard to find a forensic accountant who didn't work in some facet on the Madoff case, whether it was for the trustee or some of the individuals who lost money or some of the feeder funds or hedge funds that were involved. So thousands and thousands of people have worked on the matter generally and it was one of those interesting issues. I was worked for a firm where an individual was picked as the expert witness over the bankruptcy. And so his job was to talk about the way money was spent. And they had to prove in court that it was a Ponzi scheme. They had to literally write 125 page report that said these are all the reasons it's a Ponzi scheme. Even though Bernie had already admitted to it. And the reason was the legal mechanics around it being claimed. A Ponzi scheme had to be accepted in court. And you couldn't just take the, you know, admission of a, of a known liar and thief.

[Dan Heath]

Hey folks, Dan here with a call to curiosity. Do you like what we do on this show? Do you, do you kind of wish you could have a conversation like this with somebody in your life like a neighbor or relative or someone? Well, why not just do it? You know, get them on Zoom press record, meet them face to face in the coffee shop. Use the voice memo app on your phone to record it. And two things. One, do it for you. Do it because it's fun to have these conversations. Do it because of your curiosity. And two, if you're inclined, send it to us. I mean, there's a chance that we'll end up casting your Uncle Larry on the show. We'd love to hear what you're doing. If you do engage in this call to curiosity, you can send us the audio [e-mail] Hope you find this fun. And back to the episode. So has this work changed the way that you see people or see organizations?

[Chris Ekimoff]

It's hard to say, right? I am so jaded. Right. I think about it the same way you think about, like, an emergency room doctor. Right? An emergency room doctor might look at someone who comes in with, you know, severe shoulder injury and not even blink. I think that I've learned a lot about people and about trust in that. You know, there's a lot of statistics out there from the association of Certified Fraud Examiners and other organizations that study these things to say that, you know, the most trusted individuals are often the ones who are found to be, you know, taking money in situations where. Where fraud's identified.

[Dan Heath]

Oh, God. Really? Is that true?

[Chris Ekimoff]

Well, it's a debate between controls and oversight, right. If you've got a person that you trust implicitly, you know, you don't check every little thing they do until something major happens, right? Like that cfo, the CEO trusted him for a dozen years before he was in a position to steal from the company. And then after he. He started wanting to get out over his skis and live a more lavish lifestyle. You know, that trust trumped oversight in terms of how travel and entertainment expense was being utilized. So those things happen.

[Dan Heath]

That's gotta mess with your mind. I mean, do you have, like this loop in your brain now when, like when you start to really trust someone, you're like, wait a minute, is this the highest risk person in my life?

[Chris Ekimoff]

Yeah, for me, right. It's a personal choice, too. Like, you know, my wife and I manage a checkbook like any married couple do. And there's sometimes a raised eyebrow, right, about a specific expense or something like that. But to me, it's much more about educating that individual when they call and they go, no, no, no, no way Sharon could have done this. And you go, well, you know, I've met 11 Sharon's in the past 10 years, and they've all done it. So let's go in with open eyes and think about this from an objective perspective. And let's check Sharon's work and make sure she's signing off and getting appropriate approval and letting you know when something's out of whack or out of budget.

[Dan Heath]

Is there any way to scope like the incidence of fraud? Like based on your experience, what's the likelih company out there is experiencing something that you could interpret as fraud right now. What would you guess?

[Chris Ekimoff]

The answer is yes. So the association of certified fraud Examiners I mentioned a minute ago, they are an international body of anti fraud professionals that both certify folks like me as certified fraud examiners through a test and through training and things like that, as well as conduct studies and solicit responses from certified fraud examiners and people in the market. And their running statistic is that top line revenue of a business, 5% of that can be attributed to fraud loss.

[Dan Heath]

You're kidding. 5%?

[Chris Ekimoff]

Yeah. So if your business makes $10 million, right. 5% of that, you can somewhere in those expenses, somewhere in the operations of the business, or you're being, you're missing out on 5% of revenue is being siphoned off by, by fraudulent things. And that's everything from, you know, people inappropriately recording their time and saying they worked more than they, you know, adding an extra travel meal to their expense report even though they weren't technically traveling that day. Right. So it's not, you know, the Bernie Madoffs or the Enron scandals are 5% of the world. It's really those kind of cases that, you know, 5% of revenue is really kind of the benchmark that you can measure yourself against. Now I work with clients all day that are very adamant that there's no fraud going on. And they're probably right to a material degree. Especially if it's a mom and pop business with six people, it's a lot harder, right, to create an avenue for fraud there. Not that it doesn't happen, but you know, compared to some of the large multinational organizations, there's people trimming on the edges and coloring outside the lines, you know, pretty regularly, not to a material extent, but that is happening out there, you know, as we speak right now, someone is being fraudulent, you know, out in the world.

