The Fraud Examiner

Avoiding Conflicts with Clients

Avoiding Conflicts with Clients

By Ron Cresswell, J.D., CFE

November 2015

Jack, a Certified Fraud Examiner (CFE), thought that his latest fraud examination had gone well. Until he received an angry letter from his client. The client refused to pay the bill, claiming that it contained charges for work he did not authorize. Furthermore, the letter accused Jack of failing to return the client’s phone calls, being rude and unprofessional, and giving ineffective testimony at trial. Jack disagrees with all of the allegations in the letter and he believes that he provided excellent service to the client. Nevertheless, Jack is now in a difficult position — he has an unpaid bill and an unhappy client.

The letter described above contains some of the most common complaints made against CFEs. Those complaints include, in no particular order:

Failure to establish the scope of the fraud examination at the outset, which can lead to disagreements over billing and undue delay

Lack of documentation concerning the engagement (e.g., the client and the CFE agree over the phone to broaden the scope of the engagement, but a disagreement occurs because the agreement is not documented)

Lack of professionalism (e.g., not responding to communications, lack of apparent concern for the client’s issues, rude or antagonizing comments)

Testifying as an expert on issues beyond the scope of the CFE’s expertise

Failure or refusal to hand over the client’s documents in a timely manner

Note that the first three items involve miscommunication, the most common source of client disagreements. All of these potential sources of conflict can be avoided by observing the following guidelines.

Clearly Establish the Scope of the Engagement

According to the CFE Code of Professional Standards (CFE Standards), CFEs must “reach an understanding with those retaining them (client or employer) about the scope and limitations of the fraud examination and the responsibilities of all parties involved.” The scope of the engagement should be established early and in writing. A failure to do so can lead to serious disagreements with the client regarding billing, delays and other matters.

In most cases, the scope of the engagement should be detailed in a written engagement letter. An effective engagement letter can help manage the client’s expectations and make disputes easier to resolve. Among other things, the engagement letter should discuss the scope of the services to be provided, the timing of the work, how the client and the examiner will communicate during the engagement, how results will be reported and the payment terms. It’s important to review the terms of the engagement letter with the client, in person or over the phone.

When there is a significant change to the scope of the engagement, the CFE Standards require a new agreement with the client. The change should be documented, either in a new engagement letter or an amendment to the original engagement letter. Some examiners even send non-engagement letters to potential clients with whom they have communicated but decided not to represent.

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