The future is now in higher education

“Learning and innovation go hand in hand. The arrogance of success is to think that what you did yesterday will be sufficient for tomorrow.” — William Pollard

As tools for teaching and methods of delivery have evolved, so has anti-fraud education. The members of the ACFE Higher Education Advisory Committee are interested in advancing anti-fraud education in colleges and universities. As chair for the past two years, I’ve had the opportunity to share my thoughts with readers through this column. In this issue, three members of the committee comment on the current state of anti-fraud education and offer some words of wisdom for aspiring fraud examiners and their teachers.

Governmental perspective

Ken Dieffenbach, CFE, is a senior special agent with the U.S. Department of Justice, Office of the Inspector General, Fraud Detection Office. He’s made hundreds of presentations about fraud to a variety of audiences, including those at the ACFE Global Fraud Conference.

“Fraud teaching methods, along with most all topics, require the use of short, interactive lessons to keep students engaged,” Dieffenbach says. “I have found that old-school reading and lecture methods are much less effective.

“With the emergence of emotional intelligence research, it now seems more important than ever to emphasize interpersonal communication and even ‘argument skills,’ ” he says.

“The sharpest fraud examiners will be severely limited if they cannot get along well with all types of people, if they cannot concisely and accurately communicate a complex issue to someone new to the case, or if they are not comfortable or skilled at having a disagreement with others,” Dieffenbach says. “ ‘Groupthink’ is a very dangerous thing for an investigative team: for example, ‘They are definitely guilty; now we just need to find more proof.’ ”

He says that fraud examiners now know that understanding human psychology is critically important for fraud examination work. They must be savvy about confirmation bias, rationalizations, deviant behavior patterns and simple interviewing techniques, Dieffenbach says.

“I previously viewed fraud examinations as mostly about books and records with a few people involved tangentially, but now I realize that people are at the center of it all and the emails and bank records, etc. play supporting roles.”

Global perspective

Sandra Damijan, CFE, leads the forensic services practice at PricewaterhouseCoopers (PwC) Slovenia. She’s the training director of the ACFE’s Slovenia Chapter and a member of Transparency International’s Network of Experts in the area of integrity risk management and business compliance. Damijan is affiliated with the University of Ljubljana Faculty of Economics at which she lectures and performs research.

“When teaching about fraud, there should be emphasis on the use of cases and the development of schemes,” Damijan says. “Old-school teaching about theory and writing on the blackboard is passé; students like video watching, interactive discussion, accounting applications, role playing and modeling.”

She says that it’s now important to teach how to understand behavior patterns plus recognizing red flags and managing them.

“Social engineering frauds that trick people into revealing additional information about themselves such as examining an individual’s status, photos, friends, check-ins and location data, are becoming increasingly common, and not enough is being done to increase the awareness about it,” Damijan says.

Legal perspective

Chelsea Binns, Ph.D., CFE, is an assistant professor in the St. John’s University Department of Criminal Justice, Legal Studies and Homeland Security. She’s also first vice president and training director of the ACFE’s New York Chapter and a member of both the ACFE’s Higher Education Advisory Committee and Advisory Council.

Binns previously held leadership positions at Citibank and Morgan Stanley and worked in an investigative capacity for New York City’s Department of Investigation and the New York State Office of the Attorney General.

“As a fraud educator, I like to supplement my teaching with robust discussions on possible career outcomes,” Binns says. “I find that students are highly motivated to learn when they have a potential career goal in mind. Today, those career opportunities are quite vast.

“When I was an undergraduate studying criminal justice, most of my fellow students aspired to have careers in law enforcement [only] where most of the opportunities were found. Today’s technological advances have increased fraud-related job opportunities in all sectors, including public, private and nonprofit,” she says.

“My recent graduates are working in investment banks and Fortune 500 companies, as well as state, local and federal government. Overall, my students have the best chance of finding exciting career opportunities now more than ever before, which is amazing, considering today’s economic climate,” Binns says.

Words of wisdom

Dieffenbach and Damijan also provided some words of wisdom for budding fraud examiners and their instructors.

