Embezzlement and the CPA | Atlanta Certified Fraud Examiner | Astinel Security & Forensics



Embezzlement and the CPA | Atlanta Certified Fraud Examiner

The evidence is overwhelming. You’ve been embezzled. A number of emotions and questions will begin to reel through your mind and some of them may be, “Wait a minute, we have a CPA.” “Why didn’t the CPA find the embezzlement?” “What are we paying them for?”

These questions arise almost every time, and particularly for the small business owner or non-profit organization. You may feel a righteous need to change CPA’s or even file a lawsuit. Depending on the circumstances, this may or may not be justified. Before going down lawsuit lane, let’s take a breath.

Over the years, services offered by CPA firms have expanded to include an ala carte of selections. If you have CPA engagements beyond traditional tax work, that include advisory and audit services, you certainly feel like you have an integrated partner in your corner. Yet in many cases, they fail to find the embezzlement.

It all comes down to the scope of work you signed with the CPA. CPA’s can and do find embezzlement or questionable data in their engagements. However, the scope of work does not typically include a search for fraud. Let this sink in for a moment. It is at this point where the small business owner gives me a blank stare. The good news is that in recent years the emphasis for CPA’s to become more cognizant of fraud has increased. A number of larger firms have Certified Fraud Examiners (CFE’s) on their staff. CFE’s can perform specialized work, specifically conducting forensic audits and specialized reviews targeting fraud.

So what’s the message here?

For the CPA –

Face it, you can do everything absolutely correct in your professional life and can still be sued. You’ve placed numerous disclaimers into your written engagements, spelling out the complete work product and its limitations. One area of caution – examine your marketing platform. If your message states you could find “a black cat in a coal cellar” and verbal conversations contradict the written engagement letters, you may have a problem. Understand this is just one very simple example and many factors can come into play.

For the Client –

On the technical side, suppose your CPA brings to your attention a trend, concern or some anomaly while conducting a financial statement review or formal audit. Don’t be too quick to explain away the issue. Embezzlement could be at hand. CPA’s perform important tasks, but they and the work they do, may not meet your underlying expectations. If you have assumed fraud and embezzlement detection was a natural service, hopefully you now have a better understanding. Read over your engagement letters. Revisit the work being performed. Don’t be afraid to ask the dumb questions, even after years of service.

For both the CPA and Client –

If you don’t feel you are in-sync, consider making a change or decline the work, even though it may affect a long-term relationship. Review and communicate clearly your expectations with one another. Educate yourselves on the benefits of using a CFE. Neither the business owner, nor the CPA wants embezzlement on their watch.

Embezzlement and the CPA | Atlanta Certified Fraud Examiner

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