Conversation with other people, whether social in nature or with a specific purpose in mind, is a natural activity among individuals in the business setting. This occurs daily without giving the process any thought or concern. The process of conversation has a tendency to become stressful for many individuals when it is part of a fact finding mission or a process designed to fix blame for a situation. Many professionals, especially those in the accounting field, can become intimidated at the prospect of talking to another person with the probability that it will turn into a tense, even confrontational, conversation. An individual's desire to avoid a confrontation may cause hesitation in conducting the essential interviews with key witnesses or possible collaborators.
The success or failure of the interview process depends upon the amount of confidence, experience, and advanced preparation by the members of the interview team. Confidence and experience can be gained through the process of conducting the necessary interviews while avoiding excuses to eliminate this vital step in the fact gathering process. The points discussed in the chapter's remainder are designed to improve the interviewer's skills in extracting vital information from the person being interviewed.
SAS 99 continually emphasizes the value of the interview process in the pursuit of fraudulent activity. The audit team is urged to perform a number of analytical procedures that essentially involve the thorough and penetrating interview of key personnel associated, directly or indirectly, with the client. Examples of this key step in the audit process include the following:
The auditor should make inquiries of management concerning knowledge of fraud or awareness of allegations of fraud.
The same inquiries are to be made of members of the client's internal audit unit
The auditor is urged to inquire of others within the entity about the existence of fraud. This group would include operational personnel, employees involved in processing complex or unusual transactions, and the in-house legal counsel.
Making oral inquiries of major customers and suppliers
Interviewing personnel involved in activities in areas where a risk of material misstatement due to fraud has been identified to obtain their insights.
Inquire of individuals involved in the financial reporting process about inappropriate or unusual activity relating to the processing of journal entries and other adjustments.
The Interview Process Compared with the Interrogation Process
The conversation formats usually identified with an audit/special inquiry will range from informal conversation with witnesses to the highly emotional and tense confrontation with the person believed responsible for the fraudulent or questionable actions. The dividing mark between the two extremes is not a clear-cut line of separation. The more distant people are from an incident, the less concerned they are about any repercussions; the closer they come to the incident, the more stressed or concerned they become in talking about the situation. The concern can be due to either a feeling of being held responsible for the actions of others, knowledge of the action or actual involvement in the incident.
An interview can best be described as a professional conversation conducted with a specific purpose or goal in mind. The thrust of a good interview is to gain knowledge and information that are felt pertinent to the inquiry. The characteristics of a typical interview include the following:
It is a non-threatening format.
The goal is to gain more information or knowledge about the process.
The tone is non-accusatory.
It takes a relatively short time frame to complete (15 minutes to one hour).
The conversation could be conducted alone or without total privacy.
The physical location of the conversation is not a critical factor.
An informal report of the conversation, either oral or in writing.
An interrogation is generally viewed as a process of questioning with force, moving toward a denial of the incident or a confession. The process can be stressful on both parties and should not be conducted without a high level or preparation and planning. The characteristics of a typical interrogation would include the following:
The tone is generally accusatory.
The interviewer controls the flow of conversation.
Length of time is not a factor (may last for several hours).
The physical setting for the interrogation is important.
An interrogation should never be conducted alone (have at least one other person present).
A formal, written report should be immediately prepared at the conclusion.
It is apparent that the interview process is utilized by business and accounting professionals, while the interrogation process is best left to security personnel or to law enforcement. The accounting professional may find his or herself as part of an interrogation team or inadvertently placed in a position of interrogating the guilty party. The auditor should always be alert to signs that a simple fact-gathering interview has evolved into an interrogation with the perpetrator of the suspected activity.
The accounting professional can improve his/her conversational skill by careful planning and preparation both before and during the interview/interrogation process. An experienced interviewer is adept at eliciting key details from what may appear on the surface to be nothing more than a routine fact-finding interview. The following points will permit the accounting professional to increase the rate of success in the critical witness- interview phase of the inquiry.
Be Prepared Before Entering the Interview Process
An experienced interviewer understands the correct questions to ask and to grasp the answer that flows from the conversation. This particular skill is enhanced by advanced study and knowledge of the topic or process that is being discussed. Ignorance of the process or the specific problem presents the dishonest or threatened employee the opportunity to take advantage of the lack of knowledge on the interviewer's part. The assimilation of sufficient background information will allow the interview team to quickly recognize inaccurate or inconsistent answers to pertinent questions.
Knowledge and a comprehension of the problem being addressed allow the accounting professional/auditor to enter the interview process with more confidence and self-assurance. Many times the person interviewed will phrase his/her answers based upon a perception of knowledge possessed by the interview team. The auditor that is more knowledgeable and well-versed concerning the topic will find his or herself in a stronger position to receive candid and truthful responses to key questions and to be in a position to recognize false or misleading responses.
