Categories
AICPA Diversity, Equity, and Inclusion Inclusion Matters Inspiration NYSSCPA PSA Where We Are

Building Generations

Photo by Jeppe Hove Jensen on Unsplash

When Bernadine Coles Gines, the first Black woman to receive a CPA license in New York, was a kid, she and her little sister, Dr. Ruth Coles Harris, were so into playing office that Bernadine once asked Santa to bring her paper clips for Christmas. So it really is no surprise that Dr. Coles Harris and Ms. Coles Gines, were both valedictorians of their class in elementary school, high school, and college. Following in Bernadine’s steps, Ruth attended Virginia State College, and majored in Business Administration at the undergraduate level. One of the required classes was accounting and it turned out to be her favorite. “I could just stay up all night working.” But it was 1948 and, because there were practically no opportunities for CPAs in the United States at that time, none of the historically black colleges and universities (HBCUs) offered accounting as a major. As I have mentioned, the two year work experience requirement meant most Black people were excluded from the CPA profession.

The head of the business administration department at Virginia State College at the time, Dr. George Singleton, was the fifth Black graduate of New York University’s (NYU) school of business administration. He encouraged both sisters to follow their dreams and work towards becoming CPAs, as impossible as that path appeared at that time. The sisters both moved to New York and attended graduate school at NYU, both majoring in accounting. After graduation, the homesick Ruth moved back to Virginia, to be a professor at Virginia Union, while Bernadine went on to make her historical mark on the New York CPA profession.

Back in Virginia, there were no opportunities for Dr. Coles Harris to become a CPA – accounting firms would not hire her to fulfill the experience requirement, but she did not give up hope. When Ms Coles Gines became a CPA, Dr. Coles Harris was even more motivated – if Bernadine could do it, so could she. In 1962, Dr. Coles Harris decided to take the CPA exam. As a professor she felt that she could not encourage her students to take an exam, one that had low pass rates, that she was unwilling to take herself. On her first try, she passed all but one part of the exam. Five months later, the opportunity to take the outstanding part in Virginia Beach but, because of segregation, there were no hotels in Virginia Beach where she could stay. The thought crossed Dr. Coles Harris’s mind of making a civil rights stance, but she decided to defer that moment and, instead, focus on getting the exam done (you have to pick your battles). She found a hotel in the nearby town of Norfolk. Dr. Ruth Coles Harris passed that exam and, in 1963 became the first Black Woman to receive a CPA license in the State of Virginia, making her own history nine years after her sister.

100 years after the first Black person received his CPA license, there are still very few Black CPAs. Per the AICPA, in 2018, only 2% of CPAs in U.S. CPA firms were Black and only 1% of partners were Black. A recent CalCPA and IMA study noted eight factors that contribute to the lack of diversity in the CPA profession:

  • Lack of exposure to the profession prior to college
  • Stereotypes regarding lower mathematical aptitude
  • A disproportionally higher need to begin earning income immediately after receiving a bachelor’s degree
  • Discrimination experienced by parents or earlier generations from the business community
  • Insufficient support during college
  • Lack of business school professors with whom diverse talent identifies
  • Perceived exclusive environment and inequitable treatment within the profession
  • Lack of visible, successful diverse talent in senior levels of the profession

In the CPA Journal, NASBA’s Alfonso Alexander shared how the CPA profession is a generational one where most CPAs have a family member who is or was a CPA, giving them exposure to the profession. Many people of color do not have anyone in their network who can explain what a CPA is and what opportunities are in the profession. A history of exclusion led to a lack of diversity in the CPA profession and, as a result there are still very few Black families that include a CPA who can expose future generations to the profession. Instead, these future generations may stumble upon the exposure through a teacher or professor, as with the Coles sisters, or once they have started their careers, when they cross paths with a CPA through work.

To address this challenge, in 1980, the National Association of Black Accountants (NABA) launched the Accounting Career Awareness Program (ACAP) to fill the generational role for underrepresented ethnic groups and “increase the understanding of accounting and business career opportunities”. Working with NABA, the New York State Society of CPAs created the Career Opportunities in the Accounting Profession (COAP) program in 1987, to be a part of this vitally important work. I have met CPAs who are products of ACAP or COAP and all of them have told me that they are CPAs because of those programs. We cannot understate that value – even if the ACAP and COAP students do not become CPAs themselves, they can now, armed with a greater understanding of what a CPA is, encourage a friend or family member to consider the profession.

