Piec ing together financ ial puzzles

Transcription

1 Piec ing together financ ial puzzles Stephen Pedneault, CPA/CFF, FCPA, CFE Stephen Pedneault is the Principal of Forensic Accounting Services, LLC, a Glastonbury, Connecticut CPA firm, focused exclusively on forensic accounting, fraud, and litigation support matters. His technical expertise and intuitive investigative awareness have made Stephen a sought after litigation expert by legal, accounting and law enforcement communities. Steve Pedneault is a highly regarded member and invaluable strategic partner of legal teams throughout the state. Through his investigative work, Stephen has examined frauds ranging from a few thousand dollars to amounts well in excess of five million dollars. His expertise also lies in preventing and investigating embezzlements and financial statement frauds, evaluating financial disclosures in matrimonial and probate concerns, and utilizing forensic accounting within litigation matters. Stephen Pedneault brings over twenty-five years of public accounting experience, credentialed as a Certified Public Accountant (CPA), Certified in Financial Forensics (CFF), Forensic Certified Public Accountant (FCPA), and a Certified Fraud Examiner (CFE). He has an Associates Degree in Criminal Justice from Manchester Community College and a Bachelors Degree in Accounting from Eastern Connecticut State University, graduating Summa Cum Laude. Stephen has written four books published by Wiley. Fraud 101 (September 2009) is a straightforward guide explaining the nature of financial fraud. Anatomy of a Fraud Investigation (January 2010) is a unique walk-through of one complete fraud investigation, from original tip to conviction in court. Preventing And Detecting Employee Theft And Embezzlement, A Practical Guide (June 2010) offers business professionals an insider view at the different ways embezzlement occurs in businesses and how to keep their companies from becoming victims of embezzlement and fraud. Forensic Accounting and Fraud Investigations for Non-Experts (April 2012), is a layperson s introduction to financial fraud and forensic accounting. In addition, Stephen has contributed to three fraud case books, and authored numerous published articles appearing locally and nationally. As an adjunct professor to the University of Connecticut faculty, Steve has developed an innovative course on forensic accounting that has been offered since 2008 within UConn s Masters of Science in Accounting (MSA) program. The course provides an overview of forensic accounting, identifying the qualities and attributes required of a forensic accountant, and provides students with an approach and skill set to enable them to perform a forensic accounting assignment. Stephen is a frequent guest lecturer and adjunct professor at the Manchester Community College. He has been requested by businesses and student organizations to speak over 200 times on a range of topics including forensic accounting, fraud prevention, risk assessment, embezzlement, probate concerns, and other related issues at local and national venues Main Street Glastonbury, CT steve@fasman.com

2 2015 Accoun+ng & Audi+ng Day Chesapeake Conference Center Chesapeake, VA September 30, 2015 Forensic Accounting: Practical Applications Beyond Fraud Stephen Pedneault, CFE, CPA/CFF Forensic Accounting Services, LLC 1

3 Session Description Mostly associated with fraud ma8ers, forensic accoun;ng can draw upon the educa;on, training and experience of a professional to work within a much wider range of ma8ers in many contexts and venues. Although not specialized in "forensic accoun;ng", most Individuals working within accoun;ng fail to recognize how their experience in areas like bookkeeping, accoun;ng, taxa;on and consul;ng can add tremendous value in resolving various ma8ers. Iden;fying the different contexts, and understanding the steps involved in each process towards resolving a ma8er, will show a8endees how they can get started. Stephen Pedneault, CFE, CPA/CFF Founder of Forensic Accounting Services, LLC 25+ years of fraud experience Investigated embezzlements and fraud ranging from a few thousand to over $6 million Frequent speaker and writer Adjunct Professor of Forensic Accounting, UConn Adjunct Professor, Manchester Community College Member of AICPA, CSCPA, ACFE, NACVA Author of four books, Fraud 101; Anatomy of a Fraud Investigation; Preventing and Detecting Employee Theft and Embezzlement; and Forensic Accounting/Fraud Investigation for Non-Experts, 3rd. (Wiley) Contributing Author four books Session Objectives What is Forensic Accounting? Required Skills and Attributes Identification of Contexts Roles Within The Process 2

4 Session Objectives What is Forensic Accounting? Required Skills and Attributes Identification of Contexts Roles Within The Process Forensic Accounting Forensic accounting is the application of investigative and analytical skills for the purpose of resolving financial issues in a manner that meets standards required by courts of law. Forensic accountants apply special skills in accounting, auditing, finance, quantitative methods, certain areas of the law, research and investigative skills to collect, analyze and evaluate evidential matter and to interpret and communicate findings. Forensic Accounting Financial forensics is the application of financial principals and theories to facts or hypotheses at issue in a legal dispute and consists of two primary functions: Litigation advisory services, which recognizes the role of the financial forensic professional as an expert or consultant Investigative services, which makes use of the financial forensic professional s skills and may or may not lead to courtroom testimony 3

