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Rae Ann Tronetti, CFE, CPA
Audit Consultant and Principal
Deltron Management Consultants
Rae Ann Tronetti, CFE, CPA, Audit Consultant and Principal at Deltron Management Consultants, knows how to rise to the challenge of a fraud investigation. Throughout her tenure as an auditor, she has developed anti-fraud policy, analyzed wire transfer data, and recovered seven years worth of tax losses for a municipality despite a lack of cooperation and a lack of accounting records. From money laundering convictions to wire fraud investigations, she has come out on top and used her CFE every step of the way.
What made you decide to become a Certified Fraud Examiner (CFE)?
I have always had a strong sense of ethical values based on my upbringing. My father had a direct effect on my career choice. He was a human resources manager for Westinghouse and responsible for quality control training. Early in my career as an internal auditor for Allegheny Energy, a colleague of mine enlightened me about the CFE credential. Training plans were required as a part of our internal audit department process, and I was given the opportunity to participate in remarkable training promoting world-class internal audit departments. I was also given the opportunity to participate in ACL training and educate and train my department on the use of ACL. In the wake of Sarbanes-Oxley, my director encouraged and supported me in my effort to obtain my CFE credential.
How has earning the CFE credential benefited you in your career?
Prior to obtaining my CFE, I was senior auditor and team facilitator of one of five self-directed work teams in the internal audit department of a Fortune 500 company. In the aftermath of Sarbanes-Oxley implementation and SAS 99, I was appointed by my director to lead and manage the newly-formed forensic audit team. As part of this effort, I obtained my CFE; created a company-wide fraud risk assessment model and an anti-fraud policy; and conducted trainings to educate management and employees on the risks of fraud, and the tools necessary to prevent and detect fraud. I was selected as a senior consultant to assist the supply chain in its efforts to comply with Sarbanes- Oxley. In the time since I resigned from that position, I started my own consulting practice working primarily for local governments in Pennsylvania. I also worked for a short time with the Commonwealth of Pennsylvania as a Regional Policy Specialist. My credentials as a CPA and CFE had a direct influence on my appointments to these positions.
What trends are you currently seeing in your fraud investigations?
I see fraud in the news more and more. I think people are more willing to expose fraud and stakeholders are more willing to take accusations of fraud seriously. Specifically, I see the following trends: background checks (corporate and individual); digital data analysis; computer forensics; surveillance; searching for family, friends and associates; and collaboration with corporate security, legal and compliance.
What were some of the more challenging tasks you’ve personally faced as a CFE?
One of the challenges I have faced was identifying material weaknesses in the treasury function wire transfer process involving multi-million dollar wire transfers initiated by a subsidiary president lacking proper approvals. I recommended further investigation to "C" level management of the parent company. At the direction of management, I performed additional analysis of wire transfer data using ACL. The president was eventually terminated, arrested and convicted on federal charges of wire fraud, money laundering and conspiracy to falsify records. Another time I felt challenged was when I was hired as interim finance director for a former client. My instincts told me something was not right when the company was my client. After several months as finance director, I realized the CEO and company founder were manipulating financial data and reports to secure additional federal, state and local funding. The challenge to me was this non-profit served adjudicated boys and the CEO was well-connected in the county with judges, law enforcement and politicians. As finance director, I had check signing authority and was responsible for finance. I contacted the state to perform an informal investigation. I contacted a local attorney based on the recommendation of a client. I stayed long enough to gather evidence supporting my claim. I resigned despite suffering a huge financial loss to my family. To date, I do not believe this case has been resolved. I have found it more than difficult to find work in this area.
Please describe your most memorable case and its resolution (to-date if it’s a fresh case).
A case comes to mind where I was completely responsible for an investigation involving allegations by elected officials that the secretary-treasurer of the local Pennsylvania government failed to properly remit payroll taxes for the year under audit. I was hindered by a lack of cooperation from all elected officials and a lack of audit trail due to substantial amounts of accounting records that were absent or misplaced. I conducted interviews of elected officials, counsel and the secretary-treasurer. I made a formal request for payroll tax returns and reporting forms filed with the Internal Revenue Service (IRS) and Social Security Administration. A request for copies of bank statements and cancelled checks from banks was made. I researched and contacted the Social Security Administration to determine if a Section 218 Agreement was in place exempting the municipality from FICA and Medicare Tax. A review of insurance policies to determine applicable coverage was performed.It was determined that a Section 218 Agreement was not in place and the municipality was liable for the payment of FICA and Medicare taxes. The secretary-treasurer failed to pay FICA and Medicare taxes on behalf of the municipality during her 20-year term! She was removed from her appointed position and her employment was terminated. An agreement was reached with the IRS whereby the municipality would be liable for the previous seven years FICA and Medicare taxes; penalties were abated. There was no recovery from the insurance company. The municipality elected not to press charges.
What advice would you give to someone hoping to follow a similar career path as you?
Commit to strong ethical values. Listen to mentors. Commit to continuous learning. Educate others with respect to your successes and failures. Being a female CPA and CFE is not an easy job, but with a passion for the field and drive for results you will succeed.
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