Bernadine Coles Gines and Ruth Coles Harris were both extremely driven and smart women, who each graduated at the top of their class, yet they had to face incredible challenges to attain their CPA licenses. They had a role model in a professor who exposed them to accounting, supported them in college, and encouraged them to strive even though they faced discrimination. As Ruth Coles Harris stated, the exam is difficult enough and, if we want an inclusive profession, we need to address the other factors that are keeping some out.

Categories
AICPA Diversity, Equity, and Inclusion In The News Inclusion Matters Inspiration Props Where We Are

The Past, The Present, The Future

John W. Cromwell

If the way things are had nothing to do with what has come before, history wouldn’t be something taught at school. However, we learn in many arenas that the past plays a big part in shaping the present and the future. Both graphite and diamonds are carbon, nothing but carbon, yet they are very different from each other because of the environment in which they are formed. What happened to the carbon in the past, determines whether is a diamond or graphite today. Is there any story that we can tell that does not involve cause and effect?

On April 17, 1896, the Certified Public Accountant (CPA) designation was established in law in New York. 25 years later, in 1921, John W. Cromwell became the first Black CPA. This year we celebrate the centennial of his achievement and the doors Cromwell opened. When, as a member of the class of 1906, Cromwell graduated from Dartmouth, he was its top science student and then went on to get his masters, also from Dartmouth, in 1907. Despite these achievements, it was 15 years before Cromwell became a CPA, and not through any fault of his.

A native of Washington, D.C., Cromwell had returned home after graduation and discovered that he faced two barriers. First, because he was Black, he was not allowed to sit for the CPA exam in Washington, D.C., Virginia, or Maryland. He also faced a barrier, that would stymie many Black people who wished to become CPAs – the experience requirement. In those states, in order to become a CPA, you were required to work under the supervision of a CPA, something that became the biggest barrier, for Black people, to become a licensed CPA. Even as recently as the 1960’s Bert Mitchell, who was the 100th Black CPA in the United States, struggled to find a job with an accounting firm. Despite graduating at the top of his class, 25 firms would not hire him, using their clients’ attitudes (it could never be their own) toward people of color as an excuse. A window opened for Cromwell in 1921, when New Hampshire instituted CPA laws that did not mandate the experience requirement, and Cromwell took advantage of the opportunity. He traveled to New Hampshire, sat for, and passed the CPA exam in 1921.

Fulfilling the academic requirements of the CPA license is difficult enough – right now, only about half of those who take the CPA exam pass it, and back then an even smaller fraction passed. Now, imagine that you had to wait 15 years, and travel over 500 miles, just to be allowed to even try to suffer through it, despite having graduated from an Ivy League school, at or near the top of your class. Because of their race, the first Black CPAs faced and overcame groundless barriers that had nothing to do with their abilities and everything to do with people’s biases, discriminatory views, and actions.

100 years ago, when Cromwell became a CPA, he became an example of the possible and opened the way for others to follow. Perhaps in 1926, when Cauncey L. Christian took the CPA exam in Kentucky, Christian was braver because Cromwell had shown what was possible. Christian sat for the exam at a time when the exam was not open to Black people. So, in that exam room, Christian had a concern that the other 49 White men taking that exam did not. Although Christian was light skinned enough to pass for white, he must have been fearful of his race being discovered. But, because of his courage, out of the 50 men who took the CPA exam, Christian was one of 7 who passed and, by doing so, became the third Black CPA in the United States. As each Black CPA was licensed, more Black students saw a path to the profession opening up for them as well.

2021 is the Black CPA Centennial and, in commemoration of the trail that John W. Cromwell blazed a century ago, several organizations, including organizing partners the American Institute of CPAs (AICPA), Diverse Organization of Firms, Inc., Illinois CPA Society, National Association of Black Accountants (NABA), and National Society of Black CPAs (NSBCPA) will recognize Black CPAs and push for greater progress. The themes of the centennial are honoring the past, celebrating the progress that has been made, and continuing to build the future.

