Category: The Serious Questions

Has an Auditor Ever Been Whacked For Snitching on Fraudsters?

I’ve gotten some crazy questions over the years but this one pretty much takes the cake. I’m not saying it’s stupid, nor am I saying it’s all that crazy, it’s just… well… out there, is all. Read on.

Dear Adrienne,

I’m a college student at the University of North Texas. Fraud has been a hot topic in my courses this month. We covered many scandals including Crazy Eddie, Barry Minkow, NextCard, Enron, and Bernie Madoff. This has got me thinking a lot about how I would react if I was in the shoes of the auditor. The students in my class always say to just report the fraud, however they never put themselves in the shoes of the fraudster to determine how the fraudster would act nor do they think about protecting the reputation o watched enough movies to know that if a fraudster finds out that somebody knows “too much,” then that person probably won’t make it home alive that night, unless they cooperate. I remember in that movie, “The Other Guys,” the auditing partner got killed because the fraudsters didn’t want him snitching out any information to authorities.

Another thing is that if it is found out that a partner is involved in fraud, this will ruin the firm’s reputation if this gets reported to the SEC. However, if the firm handles this internally, fire the partner, admit mistake, and let the public know that it doesn’t want anything to do with the partner, then perhaps only the partner would get in trouble and not the firm.

So exactly how are you suppose to act in situations of fraud? Of course AICPA tells us to first report it to your supervisor, then to the audit committee, and then the SEC. But still though, you got to get this out before someone kills you and you’ve got to handle it in a manner that best protects the reputation of the firm. Am I right? Also, have you ever heard of any auditors that were murdered because they knew too much? When you read about Enron or the Bernie Madoff scandal, there are talks about death threats, but you don’t necessarily hear about any murders involved. So it may be something that only happens in the movies.

Well, since you brought up Crazy Eddie, my first instinct was to pose this question to Crazy Eddie’s corrupt CPA, Sam Antar. Thankfully Sam obviously checks his Twitter account every five minutes and had some thoughts for me almost immediately.

“Yes, the potential is there. Depends on the client. Have that person contact me if worried,” he tweeted. Now isn’t that sweet? If anyone out there is feeling the heat, you know who to hit up.

His thought? It’s rare, if not impossible. Why would a fraudster whack the auditor? By the time the fraud is uncovered, it’s too late. The workpapers would likely document said fraud, so the fraudster would then be forced to whack the entire chain on up to the partner and who has time to do all that killing? “No logic in whacking outside auditor unless part of conspiracy,” Sam said.

That being said, does anyone remember Allen Stanford’s sketchy auditor C.A.S. Hewlett (“C.A.S.H.” get it?!)? He apparently kicked the bucket on January 1st (a real accountant would have kicked the bucket on December 31st, pfft), just a month before Stanford was charged with fraud (though he didn’t get arrested until June of that year). The circumstances surrounding his death were, uh, weird to say the least but I don’t think anyone is going to go so far as to say he got whacked.

Or how about Ken Lay? I mean, does anyone really believe he had a heart attack? There is even an entire website dedicated to exposing Ken Lay’s post-mortem life.

Now, here’s where it gets tricky, and I don’t expect you to know this since you haven’t made it out into the real world yet. What is an auditor’s job? Is it to uncover fraud? Or is it to verify with a minimum of certainty (a.k.a. “reasonable assurance”) that the financial information presented by a company is probably legit? If you answered the latter, you win. Forensic accountants dissect fraud, auditors simply check boxes. I’m sorry if this offends any of you hardcore auditors out there but in your hearts, even you guys know I’m right. Auditing is a joke, an intricate dance (read: performance) that exists more for entertainment than functionality. If you don’t agree with me, I’d be happy to name any number of companies that prove my point for me (let’s see… Enron, Worldcom, Overstock, Satyam, Olympus…).

What do you think the odds are that a first or second year auditor would even be able to detect fraud? Don’t you think the criminals behind it are at least clever enough to hide their wrongdoing from a bunch of fresh-faced kids with their SALY checklists? Look at the lengths Crazy Eddie went to – to success until their greed got the best of them and a chick ruined the whole scam. And that’s the thing, the auditors rarely uncover fraud, it’s usually the fraudsters themselves who end up exposing themselves though greed or just plain stupidity.

Whistleblowers don’t make friends but they don’t have to hire armed guards either. Like I said, by the time the fraud is exposed, it’s too late to start killing people to hide the truth.

And thanks to SOX, it is illegal to “discharge, demote, suspend, threaten, harass or in any manner discriminate against” whistleblowers, so a more likely scenario is that revelations of fraud will come from within the firm, not from the outside auditors who are pissed off to be doing inventory counts on New Year’s Day.

You watch too many movies, kiddo. Just check the list, collect the bank recs and call it a day.

