Once upon a time

Tell me a story. Since our toddler days, we've enjoyed hearing a good tale. Stories that we can immerse ourselves in. That excite us. Teach us. Change us. Oh, how we love a good yarn. Why should we change when we enter the classroom?

Whether we're teaching how to interview, give expert witness testimony or prepare clients' reports, storytelling is an integral component. How can we provide memorable experiences for our students while making sure that we cover foundational information successful fraud examiners need to know?

More than war stories

My students tell me some of their favorite class memories are when visiting fraud examiners share cases: investigations, discoveries, confessions, report writing, court presentations, lessons learned, successes and failures.

As educators (and visiting practitioners) we need to tell our stories in a clear, credible manner so they become more than "war stories." Fraud examination only comes alive for your students when you teach principles through fascinating case histories. Sometimes, however, we need to help our visiting practitioners deliver stories that will make an impression.

Ask the experts

As I've discussed in previous columns, bringing practitioners into our classrooms to share their experiences adds levels of credibility and enhances students' knowledge. Even though discussion of some cases might be hampered by attorney-client privilege or impending prosecutions, these storytellers still will draw from their experiences and engage students in great discussions. Students might later reach out to these investigators, accountants and legal counsel to better understand the findings and make some great job contacts.

Let's now talk about how you can help your guest practitioners focus their cases (and you might learn some tips for your own classroom storytelling).

Elements of a good case history

Simplicity: Many subject-matter experts find it difficult to simply relay what they know so their audiences will understand. Like a good story, a good case analysis is easy to follow and keeps the intended audience in mind.

Factual/truthful: Stating the facts — and only the facts — without interjecting opinions or making judgments can be challenging. Opinion rarely has a place in reports or testimony (and case histories) unless an expert witness specifically asks for it.

Structured: A framework or structure helps organize facts either by time or the type of fraud. Following an outline logically organizes information.

Convincing: Is the information believable and does it support the case?

Visual: Pictures, charts and graphs add to the narrative and drive home major points.

Human interest: The characters in the case add a personal element to the situation and allow the audience to relate to the story.

Insights from the 2016 ACFE Report to the Nations

Case histories sometimes need a shot of statistics to bolster fraud examinations' discoveries. Fraud examiners often don't have to look any further than the 2016 ACFE Report to the Nations on Occupational Fraud and Abuse for findings that might coincide and differ with their cases.

They can provide students with a variety of situations from the report that cross industries and organizational structures plus give students valuable frames of reference to add to their fraud-fighting toolboxes.

These insights from the report about fraud at small organizations (those with fewer than 100 employees), might be particularly helpful:

• The median loss is $150,000 — the same amount as large organizations — but the impact on the small organization is greater.
• They're the most common victims of fraud at approximately 30 percent of the cases reported.
• Check tampering, skimming, payroll and cash larceny schemes are more prevalent than in large organizations.
• They have fewer resources to combat fraud.
• Presence of controls correlates with shorter duration and lower dollar amount.
• Trust often plays a bigger role in a small organization.
• Improvements in mitigating risk include more training, management review and adopting codes of conduct.
• The majority of fraudsters are first-time offenders.
• The most common behavioral red flag is living beyond their means.

Stories ripped from the headlines

Discussing real cases in the news is a great way to reinforce learning and enhance professional skepticism. Seek cases in local media. While large public companies or international organizations engaging in fraud make national news, fraud cases closer to home often resonate with students. These stories provide great examples for class discussions of the elements of the Fraud Triangle and failure or lack of internal controls.

A Google search with the keyword "embezzlement" yielded the following:

• A 41-year-old "soccer mom" embezzled more than $174,000 in three years from a soccer club in Orange County, California. A tip led other members of the organization to launch an investigation into its finances. The fraudster was sentenced to one year in prison and five years of probation along with $227,000 in restitution. See Soccer mom pleads guilty to embezzling $174,000 from youth sports club, by Ben Poston, Los Angeles Times, February 5.
• A former manager of SeaWorld in San Diego pleaded guilty to embezzling more than $880,000 from the organization in eight years. His scheme involved the creation of a fake vendor that billed SeaWorld for merchandise that it never received. Tax evasion and wire fraud were also part of this case. See Ex-SeaWorld manager pleads guilty in embezzlement case, by David Hernandez, May 5.
• The secretary of a Baptist Church in Kentucky stole more than $274,000 in four years. "Pure greed" is listed as the motivation in this case that pushed her to steal from the church. She received an 18-month prison sentence and restitution. See Former Employee Of The Scottsville Baptist Church Sentenced To 18 Months In Prison For Embezzling Church Funds, Western District of Kentucky U.S. Attorney's Office.
• An assistant superintendent in a public school district in Texas embezzled more than $500,000 and encouraged the falsification of test scores. She was sentenced to 40 months in prison and required to repay $500,000. Funneling contracts to relatives was a part of this case, and the tone at the top was corrupt. Former assistant superintendent taken to prison for theft, cheating, by Jennifer Johnson, The Examiner, June 9. 
• A former finance director at the University of Miami embezzled $2.3 million through internal vendor payments by making payments to a vendor that she was able to establish in the system. The interesting twist is the income tax perspective. She was sentenced to 37 months in prison for failing to report the income to the U.S. Internal Revenue Service (IRS). Most cases of embezzlement involve the fraudster's underreported income, but the IRS doesn't always get involved in prosecution. See Former University of Miami Director of Finance Sentenced for Tax Evasion, Southern District of Florida U.S. Attorney's Office, August 16.

Fraud examiners and educators can use these cases to create stories and supplement other cases that illustrate Fraud Triangle elements and make topics real for students.

Educators can challenge students to create their own stories from cases that interest them, which allows them to conduct research, analyze situations and develop their presentation skills when they share their stories with the class. They can set up Google alerts with keywords so the stories will come to them every day. They can narrow the parameters such as locale or types of fraud.

And they lived happily ever after

The ideal "happily ever after" in any case history includes exposed fraudsters and the organization's resumption of operations with an increased emphasis on internal controls, training and oversight. Of course, that's often not the common denouement.

We must emphasize to students that they'll eventually be assuming the mantle of the serious job of discovering, examining, preventing and deterring fraud. So they must diligently study the components of the case studies that practitioners and educators present to them in their accounting, auditing, fraud examination and business ethics classes. No less than the survival of organizations of all sizes might depend on your students' focus and dedicated study now.

Patricia A. Johnson, MBA, CFE, CPA, is the program coordinator of the Master's in Science in Forensic Accounting program at Canisius College in Buffalo, New York. She's chair of the ACFE Higher Education Advisory Committee. Her email address is: johnsonp@canisius.edu.