Interviewing techniques for forensic accountants

When our company suspects that fraud has occurred, a forensic accountant will interview potential suspects and witnesses as part of their investigation. They should not conduct the interview without sufficient preparation and making a plan (American Institute of CPAs 2013, 16), and must not argue with the interviewee, make threats or promises, become judgemental, or lose objectivity (AICPA 2013, 16).

Most importantly, forensic accountants must not obtain confessions as the result of ‘duress, intimidation, persistent importunity, or sustained or undue insistence or pressure’, as they must be made voluntarily to be admissible (McDermott v R (1948) 76 CLR 501 at 511). This includes oppressive conditions such as depriving a suspect of food or sleep (Garrett 2010, 1095).

(Cain 2015)

I have no personal experience with investigative interviews, but I recommend that forensic accountants use motivational interviewing. It is a ‘directive, client-centred style for eliciting behaviour change by helping clients to explore and resolve ambivalence’ (Rollnick and Miller 1995, 326). In contrast, the Reid Technique is a more aggressive approach. It begins with a behavioural analysis interview, followed by an interrogation to persuade the suspect to admit their guilt (Cutler 2008). If I was being interviewed, I would feel more intimidated by this technique, and the accusatory tone may lead to a false confession to end the interview quickly.

(Mead Johnson Nutrition 2016)

An alternative approach that I recommend is the PEACE Technique, which is also non-accusatory and less aggressive than the Reid Technique. It focuses on building a rapport to engage the interviewee and determine the facts, rather than merely obtaining a confession (Gudjonsson and Pearse 2011, 34), and would make me feel more comfortable when responding to the interviewer’s questions.

Relevant Links
You can read more about how to conduct an effective interview here: http://www.aicpa.org/interestareas/forensicandvaluation/resources/practaidsguidance/downloadabledocuments/10834-378_interview%20whiite%20paper-final-v1.pdf

References
American Institute of CPAs. 2013. Conducting Effective Interviews. Accessed May 12, 2016. http://www.aicpa.org/interestareas/forensicandvaluation/resources/practaidsguidance/downloadabledocuments/10834-378_interview%20whiite%20paper-final-v1.pdf.

Cain, Nicole. 2015. “The Use of Deception During Police Interrogations.” Image. Accessed May 22, 2016. http://inpublicsafety.com/2015/12/the-use-of-deception-during-police-interrogations-2/.

Cutler, Brian. 2008. “Reid Technique for Interrogations.” In Encyclopedia of Psychology and Law. Accessed May 12, 2016. http://dx.doi.org.ezp01.library.qut.edu.au/10.4135/9781412959537.n262.

Garrett, Brandon L. 2010. “The Substance of False Confessions.” Stanford Law Review 62(4): 1051-1119. Accessed May 12, 2016. http://search.proquest.com.ezp01.library.qut.edu.au/docview/224077578/fulltext/9DB57546A2BA48F4PQ/1?accountid=13380.

Gudjonsson, Gisli and John Pearse. 2011. “Suspect Interviews and False Confessions.” Current Directions in Psychological Science 20(1): 33-37. Accessed May 12, 2016. doi: 10.1177/0963721410396824.

McDermott v R (1948) 76 CLR 501.

Mead Johnson Nutrition. “The Motivational Interviewing Toolkit for the Metabolic Clinician.” Image. Accessed May 22, 2016. https://www.meadjohnson.com/pediatrics/us-en/clinical-support/metabolic-toolkit.

Rollnick, Stephen and William Miller. 1995. “What is Motivational Interviewing?” Behavioural and Cognitive Psychotherapy 23(4): 325-334. Accessed May 12, 2016. http://dx.doi.org.ezp01.library.qut.edu.au/10.1017/S135246580001643X.

Understanding and explaining fraud, bribery and corruption

When fraud is committed by employees in our company, theories and models can help us understand why it occurred. Differential Association theory claims that social behaviour is found in ‘learned attitudes, beliefs or values’ (Donegan and Ganon 2008, 6), explaining that criminal behaviour is learned by others who are engaged in criminal conduct (Salinger 2013). Although I’m not a criminal, I know from experience that it’s human nature to learn behaviour from your peers. In comparison, Strain Theory claims that social problems, including crime, ‘result from the failure of institutions, families and other structures to provide for the functional and affective needs of individuals’, leading to a sense of anomie (Donegan and Ganon 2008, 4). 