As we learn about the history of our profession, the pioneers, the challenges, and the triumphs, it should help us better understand its current state. The more we know about the history of exclusion, the better we can understand the lack of diversity and the lack of inclusion of various demographics, especially in leadership positions. We should think harder and question if the status quo exists for any better reason than the environments that existed in the past. We should remember and honor those who, in addition to having to work hard had to find their success, had to navigate around or through the arbitrary biases of others. Most of all, we should look at our present and what we can do now to create an environment that builds a future of belonging, equity, and inclusion in our profession.

Categories
At the Movies In The News Social Media Where We Are

Who Is The Accountant?

calculator-385506_1920

I have been excited about watching “The Accountant” for over a year, when I first heard about this movie – a film about a forensic accountant! I lived in fear of the project being canceled by film bigwigs, who would decide that no one wanted to see a movie about an accountant. Accountants are almost never depicted, on screen, as anyone worth one’s time. You can’t love or hate them, they are too boring to think about. But here was a movie and the filmmaker was so confident about it that he called it “The Accountant.”  I would tell people how excited I was about the film and they would almost always express surprise that anyone would want to make a film about a CPA, let alone watch one. I don’t blame them because just about every time I have seen a CPA being portrayed on film or television, I don’t want to be him (and it is almost always a him). He is a guy with zero social skills that people put up with because he is some kind of numbers-whisperer; a guy who can find secrets in the numbers that the true heroes are too busy being interesting to find. So, on Sunday, I dragged my husband, who is a true saint, to the movie theaters to watch “The Accountant.”

From the previews, you will see that Ben Affleck, the Accountant, seriously lacks social skills and does not appear to have any friends. He is, as a forensic accountant, a super numbers-whisperer who gobbles up financial statements for breakfast, lunch and dinner.  However, he is also the hero and is an incredibly interesting guy who can do all the running, jumping and full mystery solving that heroes can! They also threw in the story of Crazy Eddie and his “Panama pump”. I may have been the only person in the movie theater who exclaimed in excitement when that came up, but the story of Crazy Eddie is one of many years of various fraud schemes, ranging from money laundering and tax evasion, to financial statement fraud.  I had a great time watching this movie and, I even forgave the woman who yelled out a spoiler reveal before it happened.

It seems that many had been convinced to try out a film about a forensic accountant. “The Accountant” won the box office this weekend, by a massive margin that you don’t have to be an accountant to understand. This gives me hope for the future of CPAs on the screen (big or small). I can see it now – characters who are at least as interesting as lawyers and doctors. We may even be portrayed as people who can tell funny jokes, who can be engaging and who can even have friends: I am excited about films that break long-standing stereotypes. Maybe I am getting ahead of myself, but I will say something that is a first, with respect to how I feel about a CPA of any kind on TV or on film. I watched this movie and I came out wanting to be a forensic accountant!

 

Categories
AICPA My Two Cents PSA Where We Are

Checking Up

smile

Several years ago, I was working on an assignment that had me flying out to Boca Raton, Florida, every Monday and returning to New York City on Friday night. It was great because it was a brutal winter in New York City and pleasantly warm in Boca Raton. It was terrible because it was close to impossible to get anything done over the weekend. One week, I had to admit that there I needed to get one of my teeth looked at. It had been causing me some pain and I knew I had to sort it out before it started hurting a lot. My challenge was to find a dentist who took patients on weekend days and who I could get to easily. I found one online and went in to see him on a Saturday morning. He determined that I needed a filling fixed and he got to work. What I remember about that day is how incredibly painful it was and how unsympathetically the dentist kept ordering me to “be strong”. I was traumatized – so much so that I did not go anywhere near a dentist’s office for years after that. I knew I should, but the memory of the pain and a dentist who was in need of a heart kept me away. Other aspects of my body were very well taken of; I went to my annual physical and that was always a pleasure, compared to my dental disaster. I brushed my teeth but, other than that, they were pretty much on their own.

