• Career Center: Help Me Leave a Legacy

    Proactive Prevention Is Key for Longtime CFE 

    Keith Kauffman, CFE, CPA 


    Sunbelt Holdings 


    Keith Kauffman, CFE, CPA, has enjoyed a long tenure in the anti-fraud profession. Kauffman, the CFO for Sunbelt Holdings, has been a CFE since 2000 and has made it his mission to show organizations the importance of proactive fraud detection. His latest project, antigaap.com, is an effort to create a new financial reporting method and framework in order to help prevent fraud.

    How did you become passionate about fighting fraud? 

    It started early in my career. I had been a CPA for only a few years when I joined the ACFE as an associate member (I become a CFE in January 2000). I cannot remember how I heard of the ACFE or what prompted me to join but I wanted to help my clients detect and investigate fraud. I remember seeing the first Report to the Nations — I prepared a PowerPoint presentation with a colleague who was more experienced in fraud investigation and we went around presenting it to whomever would listen. This was before the days of Enron and not many people were interested in discussing fraud. However, over the years I have read about, and seen, the proliferation of fraud to a pandemic level which has led me to become quite vocal about proactively hunting down fraud. I would say my passion about fighting fraud has only continued to increase since my start.

    What is one of the biggest lessons you have learned since entering the fraud prevention field?

    The biggest lesson I have learned is a recent one — people and companies do not want to proactively find fraud. I’m not saying they do not like it or hope it is not there. It’s more that they do not want to hunt it down and remove it. The term “cost benefit,” which I no longer believe is a valid reason, is used as a justification for not implementing and/or improving fraud controls. Companies are willing to implement passive controls (i.e. hotlines) and wait for tips instead of boosting their internal control departments to proactively find it. Many companies and organizations, especially smaller ones, still do not have any reporting methods for frauds. In addition, all you have to do is read the stories of whistleblowers and what happens to their lives when they do report fraud. I recently posted a question on the ACFE Community regarding this specific topic and the responses were very eye opening.

    What steps led you to your current position as CFO at Sunbelt Holdings?

    The primary steps I took were strategic risks and being open to opportunities. I started my own fraud investigation firm which led to an opportunity at a large national accounting firm to join them while they were forming a local litigation and forensic accounting practice. When the practice was not sufficiently supported by the firm, instead of leaving and reforming my own firm again, I made a strategic decision to stay and began consulting for a Fortune 500 company — which resulted in transitioning to private industry. While in private industry, I took a controller position in the real estate industry (with no experience in real estate) which eventually led to a controller position at Sunbelt Holdings. While at Sunbelt Holdings, I had the opportunity to go back into public accounting and develop a consulting practice for a private equity firm which was investing in utility-scale alternative energy facilities (i.e. wind, solar and natural gas).

    Again, a field I knew nothing about, but it was an excellent opportunity. Although I left Sunbelt Holdings, I maintained them as a consulting client. The alternative energy consulting practice did not work out, but Sunbelt Holdings rehired me as their CFO.

    What are some of the unique challenges you face in the real estate/property holdings industry that other CFEs might not know about?

    The most unique challenge, which almost everyone is aware of, is the amount of money involved in real estate transactions. Even though numerous parties are reviewing, overseeing and accounting for a deal, the temptations are everywhere, which means your radar has to be up all the time. One of the specific areas of fraud I have encountered is collusion. Because so many people are usually involved in a real estate deal, a perpetrator usually needs an accomplice if they are to get any significant amount of money. As we know, collusion makes fraud harder to detect, so reliance on trusted third parties becomes important. In Sunbelt Holdings’ case, working with specific lawyers, title companies, brokers, etc. allows us to know who we are dealing with. It does not guarantee fraud will not happen, but it helps.

    What is a memorable case or project that you have worked on?

    The most memorable was my first engagement very early in my career while I was employed at a local public accounting firm. It was a forensic accounting engagement with one of the partners. It involved an outside (out of town) investor and a construction project in Arizona. The investor asked us to review the records of the construction project. The investor was particularly concerned about personal expenses being paid through the construction project by the contractor, especially a personal monthly phone bill. It was not obvious at the time to me, but the investor spent a lot of time with us discussing the phone bill issue which was not more than a few hundred dollars a month. We performed our analysis (I want to be careful of the word “investigation”) and noticed a much larger issue which we devoted more time to analyzing. We discovered the contractor was overcharging their development fees. When our analysis was complete, the development fees overcharged were substantially more than the personal expenses — around several hundred thousand dollars. When we presented our findings to the investor with our focus on the overcharged development fees, I will never forget his first words out of his mouth, “Yes, but what about the phone bills?” I could not believe what I heard. He never did care about the overcharged fees. I learned a valuable lesson that day. Fraud is personal and the person suspecting something has their own agenda. Find out what it is and resolve that first. Then address any other issues.

    What do you like about being an ACFE member?

    The continual updated knowledge of fraud, especially as technology evolves, and the worldwide access to other CFEs. As a member, I have not taken advantage of all the ACFE has to offer but I hope to change that in the future. Recently, I started my own website which I use to promote a new approach to financial reporting and auditing. Even though it is not directly related to fraud, I believe it can have a direct impact on detecting and possibly preventing fraud. I have sought input from the CFE community and have received enormous support and ideas which have helped shape my future approach and ability to implement change.

    How has obtaining the CFE impacted your professional development?

    It directly impacted my development by assisting me in acquiring my first forensic consulting position at a Big 8 (there were more of them back then). I was hired into their litigation and bankruptcy group and I believe one of the main reasons I was hired was the CFE certification I completed shortly after being hired. It has indirectly impacted my development throughout my entire career. I read every Fraud Magazine and scan the blog every day looking to improve my skills and knowledge in fighting fraud. I have used these skills in every position I have ever worked.

    What activities or hobbies do you like to do outside of work?

    I enjoy hiking and I have one main outside interest right now — my website antigaap.com. My interest which I hope to turn into a "movement," is to implement a whole new approach to financial reporting and substantially alter the financial statement audit while significantly enhancing detection and prevention of fraud.