THE SMOKE DETECTOR: Understanding Fraud And Upholding Integrity

By John Minnich posted 03-03-2015 16:54


I found a recent article, rather a quiz, entitled “What’s your fraud IQ?” in the February 2015 issue of the Journal of Accounting of interest. The quiz has appeared regularly in the JOA for several years, and if you’ve never taken it, I’d recommend that you do so. Not only will you see how you fare since the answers are provided, but the information and useful tips you’ll gain should be invaluable and have many applications in your work.

For example, did you realize that a data breach costs $3.5 million on average? What about this question for those of you who use a cloud service provider for emails: Have you considered potential complications to retrieve archived emails stored on the cloud? Now wearing my professor hat and rather than just giving you the answers, I encourage you to take the short assessment! Past fraud IQ tests are archived and linked to from the current article, so in addition to watching for future quizzes, you can go back and take past ones.

In the current JOA quiz, one answer of note to the question on the most common motive for malicious data breaches is, “According to the Verizon 2014 Data Breach Investigations Report, financial motives underlie the bulk of intentional data breaches.” While that may have been assumed, it is of particular interest and concern to CPAs. Have you ever experienced a data breach in your company or with one of your firm’s clients, and if so, what was the underlying motive? How was the issue resolved?

At the grad level at Indiana Tech, we offer a fraud examination (formerly called forensic accounting) course in our MBA program. The students read various cases and submit their opinions and recommendations using studies (i.e. related research) to support their arguments. Our students have found it to be relevant preparation for the challenges they’ll face once they enter the CPA profession or whatever business their career leads them.

In August 2014, I had the opportunity to attend the American Accounting Association annual meeting in Atlanta. The AAA is an association for accountants in academia. During one of the sessions, a speaker shared how he encourages students to find integrity. To paraphrase, he told students that if you do not have integrity, you had better find it; otherwise the profession does not want you. That was a powerful message that resonated with the audience.

As faculty, we post our schedule including office hours in our online course management software and outside of our office. Each semester, I include either a quote or key word including its definition relevant to our profession. Inspired by the national conference, this semester I chose integrity – “the quality of being honest and having strong moral principles; moral uprightness.” Not only is integrity important, it is a core value of the CPA profession.

According to the CPA Horizons 2025 Report, the first core value listed is “Integrity.” It is described there as “CPAs conduct themselves with integrity and honesty, holding themselves to rigorous standards of professional ethics.” Knowing your fraud IQ and measuring it every few months can keep your integrity at the highest level and strengthen your trusted business advisor status.

#ethics #integrity #Fraud #CPA #accounting #Education