One nights, I fell asleep while sucking on a throat sweet and, the next morning, I woke up feeling as though my teeth were about to fall out of my head. I was in a panic; I was too young to be toothless. I was desperate and looked up dentists located close to my office. Thankfully, I was able to find a dentist, a few blocks away, who was able to fit me in that very day. As he examined me, a poem from my childhood, “Oh, I Wish I’d Looked After Me Teeth” ran through my head. Fortunately, this time around, I get to keep my teeth. My dentist was a great guy who doesn’t believe in causing pain and suffering and NEVER says to me, “be strong”. I did, however, have to go through a series of appointments to repair the damage that had accumulated over the years that I had avoided the dentist, dentist I could have avoided. I have not missed an appointment since, although I get nervous when the machine turns on, even just to polish my teeth.

Like my teeth, a business needs regular checkups to maintain its financial health. Yes, a lot of companies review their financials on a monthly or quarterly basis, but how many are assessing their control systems and taking steps to update and analyze how they prevent and detect fraud? The fact that the median length of a fraud is 18 months before it is detected and that many frauds can last many years as in the cases of Bernie Madoff and Rita Crundwell, to name a few high profile cases, implies that these steps are not taken often and rigorously enough. No one really thinks that it will happen to them and some people think that their finance department, accountant or auditor will keep them safe from fraud. This is because they do not fully understand the roles and duties of their auditors and accountants. Other people don’t want to spend the money on fraud prevention and detection. However, when you start thinking that Rita Crundwell stole over $54 million and a quick search of the internet brings up many other recent cases of embezzlement of millions of dollars that have been discovered. There are many more that either have not been recorded or are of lesser amounts.

Think about this:

  • Fraud goes on for an average of 18 months but many go on for much longer.
  • Usually fraudsters start out stealing a little money but as times goes on and they are not caught, the amounts stolen grow and grow and grow
  • The knowledge that a company has allowed theft to go on under its nose for years can negatively affect its reputation, leading people to believe that it may not be a safe and ethical place to do business

These are just a few things to think about when it comes to detecting and preventing fraud in your company. It only makes sense to get a qualified Forensic Accountant, Certified in Financial Forensics to assess and evaluate your companies systems in order to beef up your fraud prevention programs and also, perhaps to detect possible fraud? Now, I learnt a very painful lesson before I started to take care of my teeth. Do you want to learn a hard, and possibly expensive, lesson before you take proper care of your business?

Categories
In The News Inspiration IRS My Two Cents PSA Where We Are

All For Love

Al_Capone_in_Florida

“Valentine’s Day; red roses
It’s said that some have died for love.
In North Clark Street, Chicago
They died for money…”

It was with those words, uttered by Laurence Olivier, on a Paul Hardcastle song about greed, that Al Capone first fascinated me. It started with that tale of the St. Valentine’s Day Massacre – “It’s a good day to die,” the gangster laughed in a scene in the video – and it continued as I learned more about his legacy as a famous gangster. I mean, as perennially single as I have been most of my life, I have been known to don black clothing and disdain on February 14th, but to shoot a bunch of people on that day? That just seemed a little much. You couldn’t wait until the 15th? What kind of person does that? I found out that others were similarly outraged by Capone’s actions and expended a lot of time and energy trying to bring him down.

A few weeks ago, I was reminded of Al Capone when I spoke with Meredith Engel of The New York Daily News. She was reporting on the financial issues faced by those in the marijuana business. Marijuana is legal in some states, such as Colorado and Washington, but is still illegal on a federal level. This dichotomy may lead to confusion on what income is taxable on a state level, where pot is legal, and on a federal level, where it is illegal.

What does this have to do with Al Capone? Well, despite being blamed for the St. Valentine’s Day Massacre, among other murders, and in spite of being investigated for racketeering and his bootlegging business, the authorities struggled to get Capone convicted on his gang-related crimes. However, there was a government agency that he had not seriously considered; the IRS. You see, it does not matter where your income comes from, be it from legal or illegal sources, you have to pay taxes on it.

It doesn’t matter whether you are selling pot or stealing from your boss, if you don’t pay taxes on that money coming into you, you cold find yourself in trouble with the IRS, ranging from interest and fines to imprisonment. Federal agents couldn’t find enough evidence to pin murder on Al Capone, but they were able to use forensic accounting methods to put together enough evidence to indict Capone on tax evasion charges. He was sentenced to 11 years in prison, was fined $50,000, was charged $7,692 in court costs and $215,000 plus interested in back taxes.