Audit Team Struggles to Come Up with Ironic Halloween Costume

From the mailbag:

Hey Caleb and Adrienne,

Question: my audit team and I are looking for a cool costume idea for Halloween. Since everyone rejected my idea of dressing as “Sox”, we’re at a loss. I’d love to go for some irony element (no one liked my idea of being Occupy protesters and not showing up for work). I think it would be fun to do a play on a scandal, fall out or another sexy accounting story, but I just can’t figure out how to make a reverse merger costume. Do your twisted, ironic minds have any ideas?

-Should probably go back to work, now

Dear SPGBTWN,


Perhaps you missed our story from last month but sorry to say, you’ve got a tall order ahead of you. That writer wanted an idea for “Accounting Police” and the best I could come up with was this:

Simply dress up as police officer and walk around the whole night counting things, not unlike The Count (in fact, I suggest you do the laugh). “What the hell are you supposed to be?” some dope will say. You’ll respond, “A counting police.”

And because you’ve got a whole team of auditors trying to get creative (not your strong suit) it’s even a bigger challenge. I suppose you could go as “whistleblowers” but that will most definitely include a blowing a whistle which will likely get you quickly ejected from any party. Another option is go as Mort Mort Feingold (maybe a sexy version?) and have the rest of your friends dress up as various, dimwitted celebrities.

Of course you could really nerd it up and play on “footnotes,” or even “audit trail.” Then again, if you want to go the “sexy” route, I suggest you go with “double-entry accounting.” How sexy you make it is up to you.

Any other ideas, gang? This is a tough one.

Tickmark or Treat – How Does Your Office Celebrate Halloween?

I was grabbing lunch yesterday and overheard a conversation between a collection of young associates at the table next to me. “Sexy cat.” “Slutty nurse.” “Superman.” No, this was not a recap of a client meeting (but imagine if it was!); they were talking tossing around Halloween costume ideas.

In the spirit of All Hallow’s Eve, we here at GC wanted to see what you were all doing to celebrate, in the office or otherwise.


Which admin assistant has the best candy on their desk? What partner encourages the team to dress up? Who shuns those who wear orange sweaters to work on 10/31? Are any offices throwing Halloween parties?

Word of HR advice – should you dress up in the office, keep your costumes PG-rated. Avoiding racial stereotypes, fishnet stockings, and any kind of head piece or mask that requires removal before picking up the phone should probably be avoided.

Bonus GC points for pictures.

Past Halloween Adventures:
Clearly Avoiding the “Sexy” Route, Young CPA Needs Help with Ideas for “Accounting Police” Halloween Costume
KPMG Halloween Party: Don’t Expect Treats in the Form of Bonuses

Are Today’s Accountants Already Occupying Wall Street?

Caleb and I had a talk last night and it made me think about this whole Occupy Wall Street thing. More importantly, it made me think about what I am and am not doing to support it. I haven’t been to a rally, even to take pictures (last time I tried to do that, I was the only one out in front of the Federal Reserve Board at 6 in the morning except for the lone Fed cop patrolling the perimeter).

I get that people are pissed off. I’m pissed off too. I’ve been pissed off, don’t tell me about being pissed off. I was lugging around aFed sign made on top of “Ron Paul ’08” acrylic three years ago, you don’t have to tell me about being pissed off. (Here I am in 2009 on SF Citizen in a “Bernanke 00%” t-shirt at an anti-Iraq war rally)

And I get that for some people, all there is to do is go downtown with a drum and some poorly-written signs on cardboard ripped from your mom’s Costco packages in the recycle bin. That’s totally fine, everyone has their own way of sticking it to the man.

For a lot of Going Concern readers, sticking it to the man means showing up every day in business casual pretending to give a fuck about COSO but actually knowing that it’s all a lie. They work you to the bone until you leave or submit and get promoted to manager. Partner if you’re lucky. Run on that hamster wheel, here have this bonus, keep going and one day you can beat your own subordinates into submission. Go, go, go… Many of you get that this is bullshit but keep showing up every day anyway, and to me, you are your own special kind of protester. Same as last year, motherfucker, it’s the ultimate form of rebellion.

Too much?


Point being, everyone has their own way of screwing the establishment. Francine does it railing against the Big 4. Bill Sheridan and Tom Hood do it at the MACPA with professionalism. Tom Selling does it by riling up fellow academics. Professor Dave Albrecht does it by being seen in public canoodling with known incendiaries like yours truly.

I do it by ripping on the IASB as often as I am allowed to, infiltrating the Hill to sniff out what’s the latest in CPA lobbying efforts and getting in as many F bombs as I can on the dry subject of accounting. That’s all I can do. I can’t abandon my day job to hang out in Manhattan eating vegan paninis. I can make and distribute offensive Bernanke fridge magnets.

