"The CPA As Sleuth: Working the Fraud Beat" ( JofA , Apr.99, page 20) was very interesting and provided some excellent tips on how to investigate fraud.
The article, however, assumes that CPAs are knowledgeable enough in matters of fraud to provide an efficient and effective fraud examination. This is similar to assuming that a CPA who is an auditor can provide the same quality of tax advice as a CPA who is a tax consultant. The auditor might plod through it, but important tax aspects could be overlooked and the service degraded.
CPAs in public practice were never specifically trained to investigate fraud and, depending on their exposure to it, they may not have the experience necessary to provide an efficient and effective fraud examination. To provide the best possible client service, the CPA who uncovers a fraud should contact a Certified Fraud Examiner (CFE).
Certified fraud examiners are experts who investigate and resolve fraud allegations from inception to resolution. They are trained in the legal elements of fraud-related crimes—from the simple fraudulent statement to the complex embezzlement, extortion or kickback.
Many CFEs are also CPAs, making them the ideal selection for investigating frauds with a financial component.
On a technical note in relation to mail fraud, your article states, "Specifically, the CPA must establish who prepared the document, who mailed it, that it went through the mail, that it was fraudulent and that the preparer knew it was fraudulent." This is inaccurate. The specific language of the mail fraud statute can be found at title 18 of the United States Code, 1341. The statute prevents the U.S. Postal Service from being used to carry out any scheme to defraud. The mailing itself does not need to contain the false or fraudulent representation as long as it is an "integral" part of the scheme. What is considered integral or incidental depends on the facts of each case; generally any mailing that advances the scheme in a significant way is sufficient. The specific legal requirements of mail fraud that need to be proven through the use of evidence are (1) intent to defraud, (2) scheme to defraud and (3) the use of the mails to further the fraudulent scheme.
The JofA is a quality publication that keeps CPAs nationwide informed about important issues affecting the accounting profession. We believe that it is important to inform CPAs that CFEs are available for consultation on fraud investigations.
Brian Wilson, CPA, CFE
Thomas Buckhoff, CPA, PhD, CFE
Fargo, North Dakota