Tag Archives: interviewing for fraud

Communication is Who We Are

BusinessMeet2One of the most frequently requested topics for ACFE lead instruction concerns the art of fraud interviewing, one of the most complex and crucial disciplines of the many comprising the fraud examination process.  And at the heart of the interviewing process lies communication.  As we all know, communication is the process of effectively sending and receiving information, thoughts, and feelings. First and foremost, an effective interviewer is an effective communicator and being an effective communicator depends on building rapport. According to the ACFE, if you don’t establish rapport with a subject at the outset of the fraud interview, the possibilities of your spotting anything are very low. Rapport is the establishment of a connection between two individuals that is based on some level of trust and a belief in the existence of a relationship that is mutually beneficial to both parties.

The interviewer who thinks s/he will find a cooperative subject without making a connection with that individual is in for a disappointment. Rapport is determined by our attitude toward the subject. Just as we as interviewers use our powers of perception to “read” the subject, the subject reads us as well. If he senses condemnation, superiority, hostility, or deceit, you can expect little but superficial cooperation from any interaction.  Besides, above all else, as the experts tell us, we are professionals. As professionals, personal judgments have no place in an interview setting. Our job is to gather information empirically, objectively, and without prejudice towards our subjects.  Why do we identify with and speak more freely to some people than to others? We’re naturally drawn to those with whom we share similar characteristics and identities. Techniques and tools are important, but only to the extent that they complement our attitude toward the interview process. So, effective communication is, in this important sense,  not what we do – it’s who we are.

And along with rapport, the analysis of the quality of the interaction between both interview participants is critical to the communication process.  An interview is a structured session, ideally between one interviewer and one subject, during which the interviewer seeks to obtain information from a subject about a particular matter.  And just as we signal each other with voice pitch and body language patterns when we’re sad, angry, delighted, or bored, we also display distinct patterns when trying to deceive each other. Fortunately for those of us who interview others as part of our profession, if we learn to recognize these patterns, our jobs are made much simpler. Of course there is no single behavior pattern one can point to and say “Aha! This person is being deceptive!” What the professional can point to is change in behavior. Should a subject begin showing signs of stress as our questions angle in a certain direction, for example, we know we have hit an area of sensitivity that probably requires further exploration.  If you interview people regularly, you probably already know that it is more likely for a subject to omit part of the story than actually lie to you. Omission is a much more innocuous form of deceit and causes less anxiety than fabricating a falsehood. So even more importantly than recognizing behavior associated with lying, the interviewer must fine tune her skills to also spot concealment patterns.

ACFE experts tell us that each party to a fraud interview may assume that they understand what the other person is conveying. However, the way we communicate and gather information is based in part on which of our senses is dominant. The three dominant senses, sight, hearing, and touch influence our perceptions and expressions more than most people realize. A sight dominant subject may “see” what you are saying and tell you he wants to “clear” things up. An auditory dominant person may “hear” what your point is and respond that it “sounds” good to him. A touch dominant person may have a “grasp” of what you are trying to convey, but “feel uncomfortable” about discussing it further.

By analyzing a subject’s use of words, an interviewer can identify his dominant sense and choose her words to match. This helps strengthen the rapport between interviewer and subject, increasing the chances of a good flow of information. Essential, of course, to analyzing and identifying a subject’s dominant senses are good listening skills. Effective communication requires empathetic listening by the interviewer.  Empathetic listening and analysis of the subject’s verbal and nonverbal communication allows us to both hear and see what the other person is attempting to communicate. It is the information that’s not provided and that’s concealed, that is most critical to our professional efforts.

In developing your listening abilities, and by practicing them with others with whom you communicate every day, the vast array and inexhaustible variations of the human vocabulary are bound to strike you. The most effective way to communicate is with clear, concise sentences that create no questions. However, the words we choose to use, and the way that we say them, are limited only by what is important to us. A subject, reluctant or cooperative, will speak volumes with what they say, and even more significantly, what they don’t say. Analysis of the latter often reveals more than the information the subject actually relates. For instance, the omission of personal pronouns could mean unwillingness on the part of the subject to identify himself with the action.

One final note of caution.  If you ask the experts about the biggest impediment to an effective interview, they will probably give you a surprising answer. Most experienced interviewers will tell you that often the greatest impediment to a successful interview is the interviewer herself. Most interviewers use all of their energies observing and evaluating the subject’s responses without realizing how their own actions and attitudes can contaminate an interview. In fact, it’s virtually impossible to conduct an interview without contaminating it to some extent. Every word used, the phrasing of a question, tone, body language, attire, the setting – all send signals to the subject.  The effective interviewer, however, has learned to contaminate as little as possible. By  retaining an objective demeanor, by asking questions which reveal little about what s/he already knows, by choosing a private setting and interviewing one subject at a time, s/he keeps the integrity of the interview intact to the best of her ability.