Differential Association theory explains why fraud occurs by groups within an organisation, whereas Strain Theory explains why individuals turn to fraud, bribery and corruption. Cressey’s Fraud Triangle is a model that addresses the effect on an individual. It explains that they feel pressure to commit fraud, which is their personal motive, there is an opportunity to commit fraud in the organisation, and the individual rationalises their behaviour (Mackevicius and Giriunas 2013).

(Brumell Group 2015)

I first heard about the Fraud Triangle during my university studies in a subject called Audit and Assurance, where it helped me understand why fraudulent financial reporting and asset misappropriation were committed by employees and management. It can also be used to explain an increase in this behaviour here at the bank of Australia. We can try and reduce this my recognising employee’s pressures such as financial distress, limiting opportunities to commit fraud (Coenen 2016), and building an ethical culture where fraud is less likely to be rationalised.

(Procurement Academy 2014)

References
Brumell Group. 2015. “The Fraud Triangle Theory.” Image. Accessed May 22, 2016. http://brumellgroup.com/news/the-fraud-triangle-theory/.

Coenen, Tracy. “The Fraud Triangle and What You Can Do About It.” Accessed May 12, 2016. https://www.allbusiness.com/the-fraud-triangle-and-what-you-can-do-about-it-4968017-1.html.

Donegan, James and Michele Ganon. 2008. “Strain, Differential Association and Coercion: Insights from the Criminology Literature on Causes of Accountant’s Misconduct.” Accounting and the Public Interest 8: 1-20. Accessed May 9, 2016. http://search.proquest.com.ezp01.library.qut.edu.au/docview/235004989?pq-origsite=summon.

Mackevicius, Jonas and Lukas Giriunas. 2013. “Transformational Research of the Fraud Triangle.” Ekonomika 92(4): 150-163. Accessed May 9, 2016. http://search.proquest.com.ezp01.library.qut.edu.au/docview/1492268000?pq-origsite=summon.

Procurement Academy. 2014. “Fraud Prevention – Cressey’s Triangle.” YouTube video, posted November 24. Accessed May 22, 2016. https://www.youtube.com/watch?v=IK_2oMODNXk.

Salinger, Lawrence. 2013. “Differential Association Theory.” In Encyclopedia of White-Collar and Corporate Crime. Accessed May 9, 2016. http://dx.doi.org.ezp01.library.qut.edu.au/10.4135/9781452276175.n135.

Remaining impartial as a forensic accounting expert witness

Our company is extremely susceptible to fraud, and it is highly likely that we will need to engage a forensic accountant as an expert witness. We must understand that their paramount duty is to the court, and this may conflict with our expectations as their client (Accounting Professional & Ethical Standards Board 2013, 8). When preparing a report, expert witnesses must form an opinion based entirely on specialised knowledge (Hoffman et al. 2013, 46). They are required to act independently and without bias, and a statement that verifies this should be included in the report (Beran 2009, 135).

(Aviation Safety Institute 2016)

All facts and assumptions that were relied on must also be explained in the report, and the opinion should be justified in terms that can be understood by a layperson (Hoffman et al. 2013). It is essential that the expert understands they are not obliged to endorse the client’s position, even if instructed by the lawyer.

I have no personal experience in this area, but if I was an expert witness, I would also be bound by these requirements to avoid prejudice. I think these duties are quite onerous and may be difficult to comply with, particularly because they are being paid by only one party to the proceeding. Despite this, expert witnesses must remain impartial throughout all dealings with their client.

Relevant Links
If you would like to read more about the forensic accountant and their expert report, you can do so here:
http://www.mwforensic.com.au/news/MWCommDispute_Ed3.pdf

References
Accounting Professional & Ethical Standards Board. 2013. Forensic Accounting Services. APES 215. Accessed April 16, 2016. http://www.apesb.org.au/uploads/standards/apesb_standards/13092014103232p1.pdf.

Aviation Safety Institute. “Expert Opinion for Legal Matters.” Image. Accessed April 20, 2016.
http://aviationsafetyinstitute.aero/consulting/expert-opinion-for-legal-matters/.

Beran, Roy G. 2009. “The role of the expert witness in the adversarial legal system.” Journal of Law and Medicine 27 (1): 133-137. Accessed April 16, 2016. http://www.westlaw.com.au.ezp01.library.qut.edu.au/.

Hoffan, Ronnie, Warwick Finney, Phillip Cox, and Kathie Cooper. 2013. The Accountant as an Expert Witness: A basic guide to forensic accounting. CCH Australia.

Munday Wilkinson. 2011. Forensic Accounting for Commercial Disputes. Accessed April 20, 2016.
http://www.mwforensic.com.au/news/MWCommDispute_Ed3.pdf.