[Dan Heath]

I was curious, like, how many layers of suspicion do you need in a typical situation? Like if someone hands you customer invoices or receipts or do you take that at face value or is there immediately a loop in your head that's like, I wonder if this is a real invoice or a real receipt. Like how much verification do you typically have to do?

[Chris Ekimoff]

It depends on the circumstance, of course, but I like to say it's an iterative process. If you give me 11 random invoices from 2022 and they all follow a standard format from a specific business, they all have very detailed amounts and descriptions on them and the numbers and dates of them do not lend themselves to any type of manipulation, right? We talk about sequential numbering. 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 if you're the only one that they're sending invoices to? Right. So if you don't pick up on anything like that, you're going to feel differently about that invoice in that business than you are if you see something that looks like a logo that. Dan, I don't know how you are at art, but maybe you or I could draw on Microsoft Paint, right? That's going to lead me to make a different conclusion about the value of that information. Or if they're following a non standard format, if the description lines go from being very detailed to very general or they shift on the page. Right. Can I explain that or can I not?

[Dan Heath]

I love this. These are such like great little screens that you've picked up over the years.

[Chris Ekimoff]

I'll talk about a little case we had a couple years ago where an individual who's an IT professional at a business was using the IT budget to buy himself things, right? All kinds of stuff from convenience stores and Target and Walmart and all this kind of things. But he would go online and what he would do is he would screenshot the line item from an invoice from a computer parts supplier, Best Buy, whomever that said HDMI cable, you know, one unit, and he would paste that over the real line item that he purchased. The problem was he did that and he didn't change anything else about that invoice. So we would get an invoice from Walmart that listed all of these HDMI cords that he had bought. But of the six lines on them, they all had insanely different prices. Like he bought one HDMI cord from Walmart on that day for $640. He bought another one for $6, he bought a third one for $1,400. It's just like being able to. Obviously that's an extreme example, but you know, he was trying to get it approved through the expense system. And all the expense system did was look at, you know, is this dollar within our budget? Which the answer was unfortunately, yes. And do the descriptions on a spot check match what we think they did? Of course. And so that's a computerized system. It did not go through and evaluate the appropriate pricing of every HDMI cable purchase. You know, we ended up finding out that he was buying himself a lot of clothing and shoes and electronics and all these things, but saying they were all HDMI cables.

[Dan Heath]

He had acquired over 780 HDMI cables.

[Chris Ekimoff]

That's right. For. For $8.5 million or whatever the number was over the period that just. He's got a whole closet full of very expensive HDMI cables. So your question was, how many layers do you have to go down? It definitely does depend. There's times where we will specifically disclaim in our reports. We did not validate the veracity of this information. I got a report from the bank that said that they paid $11 on Thursday. I did not drive to the bank and ask them where the $11 was. Right. I assumed that the bank provided me with legitimate information. They're a third party. They have no reason to lie to me. We're going to explain that in our report.

[Dan Heath]

Would you recommend this field to a young person?

[Chris Ekimoff]

I would. I've learned over the years that there are people who are naturally good at a variety of different things. One of my best friends is a healthcare auditor in Pittsburgh and he loves seeing the same client every year doing very similar work. Every year, same type of audit work. Not that that's boring or repetitive in any means, but kind of having those long standing relationships with clients. I have friends who work as accountants in house, and they write the same report every month, every year for a dozen years.

[Dan Heath]

That's not something that I'm sensing, a need for variety. And you're.

[Chris Ekimoff]

That's where I'm at. Right. I'm. I'm one of those people who, you know, I like to tell the story. I was on a huge litigation matter between creator of Telecommunication Services. Right. Satellites and a federal agency. And I learned more about satellites than probably anybody but Dave Matthews knows about. Pause for laughter.

[Dan Heath]

I love it. Dad jokes are always welcome on the show.

[Chris Ekimoff]

You got it. And I have not worked on a satellite case since. Right. So I can watch a report of what, you know, Elon Musk has put into the sky and know a little bit more about it than I did, you know, 10 years ago. But I'm not going from satellite case to satellite case. And I like getting that view of different industries, different services, different types of circumstance and learning from them and maybe, you know, filing that away as a memory or as a lesson to learn on a future case. But if I were to be always looking at just one type of issue, I think that I would kind of lose it a little bit. And that's just my natural preference. So if you're asking about recommendations, I would ask people to look inside themselves and say, are you okay with getting yelled at by a different client every week, 52 weeks a year?

[Dan Heath]

Pure variety.

[Chris Ekimoff]

If the answer's close to yes, yeah, maybe. Maybe. Think about it. Where if you'd rather be yelled at by one client every year, maybe you look a little bit more towards my friend.

[Dan Heath]

It's not for you.

[Chris Ekimoff]

Yeah.

[Dan Heath]

So, Chris, on the show, we always end with a lightning round of questions for our guests. So let me fire away here. What is a word or phrase that only someone from your profession would be likely to know, and what does it mean?