Preparing a tax return can get rather complicated. Figuring what deductions, exemptions and credits you are eligible for can be a like navigating a maze. However, the most simple part of the tax return is the income that you start with. If you don’t want to get into trouble with the IRS – REPORT ALL OF IT, regardless of how you came about it.

Categories
In The News PSA Where We Are

Ripped From My Headlines?

IMG_2402-0

“Aren’t you excited that they’re making a show about you?” This is how my friend, Tabeel, greeted me this morning.

A show about me and I haven’t been telling you all about it? Well, let me tell you, I’m as surprised as you are, but very delighted about the news. It’s about time. I watch way more than my share of crime shows. I have watched so much vintage Law & Order that I can pretty much tell when we are going to move from the Order to the Law and I can see a twist coming a mile away. When I see a new crime show being advertised on TV, I am pretty much always willing to give it a chance. I am held back from watching more crime-related shows because there are only 24 hours in day and I waste a lot of that time sleeping, working and interacting with the real world. For all the great and wonderful things that the shows do for me, I have a recurring gripe.

Every once in a while, on these shows, the investigators will have to solve a money-related issue and they’ll call in the forensic accountant. The guy, and it’s always a guy, who shows up always looks like he has not seen the light of day in years and appears to have forgotten how to interact with other human beings. His clothes and hair are out of style and the other investigators only put up with him because he talks, geekily, about where the money that they are trying to find went. The forensic accountant is that one guy on the show that no one wants to be. I mean, the coroners are more exciting than the forensic accountant and they deal with corpses!

But all of that is about to change. It is as though someone with access to a television network has been listening in on my conversations and hearing me yelling at the television. Tabeel shared with me that Shonda Rhimes is adding a new show to her resume, “The Catch”, and this show is a show about a forensic accountant. Not a show where a forensic accountant is released from the dungeon every once in a while, to look at numbers. The main character is a forensic accountant and the forensic accountant is a woman! Finally, someone found the right ear to whisper in – the stereotype is not reality. There is so much more to a forensic accountant than we have seen so far on television. At last, someone has decided to make a show about me!

I mean it totally has to be a show about me, right? A female, forensic accountant who is likely to be kick-ass and have many clever and insightful things to say. That’s totally how I roll. I look forward to this show, in between the dramatic twists and cliffhangers, highlighting some of the processes and nuances of what forensic accounting is about.It may begin a movement until finally Law & Order FAU (Forensic Accounting Unit) is launched. The forensic accountant is busting out of the basement and she’s taking no prisoners! Well, there probably be a lot of prisoners but you get what I’m saying. Look out for it, set your DVRs and dive into the world of the crime-fighting CPA!

Categories
Enforcement The Fed Where We Are

The Sheriff in Town!

When I first went to university, I was unsure what I wanted to major in. I had been considering chemistry, because I fancied that I might be the person to come up with a cure for AIDS. At the idealistic age of 18, I was so sure that I could use the colorful magic of gas chromatography to come up with a solution that many experienced scientists with doctoral degrees had been unable to discover. I signed up for a chemistry class and, I decided to take an elective in economics. I was hooked after my first class and ended up majoring in economics. I was fascinated by various theories and the push and pull between fiscal and monetary policies. I did come away from my class knowing one thing – I wanted to work for the Federal Reserve System, home of US monetary policy. To me, to be part of an organization that was focused on what to do in order to best positively influence the economy of the entire nation was awesome! Federal Reserve Banks issue the money that we use; how cool is that? I remember going to a campus career fair and spending most of my time there chatting with a representative from the Fed. Following that conversation, getting a job at the Fed was my dream. One big obstacle stood in my way; at the time, I was not a US citizen. I was devastated but I still dreamt that one day I would either be a citizen or the Fed would change its policies, whichever came first. At the time, as an economist in training, my dream was to be an analyst.