The Initial Contact Should Be Polite and Professional
All interviews should begin with the anticipation of complete cooperation and candor from the person being interviewed. The meeting is expected to begin on a friendly, yet professional, tone with no defensiveness or hostility anticipated from either party. This sense of cooperation begins with the interviewer. Arrogance, aggressiveness or an air of superiority is not the way to begin an interview when seeking answers or assistance from the other party to the conversation. The interviewer should expect that some nervousness, even resentment, will be evident during an interview concerning a business controversy or suspected act of fraud. This attitude generally subsides within a short time and both parties can then get on with the task of resolving a problem. An initial exchange with nonspecific, generic conversation allows time for both parties to adjust to the dynamics of the beginning interview. Inform the interviewee of the identity of the persons conducting the interview and the general nature of the inquiry. Avoid the use of inflammatory words such as "fraud, embezzle, deception." Replace them with phrases that will generate less tension. This would include words like "review, analyze, examine, or unusual transaction."
Control the Interview Process
While it is important to begin the interview on a friendly, non-threatening basis, it is just as important to maintain firm control over the interview process. The accounting professional should be viewed as in charge and with a mission to accomplish, that is, to resolve the topic of the inquiry. This aura can be transmitted through proper business dress, personal demeanor, and a business-like approach to the interview. The interview should be conducted in a business locale with a minimum of distractions or potential interruptions. The topic of conversation should be controlled to maintain the parameters of the subject matter.
The interviewer can have a prepared list of questions, but they should not be used as a crutch for an ill-prepared interview. The written questions can assist the interviewer by serving as a reminder of the topics to be discussed or specific points to be covered. The list should not become a barrier that inhibits a smooth flow of dialogue between the parties and the interview.
Allow Sufficient Time to Answer the Question
Many times the inexperienced or ill-prepared interviewer will ask a question and immediately begin to provide the answer, all before the other person has an opportunity to speak. The goal is to listen to the response, not to articulate a response. Information is gained by asking a question and listening carefully to the response.
Silence can be a strong motivator to the flow of information. Once the question is asked, wait for the answer. The silence is an obvious clue that you are waiting for a response. Allow the person being interviewed to fill the silence with conversation. The more the person talks, the more information there is to be gained from the process. The additional conversation allows for additional evaluation of the completeness, accuracy, and candor of the responses. By allowing the individual to continue to respond, indicators of inconsistency may begin to emerge.
Be Alert to Nonverbal Communication Factors
The successful interviewer has the experience and confidence to recognize what an individual is actually saying through the interpretation of body movements, facial gestures or other forms of nonverbal communication. Because the nonverbal responses are primarily the result of a subconscious reaction to events, many feel they are more reliable as an accurate portrayal of the truthful answers.
An individual has a tendency to subconsciously react when an intentionally fabricated answer is given to questions. The reactions may be subtle, but are recognizable to the experienced and confident interviewer. The accounting professional should be alert to the following nonverbal communication clues that may be an indication of deception:
Excessive grooming or fidgeting during the interview, especially during key questions
Avoidance of eye contact during pertinent questions
Preoccupation or fidgeting with other items on the desk or in the room
Excessive perspiration, nervousness, heavy breathing, or fast heartbeat
The effective interviewer will not place too much reliance on any one factor but will view the overall non-communicative patterns displayed by the individual. A single gesture or motion should not be taken out of context, but rather viewed as a part of the total reaction pattern of the individual. The skilled interviewer will carefully observe and analyze such points as eye movement, body gestures or even posture in an effort to capture the full meaning of the verbal responses given to the questions.
A study in 2004 showed that a small group of people recently tested for the ability to detect deception in the interview process have the remarkable ability to identify deceptive answers in a high percentage of instances. It is a process that should not be discounted or minimized during the interview phase that is designed to ferret out fraudulent activity.
Effectively Ending the Interview
The experienced interviewer will paraphrase or repeat the key points that came from the dialogue. This ensures that the facts are understood and none of the key points have been misinterpreted. An effort should also be made to ensure that the interview ends on a positive note between the parties. Hostility should be avoided unless it is a tactical decision to ferret out more facts.
The closing should include the possibility of a re-contact to clarify a point or at least to provide the person the option to "recall an important fact." An effective technique is to return to the more critical witness interviews in an effort to clarify a point; this gives the person a second chance at disclosing a significant fact that is unknown to the accounting professionals.
Many witnesses are reluctant to discuss what they really know or strongly suspect is going on. By asking the question "What do you think . . . ?", the person being interviewed may feel less pressure to tell what he/she knows or strongly suspects.