I completely understand why people are attracted to Occupy Wall Street; the part I’m struggling with is why so many of the 99 Percenters seem obsessed with this thing called “fairness” that does not, in fact, exist. Is it fair that any of us have to drag our asses to work every day and do what we do? Is it fair that Becker costs $3,000 and doesn’t pass the CPA exam for you? Is it fair that many of you are drowning in student loan debt and seemingly forced to get Master’s degrees just to work in your field? Is it fair that Caleb gets listed in all the accounting publications and I’m stuck as the sidekick hack who always manages to piss people off? This world is unfair, sorry to be the bearer of bad news. I have to write about accounting every day of my life, it’s un-fucking-fair, we get it.

In my view (for whatever that is worth, which is probably not more than our company pays me to write this post), the ultimate rebellion is assimilating and infiltrating the establishment to enact real change from the inside. Are partners scared as shit of this website? Yes. If they’re threatening you with termination if you even dare to write us for advice, we’re doing something right. And I didn’t even have to not shave my armpits to accomplish that (but Caleb probably shaved his).

Are any of you going to independently revolutionize the accounting industry? Probably not. But collectively, you have scared the pants off of lazy ass recruiters and partners across this country who thought you didn’t have it in you. They read us because they feel like they have to or else they’ll lose touch with what you guys are thinking, and it scares the living shit out of them. In my mind, that’s a far more effective message to send the The Establishment, whoever the hell they are.

I fully support the fundamental sentiment of Occupy Wall Street but much prefer fulfilling my incendiary duties here trying to get accounting kids riled up and questioning why they put up with the shit they do. Working mothers in public accounting should be allowed to have children. Interns should be allowed to ask questions (even dumb ones). Auditors should be expected to question last year’s logic. It’s not complicated but it’s important work that a lot of you do, and I hope that you get that.

It is not your fault that we’re here. Many of you just followed the rules.

Thanks for letting me be a part of that. Beats standing around with a fucking sign, that’s for sure.

Earlier:
Wanted: Accountants for Large Protest; Organizational Skills and Experience with Anything Slightly Resembling a Expense Reimbursement Policy a Plus [GC]

Blind Item: Which Accounting Firm Has a Manager Who Recently Scolded a Team of Barnyard Animals?

From the mailbag: “The author is a newly appointed manager and a certified d-bag. His email is serious.”

Hi Guys –

It has come to our attention that there are several people making animal noises around the office. I feel it shouldn’t need to be pointed out that this is not appropriate in the office and can be very uncomfortable/awkward for others. Aside from co-workers, we also have prospects, clients, recruits, etc. walking through the halls on a daily basis. Hearing animal sounds made toward each other does not give a good impression of [a firm who, we are told, is “über-sensitive”] and our abilities to those people. It also does not go unnoticed by partners/senior managers/managers.

Please be mindful of those that could be in your audience. Please see me if you have any concerns or questions.

Thanks,

Okay, team. Lots to discuss here aside from guessing the zoo where these beasts work.

1. I alluded to a noise from a cow, pig, chicken, or maybe even a llama but obviously there is room for other possibilities. Macaws? Beluga whales? Howler monkeys?

2. Are these noises mating calls, expressions of joy, or melancholic song?

3. If our barnyard animals guess is accurate, the firm should ask themselves: why would you hire Goat Boys in the first place?

4. If this some kind of involuntary function, how does one handle this appropriately without running aground of diversity issues?

5. Other thoughts, and obviously guesses to the firm, are welcome at this time.

Clearly Avoiding the “Sexy” Route, Young CPA Needs Help with Ideas for “Accounting Police” Halloween Costume

Now that it’s September, people start getting anxious about their Halloween costumes. Regardless of the two months of football, a World Series, and God knows how many GOP Presidential candidate debates, many will agonize over just what outfit they will wear for approximately 2-3 hours, knowing full well that vomit could end up on it. These days Halloween costumes, for better or worse, focus on the “sexy.” The sexy Little Bo Peep. The sexy priest. This year, I’m really hoping to see the sexy Angry Birds. Anyway, a reader is stumped on how best to approach a recent light bulb moment she had for this year’s outfit:

Hi Caleb,

I am hoping some creative CPAs who read your blog can help me out. A month ago, during one of my trainings, a partner came in and spoke to us about how we should not be seen by our clients as the “accounting police.” Immediately, a lightbulb went off in my head and I thought “HALLOWEEN COSTUME!”, but I have no idea how to pull this off so people will understand it! Any ideas out there?

So we have “accounting” and “police.” Not exactly a lot to work with here but we’ll throw a few ideas out there to get things rolling:

1. Ask four of your friends to join you and go as the letters P-C-A-O-B. Of course, you won’t actually do anything.

2. Simply dress up as police officer and walk around the whole night counting things, not unlike The Count (in fact, I suggest you do the laugh). “What the hell are you supposed to be?” some dope will say. You’ll respond, “A counting police.”

3. Get another idea.

Your suggestions are now welcome.