As time has gone by (I am a citizen now) and I have gone on to add becoming a CPA and then getting Certified in Financial Forensics to my skill set, my interest in the Fed and what it does has grown. After graduating, with my degree in economics and mathematics, I went on to work at a bank, where I was an analyst. I was very excited about the opportunity to apply the theory I had learnt in college. I had not bargained on how people are not very good at following the rules, be they the rules of logic or the rule of law. I mean, how many times have you said, “Who would do that,” or “Why did they act that way? It doesn’t make sense”? Yep, we humans use our free will in the nuttiest ways. Just last week, I read a crazy story about a Georgia woman filing a tax return for a $94 million dollar refund. Every aspect of the story is insane, from her 100 dependents to thinking that she could pick up her refund check at a local Kroger grocery store, and yet she is neither the first or last person to attempt this kind of thing. So, after the monetary policy folks have come up with their ideas about how best to influence the economy, there need to be the people who make sure that people are not breaking the rules and people who create control systems and audit them to minimize the risk of people breaking the rules. This is where forensic accountants come into play at the Fed.

Forensic Accountants, both those Certified in Financial Forensics and those who are Certified Fraud Examiners, can be found in the audit and enforcement areas of the Federal Reserve System. The saying is that love makes the world go around, but we are all aware that money is a big motivator for who many people behave. I have written about the fraud triangle and how people in positions of trust and authority will break the law in pursuit of illicit gain. With this in mind, it is vital to assess and improve control systems to make sure that, starting at the top financial institution, there is little opportunity for those who feel the pressure to commit financial crime. If the top bank cannot keep money safe, what hope is there for the rest of them? The Fed has bank examiners whose goal is to ensure that banks comply with laws such as those governing anti-money laundering and doing business with nations and people that the US government has imposed sanctions upon. The Fed plays an important role as an independent third party that will objectively assess operations at the banks that they supervise to make sure that they are not, for example, helping criminal rings hide their ill-gotten gains.

There are twelve banks in the Federal Reserve System and each bill of paper money that you have incorporates, in its serial number, the letter assigned to bank that issued that bill. Pull out a banknote, be it a dollar or a $100 bill, it will have the letter of the particular Federal Reserve Bank that issued it, be it Boston, San Francisco or any of the ones in between. In the case of the dollar bill, the name of the issuing bank is also noted on the bill. It goes almost without saying that the institution that issues the money that we use should have top notch controls. Each Federal Reserve Bank, therefore, has audit departments that are constantly reviewing it and making sure that the banks are complying with the rules. The auditors also work to improve systems. Every day, people are spending a lot of time and energy trying to figure out how to game the system and so those at the Fed should spend at least as much time and energy working to keep the banks safe and compliant.

Though my focus has changed, my excitement when it comes to the Fed is unabated. Not only are they working on monetary policy, they are also working to make sure that the rules are not being broken and that the opportunity to defraud, steal or abet crime is diminished. Take a look at the money in your wallet and think about what goes into making it worth what it is worth.

Categories
AICPA In The News NYSSCPA PSA Where We Are

Hear Ye, Hear Ye! It’s The Future!

 

Toward the end of June, I went into the New York State Society of CPAs offices (very lovely offices, I must say) to be part of a roundtable discussion on the future of the accounting profession. The discussion was distilled into a piece in August’s CPA Journal. Personal interest aside, it is a great read with a diversity of opinions on various issues regarding the CPA profession and the value of the designation. Along with me were three other professionals, all with different career paths within the designation of CPA. Somya Munjal is the founder of CPA for the People, which is a CPA services, business consulting and social venture firm. She is also the founder of Youthful Savings, whose mission is “empowering the next generation with financial education and entrepreneurship training”. Michael Durant is working on his master’s degree in taxation, while pursuing his CPA designation. That’s right, a master’s in taxation; that should begin to convey just how complicated taxation can be. Michael is also the cochairman of the advisory board for the Bronx School of Law and Finance, a school that he is an alumnus of. Jordan Frey is a senior account in EisnerAmper’s private business services group. As you can see on the company’s website, the group provides a wide range of services to businesses of all types and sizes. And then there is me – figuring financial forensics. So, in a room of four CPAs, you have a tax man, a social venture, financial education and entrepreneurship training guru, a private business services expert and a forensic accountant. Walking into the room, I was encouraged to find that I was in a room with people who validate my claims about the variety of professional paths that a CPA can take. It’s always a good feeling when your claims are validated.