All the People All of the Time

Education2“We are again honored to have a fifth guest post from our friend and Richmond Chapter member, Rumbi Bwerinofa, CPA/CFF.  Rumbi is a Director of the Queens/Brooklyn Chapter of the New York State Society of CPAs and a member of the NYSSCPA Litigation Services Committee. She is the editor of TheFStudent.com, where she discusses financial forensic issues and she  has just returned from a trip to Africa.” – Charles Lawver-2014 RVACFES Chapter President…

Recently, I found myself in front of a class of teenagers and I was pretty nervous. Audiences of teens and children tend to be more brutally honest than adult audiences. If you’re giving a talk and teens and children have no interest in what you have to say, they’ll let you know, in no uncertain terms. It’s like my six year old cousin who will say things to me like, “Big Rumbi, you’re not very good,” when I’m tying his shoelaces.

But I digress. I was speaking to rising 12th graders as part of the NYSSCPA’s Career Opportunities in the Accounting Profession (COAP) program. As part of five days of events that included visits to companies in various industries and networking sessions, I came in to talk to the students about being a CPA, Certified in Financial Forensics. The specific topic for this particular interactive session, was “Interviewing as Part of a Forensic Accounting Investigation”.

After discussing what forensic accountants do and the various arenas in which they practice, we quickly moved on to the subject of interviewing. Although I was speaking in the context of a forensic investigation, the skills and, at times, the art of information gathering conversation are vital for CPAs and fraud examiners working in every sub-specialty. For example, when auditors are assessing an entity’s control systems, they need to talk not only with department heads, but also with all levels of departmental line employees to find out what those employees actually do. Recently, I found myself hanging out with the staff of the accounts payable (A/P) department on a check-writing day. The A/P staff were paging through a massive pile of checks that they had just run. When I asked what they were doing, they explained that they were scanning the checks for any anomalies such as odd invoice numbers, duplicates and checks that required special treatment. They have been working in this department for a while and, based on historical issues, they independently adopted measures to reduce the numbers of errors, such as duplicate payments, returned checks and checks being credited to incorrect accounts. When I later read the operations manual for A/P, this control step was not listed. Only talking with those directly involved in a process can highlight the nuances of that process and, at times, shine light on those soft spots in a system where fraud or error could potentially occur.

When carrying out a forensic investigation, a forensic accountant may perform interviews in order to gather information and evidence pertinent to the investigation. The ultimate goal(s) of interviews will determine the questioning approach but, in all cases, the forensic accountant will be seeking the truth. Although those from whom we seek information may not always be honest with us, it’s a truism that even the best liars can’t fool all the people all of the time. In the same vein, forensic accountants should also keep in mind that they can’t catch all the liars all of the time. Even with the modified goal of catching most of the liars most of the time, any forensic investigator will find herself spending a lot of time studying human behavior and training extensively to improve interviewing skills is a vital subset of the profession.

Thus, when talking with the COAP class, I emphasized that, although very important, the act of interviewing is only a single component of a complete forensic investigation. Forensic accountants will also find themselves called upon to gather information and corroborating evidence using forensic accounting methods. A good interview can point out numerous, additional investigative angles to explore.  I did, however, point out to the class that information gathered from an interview must always be corroborated.  An interviewee’s mere unsubstantiated word, in and of itself, can never be considered reliable enough to constitute sufficient evidence in a court of law; thus the very process of obtaining required substantiation is a key component of what the forensic examination is all about.

We then went on to discuss how to approach an interview. Interviewing is not interrogation. Unlike the overly aggressive interrogations appearing on TV cop shows that portray practically captive interviewees, professional forensic interviews are planned to take place in far more relaxed and less constrained environments. The interviewee should always feel that the interview is voluntary and that s/he is free to leave at any point in time, should they wish. The interviewer, in turn, should consciously strive to project a polite, caring, respectful and professional demeanor at all times.

