The big four

In this column, we hear from a seasoned fraud fighter and educator who has some excellent advice on skill building for new CFEs and students. You can discover how to develop these essential core traits through a mentor relationship or by observing those professionals you admire. Of course, it'll take some practice and occasional self-examination, but these traits are a step in the right direction as you begin your career.  — Colin May

After 10 years as a forensic accountant, plus three years teaching fraud examination courses at a state university, I've become accustomed to fielding students' questions about what it takes to enter the fraud examiner profession.

Here are some of the most common questions: What should I major in? What courses should I take? How do I get into the profession? What kind of work experience should I obtain to be most competitive? These are important logistical questions, but they don't cut to the core. Students would do well to sharpen four traits early in their careers: fraud acumen, communication skills, curiosity and objectivity.

Fraud acumen

Think back to when you were in grade school. I distinctly remember my third grade teacher's lesson plans on mastering basic arithmetic. Throughout the year we had to take timed addition, subtraction, multiplication and division table problem tests. You couldn't move on to subtraction before mastering addition or division before mastering multiplication.

The culmination was a final test of all four. Those who passed received a trophy engraved with the honor of "Mathematician." Earning that trophy was a big deal. Basic arithmetic was only the beginning foundation for more sophisticated math to come (think algebra and calculus).

The same process holds true when building your fraud acumen muscle over time. Fraud acumen is the basic knowledge necessary to be a fraud examiner. You must be able to understand the aspects of how and why fraud occurs. You don't have to be an immediate master; you only need diligence, passion and a willingness to learn.

If you earn the CFE credential, you'll have the baseline knowledge of fraud examination sanctioned by the ACFE. Taking the steps to become a CFE will position you as a leader in the anti-fraud community and a specialist in the prevention and detection of fraud. The CFE Exam tests your knowledge and expertise in the four primary areas of fraud examination: financial transactions and fraud schemes, law, investigation, and fraud prevention and deterrence. Your fraud acumen building can be infinite if you're diligent and passionate. Good fraud examiners are always learning something new from examinations they work, colleagues and supervisors, past college mentors, and ACFE events and materials. Einstein probably had to get through his third-grade math, too, right?

Communication skills

Fraud examiners — even more than auditors and accountants — need to have innate communication skills or be willing to do anything to develop them. You won't just be analyzing data; you'll be interviewing subjects formally — in interview rooms — and informally in offices, warehouses, shop floors, on the streets and in homes. You'll need to know how to ask the correct questions at the right time. But, perhaps more importantly, you'll need to cultivate the art of listening.

Have you ever truly listened to music? Put on some headphones, play your favorite tune and just listen with no distractions. You'll probably hear sounds you've never heard before. Perhaps it's the subtlety of the bass guitar, the nuances of the background vocals, or the beat of the cowbell. (We all need more cowbell!)

Now apply your new listening skills to your next informal interviewee, your boss (always a good move), a colleague, your spouse or significant other. Ask a few questions but then listen for the subtleties. Move your attention from the "great I" to the person in front of you. Then go to a quiet place and write down all you can remember. Do this many times over the next few weeks, and you'll see your fraud examination skills improve exponentially. Listening is paramount to the success of any fraud examiner. If you learn early in your career to develop an empathetic ear with victims, an analytical ear with witnesses and an inquisitive ear with subjects you'll be well on your way to success.

Curiosity

Undoubtedly you've heard the saying, "curiosity killed the cat." Lack of curiosity can kill a fraud examination. One of my favorite parts of a fraud examination is reviewing and analyzing documents. Receiving those documents (financial records, emails, business reports, etc.) is similar to receiving a birthday present as a child. Someone has given you a big box, you don't know what's inside, but you excitedly unwrap it and play with that gift. If you're not curious and excited during a fraud examination you probably won't discover pertinent evidence. Don't always settle for the first results. Probe more deeply and satisfy your burning curiosity. If TV detectives (we still need to have at least one good program with a fraud examiner protagonist!) settled for the first few red herrings, then all cop shows would be 15 minutes long.

One simple but effective way to build curiosity is to be willing to take on assignments outside your area of responsibility and perhaps your comfort zone, especially if they're in areas in which you're naturally interested. As a first-year staff accountant at a public accounting firm, I was hesitant to take on more responsibility on perceived difficult projects for fear that I'd fail. Eventually, I learned that these assignments helped develop my research and analytical skills, and set me apart from my colleagues.

A word of caution, though; being curious doesn't equate to being reckless. As fraud examiners, we're held to standards of ethics. (Read the ACFE Code of Professional Ethics.)

Curiosity and excitement shouldn't interfere with your ability to be a truth seeker and work within the parameters of your situation. Unlike cats, fraud examiners don't have nine lives, and you might only have one shot to get a fraud examination right. However, if you're willing to proactively find answers and satiate your curiosity, then you're well suited for a career in fraud examination.

Objectivity

The human brain is powerful. It not only controls almost all other functions of the physical body but it gives us the ability to think, organize, adapt and have emotion. While these abilities allow humans to live extraordinary lives, they can also lead us to develop certain biases or preconceived notions about events and people. As a result, biases morph into supposed facts and influence our perceptions of reality. Lack of objectivity can destroy a fraud examination.

The ACFE has published some excellent articles that explain and demonstrate the power of bias and the danger it presents when conducting fraud examinations. See The peril of bias in fraud examinations, by Scott Patterson, CFE, The Fraud Examiner, January 2015; Your dog is the worst dog. Ever. Science says we'll be biased. Make efforts to mitigate it, by Gerard Zack, CFE, CPA, CIA, The Fraud Examiner, October 2013; and Tipping the balance: Never assume guilt of innocence, by David Petterson, CFE, Fraud Magazine, May/June 2015.

You can better understand and hone your biases by playing the role of devil's advocate — arguing for a position that you might not necessarily agree with. Taking the time to understand opposing viewpoints will develop your critical thinking and reasoning skills, which are necessary tools when you're trying to be objective. (If you want a quick crash course in understanding your biases, be a devil's advocate when your family and friends are discussing the taboo topics of religion and politics!)

Fraud examiners sometimes work in adversarial environments, but that doesn't mean we pick sides before an examination commences. We're not hired guns propping up an opinion but finders of facts — wherever they might lead us. Fraud examiners are truth seekers first and should never allow unsubstantiated evidence to enter into examinations. Of course, this can be a struggle. So, it's necessary to have a calculated, critical eye for all evidence presented and not succumb to pure instinct and emotion.

Big four among many

These four traits — fraud acumen, communication skills, curiosity and objectivity — are just some of the important characteristics you'll need in a fraud examination career. This list isn't exhaustive but contains the legs for a general baseline that will surely set you off on the right path as you begin your quest. Here's to your exciting career in fraud examination!

L. Christopher Knight, CFE, CPA, is a forensic accountant in Indianapolis, Indiana, and an adjunct faculty member at Indiana University's Kelley School of Business in Bloomington and Indiana University-East in Richmond. His email address is: lchristopherknight@yahoo.com.

Colin May, CFE, is a forensic financial investigator with a government agency (the views in "Starting Out" are his own). His email address is: colin.may.cfe@gmail.com.