We had a very interesting discussion about the different directions in which our CPA designation was taking us and, for all the differences in career we had, we had some real similarities. We were drawn by the high standards and ethics that are integral to being a CPA. I have written about how a CPA is considered to be a trusted professional, a characteristic that is an asset in someone you are dealing with when it comes to financial matters. I am happy to find that I am not alone. It is one thing for me to stand on my soap box and wax lyrical about the virtues of the CPA; it is completely something else, in a very good way, to be in a room with others who feel as passionately as I do about what we do.

I am sharing our conversations with you and, if you feel as though reading The CPA Journal diminishes your street cred, you can throw in a little Wu Tang Clan as your backing track, as you read a little bit about the future…

Categories
D.O.J. Enforcement Where We Are

It’s In The Mail

ImageIn one of my previous lives, I worked for a company that, among its various business ventures, owned a mailboxes service. I would pop in occasionally to see how this and other nearby businesses were doing and, on one such visit, I found myself in the middle of an adventure. In the morning, shortly after the store opened, a man walked in and flashed his very impressive-looking badge. He explained that a woman was going to come in later in the day to pick up a package and that he needed to be present when this happened. Unsure what was going on, yet thoroughly impressed by the badge, the store’s staff agreed to let the man set himself up behind the counter, in wait for the woman. In no time, the man had settled himself in a chair, opened up a newspaper and blended into the scenery. A short while later, the store’s phone rang and one of the store’s employees answered a call for the woman they were waiting for. She asked if her package had arrived. Upon hearing that it had, she requested that someone bring it out to her car, as she was waiting outside the store. The employee explained that it was the store’s policy that all customers come in to pick up and sign for their own packages. After a short back and forth, he hung up the phone and a few minutes later a small woman in massive sunglasses walked in. The agent paid her no notice and appeared, instead, to be engrossed in a phone conversation with a friend. The woman signed for her package and turned to leave with it. As she did so, the agent whispered urgently into his phone and, suddenly, the mailboxes store turned into a scene straight out of the movies. Men in dark glasses, holding guns, burst in through the door, our agent behind the counter surged forward and, in no time, the woman was under arrest and her box was in their custody. Before he left, the agent explained that this woman was one of a group of people shipping some drug along the lines of PCP. Suffice to say, we were all pretty speechless and the most amazing thing of all? These guys worked for the US Postal Service. Yes, those folks who will let “Neither snow nor rain nor heat…” keep them from delivering your mail will not let crime hang out in their system either.

The United States Postal Inspection Service, founded by Benjamin Franklin, is the primary law enforcement arm of the US Postal Service and one of the oldest federal law enforcement agencies in the United States. Their goal is to protect against those who  “attack our nation’s postal system and misuse it to defraud, endanger, or otherwise threaten the American public.” You would be amazed how many criminals use the postal service as a conduit for perpetuating their crimes (using services such as UPS and FedEx for crimes that cross state lines is also covered by these laws). When Charles Ponzi was arrested for taking people’s money in a giant fraud that came to be known by his last name, the Ponzi Scheme, he was arrested by the US Postal Inspection Service because he had used the mail system to write to his investors, encouraging them to reinvest their funds.  He was charged with and went to jail for mail fraud.

If a person sends you mail in order to ensnare you in some kind of scam, to make an illegal delivery or to otherwise commit a crime, that is mail fraud. Conversely, if someone has scammed you and you end up sending that person money or some other item of value, that too is also considered mail fraud and that person can be prosecuted for it. Since a lot of mail fraud involves financial schemes, the work of financial forensics experts is quite important in the crime fighting work of the US Postal Inspection Service. If, for example, a person were running a pyramid scheme that involves people mailing in funds to invest in the scheme, a forensic accountant would be needed to track and follow the money trail and build a case against the criminal carrying out the scheme. Also, say you received a solicitation to send money to a fake charity and you sent payment in the mail. A forensic CPA’s skills would go a long way in exposing and putting a stop to the bad deeds of the fake charity.

