The Softer Side of Fraud Examinations

Imagine you are a small business owner. You started the company from the ground up and now it’s operating like a well-oiled machine. You have a large staff of individuals you trust completely. They’ve been in the trenches with you and have been a huge part of your success. So you become a little relaxed with your management style — you don’t believe they need a firm hand anymore.

But then months or even years later you notice that the numbers are no longer adding up and the company is coming perilously close to collapsing. But worst of all, you discover that one of your most trusted employees is behind it all. They’ve been misappropriating cash right under your nose and you are devastated. You immediately reach out to a Certified Fraud Examiner for help. And though you initially seek help rooting out the machinations of the fraud, over time it’s the emotional support that helps you see things through to the end.

Stephen Pedneault, CFE, CPA/CFF, Founder of Forensic Accounting Services, LLC, believes that being an emotional crutch for your clients is a skill fraud examiners should be prepared to possess. During his session, “Managing Client Emotions: The Softer Side of Fraud Examinations,” he explained the importance of going beyond fraud examination services. “We listen to our clients, we provide our clients with advice and we are there for them when they need us,” he explained.

And encountering emotions isn’t limited to only clients. “While working with individuals during a fraud examination, you can expect to encounter a wide range of emotions from the victim, the suspect(s), witnesses, family members, co-workers, and others who may be affected by the matter being investigated and resolved,” said Pedneault. “If I run into someone who’s angry, I let them vent."

He explained that fraud victims, like other victims of crimes, typically don’t have an understanding of the process and how slow an investigation can move. Therefore, fraud examiners should:

  • Identify their goals at the onset.
  • Discuss their expectations.
  • Paint a realistic picture with timelines and outcomes.
  • Avoid raising false hopes.
  • Keep clients well informed throughout the process.
  • Make themselves available.
  • Don’t talk about “justice.” Talk about closure and resolution.
  • Segregate business from emotions.
  • Let them vent, then bring them back on task.
  • Give them a voice in the process and incorporate them as part of the team effort.

Sympathy vs. Empathy

“I don’t want my staff to be sympathetic with my clients,” said Pedneault. He explained that sympathy is feeling pity or sorrow for someone — having compassion for another person’s distress. “We don’t want to feel sympathy for our clients. We want to resolve the matter.”

But his staff can be empathetic, which is the ability to understand and share feelings. It’s important to recognize the client’s emotions, which means feeling with someone, not for. “It’s all a matter of style,” he explained. “Everybody has a different style. I tend to use analogies … and that seems to really work. But sometimes it’s humor.”

And when the case nears the end, be prepared to move on. Pedneault explained that it’s okay to take an interest in your client’s case, but don’t get attached. It’s your goal to take the case, work the case, resolve the case and move on.

If you take anything away from this, though, Pedneault said it best when he finished his session: “Listen! Listen! Listen! Recognize and then empathize.”