“Case studies can be extremely useful but educators must carefully structure them to avoid being just war stories,” Dieffenbach says. “Specific lessons learned, takeaways and ideas for further research can make a case study into a most useful tool.

“Educators often overlook communication skills. Fraud examiners might find themselves interviewing for jobs, trying to secure clients, explaining cases to prosecutors or trying to obtain information from witnesses. Each of these requires different communication skills,” he says.

“Anti-fraud education programs must emphasize this wide range of needs and must focus on hands-on experiences,” Dieffenbach adds. “These can include briefing a small group, presenting unfavorable or contradictory information, or professionally and appropriately standing your ground with your opinions.”

“Networking is a key skill not only for finding a job but also for accomplishing a job,” Damijan says.  “For instance, the accounting profession is often a solo endeavor, but students must be ready to develop networks of people in different areas of expertise to be well-rounded fraud examiners.

“A combination of human intelligence and technology development is crucial for keeping pace with fraudsters,” Damijan adds. “They’re taking advantage of technology, so fraud examiners will have to stay one step ahead to successfully prevent and detect fraud.

“Data and advanced analytics play a much larger role in regulatory and compliance efforts enabling an effective and scalable approach for the fight against fraud especially in such areas as Anti-Money Laundering (AML), Know Your Customer (KYC), fit and proper due diligence, etc.,” Damijan says.

Limited only by imagination

Anti-fraud education has come a long way. Three main factors — technology, the globalization of business and the regulatory climate — have affected both fraud education and fraud detection and prevention. Studies on the psychology of fraud along with behavioral research continue to remind us that it’s people who commit fraud.

Excellent communication skills top the list of criteria for entry-level professionals. The importance of networking doesn’t stop once they obtain jobs. Successful fraud fighters develop professional networks of accountants, auditors, attorneys, law enforcement professionals and technology experts.

The vast amount of data that organizations accumulate brings with it both opportunity and responsibility. Though examining paper documents still plays a part in many fraud examinations, the skill of managing and analyzing large quantities of data is fast becoming a job requirement. Continued instances of hacking of large corporate information networks have focused attention on cybersecurity and increased controls in the use of technology.

Only fraud examiners’ imaginations limit their opportunities across all industries. More regulations spur the financial services industry to increasingly emphasize compliance. Risk management spans industries from small nonprofits to Fortune 500 corporations. The health care industry continually struggles with privacy issues and data management.

These are just a few of the expanding possibilities for those trained in fraud detection and prevention. Educating individuals and organizations on the value of fraud prevention continues to be important but can be a hard sell until “something happens.”

ACFE Anti-Fraud Education Partnership

The ACFE continues to support higher education. Dr. Joseph T. Wells, CFE, CPA, founder and Chairman of the ACFE, started the Anti-Fraud Education Partnership initiative to address the need for fraud examination education at the college level. Through the partnership, the ACFE provides full-time college and university faculty with materials covering a broad range of topics.

In 1999, only about 20 out of approximately 900 accounting programs in the U.S. offered a course in fraud examination. (See the “Fraud EDge” column, by Mary-Jo Kranacher, MBA, CFE, CPA, Anti-Fraud Education: Standardizing nationally, expanding globally, Fraud Magazine, January/February 2005.)

Nearly 300 colleges and universities participate in the partnership with courses offered in accounting, law, criminal justice, computer science and information technology disciplines. Several institutions have taken it one step further by developing undergraduate and graduate degrees in fraud examination and forensic accounting as the need and interest have grown.

Joining the higher education partnership can be a great benefit to your school. Access to ACFE training materials, sample syllabi, case studies and an e-newsletter focused on education and assistance obtaining guest lecturers are just a few of the tools offered. If you know of a college or university that isn’t participating, encourage them to check it out. More details are available at ACFE.com/HigherEd.

Whether you’re behind or ahead of the curve in anti-fraud education, it’s clear that this is both an exciting and challenging time to be involved. Resolve to step up to the challenge!

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.