The US Postal Service provides a very important service. It is well known that stealing mail is a federal crime but few realize just how far the US Postal Service and its law enforcement agents go to maintain the integrity of the postal service. Much trust is placed in those blue boxes and this is because of the work of these agents.

Categories
Uncategorized Where We Are

Things Fall Apart

breaking-up-laurie-lipton-15

Divorce. Just about nobody wants to deal with that. However, just about everybody knows that, in order to best navigate what can be a rather complicated process, if they are getting divorced, they should get a lawyer. How many think – I should probably get an accountant too? That’s right – an accountant. During a marriage, couples will acquire property, share incomes and perhaps even have children. Should they split, it is almost never a simple matter of just walking away. There may be a home (or homes) to consider, issues of child and spousal support and other financial assets that will be taken by one or the other spouse. These many financial aspects to divorce  can be very challenging to resolve, and this is where the services of a forensic accountant can be well utilized.

The services can be as straightforward as preparing a spouse’s statement of net worth.  The forensic CPA’s understanding of and experience with financial statements and tax return documents will help make this process more efficient, and less likely to contain errors, than trying to prepare the statement yourself. Trying to correct net worth numbers after a divorce is finalized is a huge headache that most would probably want to do without. The need for the specialized skills and qualifications of a forensic CPA  come into play when a divorce involves more substantial and complicated assets. During a marriage couples may accumulate property, own and operate businesses, or incur debts. Forensic accountants will investigate the locations, value and character of the assets and income of the divorcing couple and present this financial information and testimony in court.

The location of assets and income is simple enough concept. Sometimes a divorcing spouse who wishes to minimize alimony or child support payments may try to hide their true income. Especially when the spouse is self-employed or has various sources of income, a forensic accountant may need to use various methods to trace and recalculate hidden income. In addition to tracing hidden income, a forensic account will assess the current value of property and other non-cash assets. What also comes into play in a divorce proceeding is the character of the property and debts. Where a divorcing couple resides decides to a large extent whether property will be viewed as community, equitable or separate. A state’s marital, financial and tax laws determine how the marital estate will be divided, how spousal and child support will be calculated and it is, therefore, very important that a divorcing party engages experienced divorce attorneys and forensic accountants who are experienced in family law.

For instance, when a couple has been married for many years, trying to determine the character of an asset can be a challenge. A forensic accountant may be needed to trace that asset back many years, and possibly through various investments, to figure out the source of the original funds used to purchase the assets. Sometimes separate property has been mixed with community property (which is completely understandable as most believe their marriage will be permanent). In these cases, it is important to have a professional who can use acceptable methods to identify the different types of property to a level that is acceptable in a court of law. Things can get really complicated. For example:

  • What if one spouse comes to the marriage with separate property which carries debt. During the marriage payments on this property. Are those payments made with separate or community funds? Will that change the character of the property as a whole, or in part or not at all?
  • What about if one spouse comes to the marriage with a business that she or he works in during the marriage. At the time of the divorce, can the other spouse claim a part of the increase in value of the business? How could their contribution be assessed if at all?

Using presiding laws and their expertise, forensic accountants work to provide the evidence and calculations that the judge will use to come to conclusions about the apportionment of assets and income.

Another way in which the skills of a forensic accountant are used are during the discovery phase. This is the part of the divorce process where the lawyers gather information, documents and other evidence that they will then use to resolve the case. Discovery involves requesting and collecting documents, asking questions of various parties that must be answered, under oath, in either written form or in the presence of a court stenographer, issuing subpoenas, and asking the opposing party to admit that items on a list of statements are true. Credentialed forensic accountants are very important during discovery as they can help the attorneys draft documents, analyze and assess whether or not documents received are reliable and useful. They can help the lawyers put together the lists of the documents that they should request from the opposing parties.

The stress of dealing with a divorce can be better managed by engaging the services of a qualified professional who has an understanding of

  • tax issues,
  • financial statements,
  • tracing financial transactions,
  • analyzing the value and character of assets and liabilities, and
  • understanding the machinations of the local legal system.

Together with your lawyer, should you have to go through a divorce, a certified and experienced forensic accountant can help make the process less of a drama.