We then turned to a consideration of the process of interview preparation. Effective forensic accountants put a lot of work into preparing for any interview, consciously choosing everything from the location of the interview and seating arrangements, to formally documenting the goals of the interview and the questions that will be asked to reach those goals. It’s very important to pick an interview location that’s a private space, with minimal distractions and interruptions. As I said, the interviewers should also make sure that the interviewee has easy access to the exit; this is a safety measure but also so that the interviewee isn’t made to feel in anyway that s/he is being held captive and, therefore,  isn’t free to leave at any time. Every measure should be taken to ensure that the environment is non-threatening.

Forensic accountants must establish, and formally document, the goals of their interviews beforehand, extensively planning the questions that they want to ask during the interview. They must also plan to ensure they have adequate time to cover all the topics and questions they wish to ask as well as any follow-up questions that always arise during any investigative interview.  It’s vital to be sure that an interview isn’t negatively impacted because the investigators have run out of time. Finally, plan to have two parties conducting the interview. One person will be asking the questions and be focused on the subject matter of the interview, while a second party, seated to the side and somewhat out of the interviewee’s view, will be taking extensive notes.

We then moved on to conducting the interview itself.  We discussed beginning the interview by creating a rapport with the interviewee and putting him or her at ease by the asking of simple questions, such as his or her full name and position and how long they’ve occupied their position. As the interview proceeds, the questions will naturally become more focused on obtaining information on the subject of the investigation.

During the interview, forensic accountants will apply their formal training in human behavior to assess verbal and non-verbal cues to assess their witness’ credibility. In addition to observing the cues, forensic accountants will also make use of any additional evidence they have at hand to assist in determining the validity of the information the interviewee is providing. Subsequent to the interview, and with their interview notes to guide them, the investigator(s) will conduct follow-up on the value of the interviewee’s key assertions.

There is no holy grail when it comes to telling whether or not a person is telling the truth. Some people are terrible liars but a lot of criminals, especially career criminals, are surprisingly good at it. Deception is a prime element of effective fraud implementation and many criminals have a history of successfully applying formal methods of deception to fool even the most experienced investigators interviewing them. This is why skills related to professional experience, training and corroboration are so vital to forensic accountants. Try to keep in mind that no one is infallible when it comes to interviewing; everyone can be fooled sometime.

We closed our session with an interactive case study, where two members of the class posed as suspects in a robbery and the rest of the class set up an interview. Our two suspects convincingly threw themselves into their roles. After setting up the room, a member of the class sat as the interviewer and asked the questions collected from other members of the class. It was an enlightening session, where the students asked excellent questions and the majority were able to correctly identify the perpetrator; that the team’s selection was, however,  not unanimous was a great reminder that we can’t catch all the liars all of the time.

Podcast 102 – Fraud Interviewing – 2 CPE Credits!

What are TheInnerAuditor podcasts?

The Central Virginia Chapter of the Association of Certified Fraud Examiners – The Inner Auditor blog presents an on-going series of free webcasts to bring you, our Richmond CFE Chapter members and guests, lectures and interviews in the fields of fraud examination and auditing.  We plan our webcasts to be wide ranging to include topics relevant to practitioners actively  involved in the  fraud examination and audit communities.

The Inner Auditor webcasts will be posted to this blog as they are completed… their presentation dates may correspond to the scheduled dates for our virtual Chapter meetings or they may not… at any rate, if you are a current Central Virginia Chapter member, you will all ready have received an e-mail, notifying you that this podcast has been posted and the number of CPE credits to be awarded for listening to it.  Although all visitors to our blog are welcome to listen, only Chapter members can listen for continuing education credit.

You don’t have to be a resident of Central Virginia or even of Virginia to be a member of our Chapter.  If you are interested in becoming a member, please visit the Chapter’s web page at http://www.cpenet.net  where you will find a link to the Richmond CFE Chapter home page and an application form which you can fill out and submit online.

Our podcasts are in MP3 format, the same condensed format used by Apple ITunes.  .  Each webcast is between 40 and 90 minutes long.  Sometimes the podcast will be accompanied by a PowerPoint presentation… if so, the PowerPoint will be available via a separately provided link; listen to the webcast while simultaneously viewing a printed copy of the PowerPoint.  There is no PowerPoint for this podcast.

Each webcast will be associated with a set of five questions which must be answered and submitted in order for the member to obtain a certificate by return e-mail.  The questions will be included  with the e-mail announcing the availability of the podcast.

To listen to the podcast, just click on the following link.

PODCAST # 102 – FRAUD INTERVIEWING 

A player will open and you can control volume and the standard audio controls.  When you finish, answer the quizzer questions and  paste them into an e-mail; send the questions  to the address included in the notification e-mail.  After review, we will e-mail you a certificate of completion.

Thanks for listening!…