5 Forensic Accounting Financial forensics is the intersection of financial principals and the law and, therefore, applies the (1) technical skills of accounting, auditing, finance, quantitative methods, and certain areas of the law and research; (2) investigative skills for the collection, analysis, and evaluation of evidentiary matter; and (3) critical thinking to interpret and communicate the results of an investigation Forensic Accounting Forensic accounting is the action of identifying, recording, settling, extracting, sorting, reporting, and verifying past financial data or other accounting activities for settling current or prospective legal disputes or using such past financial data for projecting future financial data to settle legal disputes Forensic Accounting Forensic accounting is the use of accounting for legal purposes 4

6 Session Objectives What is Forensic Accounting? Required Skills and Attributes Identification of Contexts Roles Within The Process Skill set of a Forensic Accountant Accounting Investigations Do you agree? Accounting Psychology Technology Savvy Interviewing Investigations Strategist 5

7 Accounting Psychologist Technology Savvy Interviewer Investigator Strategist Desired Attributes Pa+ent Persistent Flexible Indifference to being lied to Key Personal Attributes Objec+ve Independent Fact Finder Detail Oriented An Advocate (for the truth) Honesty and Integrity 6

8 Prerequisites Accoun+ng Reading Wri+ng Oral Communica+ons Listening Observing Session Objectives What is Forensic Accounting? Required Skills and Attributes Identification of Contexts Roles Within The Process Focus of the CFF Source: AICPA 7

9 I. Embezzlement Matters For the Victim For the Prosecutor Filing Insurance Claim Defending the Suspect Reviewing Insurance Claim Other Theft Matters Inventory and/or Fixed Assets Employees Contractors Customers Suppliers & Vendors II. Financial Statement Matters For the Government For the Investors For a Lender Defending an Auditor For an Insurance Claim 8

10 III. Corruption Political Corruption Bribes Kickbacks Bid rigging Other Corruption Focus of the CFF Source: AICPA Matters Involving Technology Unauthorized Access - Internal Unauthorized Access - External Proprietary Information Intellectual Property HIPAA Privacy 9

11 Estate Matters Fraudulent Documents Fraudulent Transactions Fraudulent Filings Thefts of Assets Misuse/Theft of Funds Reconstructions Fiduciary Matters Undue Stress, Duress or Influence Incapacity Forgery Misuse and Theft Reconstructions Insurance Matters Fraudulent Application Staged / Fraudulent Acts Claim Submission Claim Review Fraudulent Documents Thefts Every Type of Insurance 10

12 Financial Institution Matters Account Opening Fraud Thefts from Accounts - Internal Thefts - External Loan Fraud Collateral Fraud Defaults Creditor & Collection Matters Collections Pre-emptive Transfers Bust-out Schemes Hidden Assets Hidden Income Streams Bankruptcies Tax Matters For the Government For the Taxpayer Litigation Matters Matrimonial Matters Probate Matters Others 11

13 Litigation Support Matters For the Plaintiff For the Defendant For the Court For the Receiver As the Receiver Matrimonial Matters For the Plaintiff For the Defendant Mutually Retained Undisclosed Assets Undisclosed Income Valuation Investment Matters For the Government For the Investors For the Insurance For the Fund Defending Auditors Defending Charges 12

14 Real Estate Matters Loan / Application Fraud Appraisal Fraud Fraudulent Documents Fraudulent Transactions Flips / Churning Fees / Charges Defending Lenders Property Matters Fraudulent Documents Forgeries Fraudulent Transactions Fraudulent Conveyance Related Parties Structuring Session Objectives What is Forensic Accounting? Required Skills and Attributes Identification of Contexts Roles Within The Process 13

15 Important Issues Consultant versus Expert Privilege What is Discovery? Why is it important to understand discovery? Levels of Involvement Consulting expert vs. Testifying expert Steps from Initiation to Pre-Trial A Layman s Perspective Complaint / Claim Response / Counter Complaint / Claim Discovery: u u u u Request / Demand / Order Production of Records Interrogatories Subpoena / Subpoena Duces Tecum Deposition Informal Meeting / Settlement Efforts 14

16 Steps from Pre-Trial through Resolution A Layman s Perspective Pre-Trial Settlement Efforts: u u u u Mediation Arbitration Special Masters Pre-Trial Trial (a/k/a Hearing) Post-Trial Stages of Involvement Provide initial review and impressions Provide insight / identify issues Provide questions to posed Provide responses to provide Identify documents to be requested/subpoenaed Write language for request / subpoena Facilitate preservation of evidence and records Research facts of the case Stages of Involvement Analyze records Identify additional records needed Identify sources for additional facts Appear at hearings to gain access to more information Provide analyses, calculations, other evidence Participate in settlement discussions Prepare questions for depositions and cross examination Attend depositions Appear at trial 15

17 Depositions (Civil Trials) Opportunity for opposing counsel to ask questions of the witness Sworn testimony (under oath) Can not change testimony from deposition to trial Direct Testimony Present your report Expect open-ended questions Not as stressful as cross examination Listen to question being posed to you Answer the question Elaborate when needed to add important details Forensic Accounting: Practical Applications Beyond Fraud Questions? Stephen Pedneault, CFE, CPA/CFF Forensic Accounting Services, LLC 16

18 Piecing Together Financial Puzzles Stephen Pedneault, CFE, CPA/CFF Forensic Accounting Services, LLC 2389 Main Street Glastonbury, CT