The fine art of fighting financial fraud

Forensic accounting firm has national ­reputation for investigating financial fraud

By Stephanie Basalyga
BridgeTower Media Newswires
 
BOISE — Tiffany Couch still remembers the woman who showed up at her door 20 years ago.

The woman, who drove a Jaguar and wore designer clothes, was planning to file for divorce from her husband and wanted Couch to use her skills as a certified public accountant to evaluate the man’s finances.

“She told me, ‘My husband says we don’t have any money, but I know we do,” Couch recalls.

Looking at the generous diamond on the woman’s finger, Couch was inclined to agree. She began digging into the couple’s financial records. But instead of limiting her efforts to a basic audit, she took her investigation a few steps further, combining her knack for numbers with a natural curiosity, a strong sense of logic and an inherent passion for digging deep into details. In the end Couch discovered that her client’s husband did indeed have more money than he was admitting to; the man was squirreling away cash he wasn’t reporting as revenue.

Armed with the information Couch uncovered, her client pursued her divorce. Meanwhile, Couch walked away from the case with her professional interest piqued. At the time, fraud — what Couch humorously calls the “f word” — wasn’t something that people talked about. It definitely wasn’t something that accountants were trained to tackle. But Couch didn’t care.

“I told myself and my colleagues, ‘I don’t know what this is called, but when I grow up, this is what I want to do.’ “

Since then, Couch has not only figured out the name for what she encountered two decades ago, she’s managed to turn it into the focus on her Vancouver, Washington-based firm, Acuity Forensics. The business is now recognized as one of a handful of forensic accounting firms in the country specializing in investigating financial fraud, and Couch has built a national reputation that includes speaking at conferences and authoring a book. The woman who as a girl had a passion for episodes of Matlock, a television detective show that featured Andy Griffith, and books about a teenage girl detective named Trixie Belden has, in a way, joined their ranks.

“I absolutely am a fraud detective — I just don’t carry handcuffs or have subpoenas,” Couch says. “I always say I’m CSI without the dead bodies.

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Finding a niche

In 2007, Couch was new to the Portland-Vancouver area and trying to figure out her next career step. Her friends recommended the certified public accountant open a tax practice. But Couch was looking for a new type of adventure. Remembering the thrill of solving a case for that wealthy woman client more than a decade earlier, she decided to jump into the area of forensic accounting with both feet.

With the goal of creating a firm focused solely on financial fraud investigation, she set out to establish her expertise with the local market. She called area rotary clubs and chambers of commerce and lawyers groups, offering to speak for free at meetings and luncheons. She scanned profiles of local lawyers, found one or two who appeared to be close to her age and invited them to coffee.

“I told people, if you’ve got clients with a messy set of books, send them my way,” Couch says.

These days, Acuity Forensics has grown from a one-woman effort to a six-person business that includes Couch’s husband as office manager. Couch is still the only fraud investigation expert on board, but she’s used to the solitary status.

“Across the country, those of us doing fraud and litigation support, it’s a small exclusive group,” she says.

It’s also a group in which there are few women. But Couch doesn’t spend a lot of time focused on that aspect of her chosen profession.

“If I spent my time worrying about that, I think I wouldn’t get as much work,” she says. “I think I bring a lot to the table as a woman. I’m approachable and able to get a lot of information out of people by being the girl next door. It helps me more than it hurts me.”

That trustworthy approach is often what clients are in need of when they call Couch’s firm. By the time they arrive at Acuity Forensics, they’ve either already become suspicious that something isn’t right in their company or business, or they’ve uncovered hard evidence that something is definitely amiss.

Determining the nature and extent of a problem is just part of what Couch offers her clients. When it comes to taking the next step once evidence of fraud is in hand, Couch says a one-size approach doesn’t fit all cases. Sometimes she goes in alone to talk with the person suspected of committing the act in order to get a confession. Other times, she’ll bring in lawyers to talk with business owners about their options for take the next step. In extreme cases, law enforcement may be brought in to handle the situation.

She also helps employers decide how to best resolve situations and guides them in determining the best way to recoup losses, including helping them navigate the best way to file a claim if the company has employee dishonesty insurance coverage. The coverage, Couch says, is often the best — or only — option for companies to recoup losses from fraud.

“I’ve only met one or two fraudsters who have invested illicit proceeds. The rest spend it on crap, so there’s not much for clients to go after. Insurance is usually the best way to get your money back,” Couch says.

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Proactive practices

While fraud and embezzlement can occur in any industry, Couch has built a strong expertise for helping companies involved in construction. The industry, in general, has a higher median loss than other industries. While losses in most industries run between $100,000 and $125,000, the median loss in construction is $227,000, Couch says. In addition, a recent study indicated that three-quarters of construction companies polled said they had experienced some sort of fraud.

Couch says the nature of construction and how projects operate make the industry ripe for fraud and other similar financial crimes.

In the majority of cases, the person committing the act often turns out to be an employer’s most trusted employee, someone who’s allowed to work without a high degree of oversight. That’s a common situation at construction companies, especially smaller operations, where an owner may rely on a trusted go-to person to handle money matters so that the owner is free to focus on other aspects of the business.

That trust factor in construction also extends to project sites, where oversight can become even more of a challenge.

“You have to trust that subs are going to show up on time and do the work they’ve promised to perform and purchase materials they’ve promised to purchase,” Couch says. “Unless you’re looking over everything, there’s opportunity there.”

While there’s no surefire way to keep fraud from occurring, Couch says there are a few simple steps business owners should make a regular part of their operations to minimize the possibility of fraud occurring.

Committing financial fraud requires a three-part perfect storm of an internal pressure, an ability to rationalize the act and an opportunity to commit the act. Employers can eliminate the latter component by making sure no one person in the company has control over all aspects of financial matters.

In addition, although most owners are already overwhelmed, Couch says it’s critical for them to make sure they personally provide oversight by taking the time to regularly review bank statements and cancelled checks in paper format. Ditto for credit card statements.

“The majority of fraud happens when someone is writing checks to themselves or using the debit card,” Couch says.

She also recommends a business owner review all payroll reports after a payroll has been processed.

While conducting those reviews each week may add another hour or so to an employer’s work week, Couch says it’s an investment of time that will pay off down the line.

“I don’t believe fraud is happening everywhere, I just believe it has the opportunity to,” she says. “Being vigilant on the front end, it’s going to save you so much money and heartache.”

At the same time, a business owner can’t always be everywhere all the time, so she encourages employers to create a culture where their employees feel they can voice their concerns without being made to feel they are being brushed off.

“I’ve seen too many times when a whistle blower is sent back to their desk,” Couch says. Instead, she says, employees should be encouraged to speak honestly without fear of recrimination or rebuff.

“If someone sees something, they should be able to say something,” Couch says. “If someone brings something to your attention, look into it. Take it seriously.”