[Chris Ekimoff]

Well, I'm going to broaden the definition of profession, so I'm going to say those who work in the litigation or fraud investigation space. So, attorneys, you're welcome in as well. The word is sienter. Dan, do you know what sienter is?

[Dan Heath]

Sienter?

[Chris Ekimoff]

No. Sienter is the legal term for a fraudulent intent. So sienter is often what you have to prove in a court of law so that a judge or a jury can determine if this was fraud or not. Right. So writing yourself a $5,000 check by accident, again, we can make that argument as one does. That's it. It has happened, I'm sure, somewhere. Right. Nothing in the world is new versus purposefully writing yourself a $5,000 check to steal from the company to enrich yourself to, you know, make the down payment on your yacht. Right. That proving that sient or that knowledge of that fraudulent intent has a legal element to it versus negligence. Right. Is another legal concept of maybe not overtly performing an act or omitting an act that creates an issue, but just comes by happenstance or by you neglecting something.

[Dan Heath]

So our HDMI cable friend, Bukusienter.

[Chris Ekimoff]

Yes, he was. It was quite clear from the documents that he was maybe a little lazy and copying the same HDMI screenshot over and over again, but did not have much to say about his fraudulent intent after he was approached.

[Dan Heath]

All right, question two. Who is the most famous forensic accountant, whether real or fictional?

[Chris Ekimoff]

So the answer is both real and fictional. And the gentleman who got me involved or interested in forensic accounting is a Gentleman named Frank Wilson. Dan, do you know who Frank Wilson is?

[Dan Heath]

No. No. Tell me about Frank.

[Chris Ekimoff]

Frank Wilson is one of the folks on Elliot Ness's team who helped capture the famous Al Capone on tax fraud. So if you remember the movie from the late 80s, the Untouchables, starring one young Kevin Costner, I saw that movie early in my career, and just the idea that there was this, you know, type of law enforcement service or law enforcement adjacent activity related to accounting really, really got me excited. So I'm sure folks will say, ben.

[Dan Heath]

I love that you were fixated on the accountants and that. Exactly.

[Chris Ekimoff]

Yeah. There's a lot of other stuff going on, and Sean Connery is great. Most people would probably say Ben Affleck's character in the Accountant is probably more famous now after that action movie came out a few years ago. But I always go back to Frank Wilson as a. As a driving force in my career.

[Dan Heath]

Oh, that's true. The Ben Affleck character was a forensic accountant, wasn't he?

[Chris Ekimoff]

Yeah. And that movie is 100% accurate if you only focus on the scene where he's in the conference room checking the numbers. All the other stuff I have not seen in my career in terms of gun ranges and flying vehicles and everything else going on. Yeah.

[Dan Heath]

You all are basically Navy SEALs with calculators, right?

[Chris Ekimoff]

Sure. Yes. Yeah, that's right. And sometimes I get tired standing up, but that's a different story.

[Dan Heath]

Okay, question three. What phrase or sentence strikes fear in the heart of forensic accountants?

[Chris Ekimoff]

Oh, here's something I should have given you at the beginning of the investigation.

[Dan Heath]

Has someone said that to you before?

[Chris Ekimoff]

When I hear that from a client, I just know I'm in for a world of hurt. Right. There's some assumption that we missed or some document that we didn't know about, that maybe we went down path A and we should have gone down path Z. Had we known that, we would have done a lot of things differently. So that's something where, all things being equal, we'll get to the right answer. But that's one of those where. All right, we gotta start all over again and kind of reframe what we're doing.

[Dan Heath]

Chris Ekimoff is a forensic accountant and co host of the Insecurities Podcast, which explores the wild world of securities regulations and enforcement. We'll put a link to it in the show notes. And I'm a subscriber myself, by the way. I could have talked to Chris for three hours. I'm totally fascinated by what he does and what I kept Thinking about after we talked was the point he made about how it's usually the most trusted individuals who are the ones most responsible for fraudulent activity. Not because trusted people are more likely to be criminals, which would be insane, but because trusted people are the only people with the access and the wherewithal to pull off the crimes. And then because that one trusted person in 100 or a thousand abuses their trust and commits fraud, the rest of us stop getting trusted preemptively. Right? So all of this compliance activity springs up around us, the controls and the oversight and the red tape, and it makes everybody's life a little bit more frustrating. It's sort of like how drugstores started locking up the razor blades because they were expensive and easy to steal. And then because one bad apple in a thousand might have tried to steal the razor blades, the other 999 of us have a guaranteed more annoying shopping experience. And I think the same thing is true with financial controls. It's like a tax we all have to pay because of people like our friend the HDMI cable bandit. But at least we've got people like Chris out there tracking them down one by one. You gotta love a profession where you can use your math skills to fight crime. And, folks, that's what it's like to be a forensic accountant. If you like this episode and you want to do something to support us and more episodes like this, do us a favor. Leave us a review on Apple podcasts or Spotify or wherever you listen. It helps other folks find us. This show was produced by Matt Purdy. I'm Dan Heath. Takes.