stablishing a solid antifraud practice is not the same as building a typical CPA firm,” says Karen J. Tierney, CPA, of Glastonbury, Connecticut, “but for CPAs with the right background, training and expertise, I believe the antifraud profession offers great opportunities.” Craig L. Greene, CPA, a partner in the accounting firm of McGovern & Greene in Chicago, agrees. “You’ll find the niche market in fraud examination can involve different clients and unique approaches,” he says. He deals with embezzlement cases, corporate internal investigations and fraud by contractors and vendors. This article details the steps these two CPAs used to build and promote a practice in this fast-growing field.

THE MARKET
There are many areas where CPAs—especially small practitioners—can specialize.” Tierney, who spent nearly a decade investigating bond claims, has made insurance fraud her specialty. “While working for an insurance company, I discovered that I had a passion for investigating fraud in fidelity and surety bonds and decided to pursue this field.” Now a sole practitioner, Tierney has nearly 200 cases under her belt. She notes that in the business community today “clients are more attuned to fraud than ever before because of high-profile accounting failures such as Enron and WorldCom.”

But the great majority of small businesses, with the highest statistical risk of fraud, are not audited. That fact provides an excellent opportunity for CPAs seeking fraud-detection experience to expand their services to current nonaudit clients through fraud-education programs as well as internal control and cash account reviews.

Education. The cornerstone of fraud prevention is education, and CPAs can offer in-house seminars and other types of training programs to the staffs of their clients. After all, it is difficult to defraud someone who has enough knowledge to recognize the warning signs. “Education begins,” says Greene, “with the client and the employees who work for the organization.” Greene lectures regularly on the subject.

Internal control reviews. Although most small business clients don’t need or in many instances can’t afford a complete audit, they can greatly benefit from a thorough review of their internal control structure, observes Tierney. “Schemes against small businesses are usually made possible by a lack of separation of duties. By conducting an internal control review, the CPA is providing a valuable service for the client,” she adds.

PRACTICE TIPS
Once you’ve obtained the necessary expertise, you’ll want to employ some traditional methods to grow your practice. Both Tierney and Greene have joined professional organizations related to the field and are active in them (see “Network Builder” and “Media Savvy” ).

“You need to be careful in selecting the organizations you join,” says Greene. “When I started in practice a number of years ago, I was not focused on my marketing approach and spent too much time in organizations that could not benefit my practice.” Greene now occasionally exhibits at large conferences of antifraud professionals, CPAs and lawyers. “I also have a Web site with interesting and ever-changing useful information. Attorneys frequently use the Internet to locate fraud examiners,” he says.

Tierney, past president of the Connecticut area chapter of ACFE, says attending the group’s monthly meetings has been an excellent way of expanding her knowledge and contacts. Since Tierney is a sole practitioner, she is careful not to take on assignments that overcommit her. “Don’t make the mistake of taking on a case you can’t handle,” she says. “Find the right expert to assist you in a fee-sharing arrangement.” Fraud examinations are typically done on-site, so the overhead of an office is not always necessary. Tierney practices from her well-equipped home office. “Because investigating fraud can be adversarial, make sure you are adequately insured against lawsuits,” she advises.

Although she now has a successful practice, Tierney says that initially she didn’t realize how much time it would take. “Getting into the antifraud field will not occur overnight; it takes time, money and much effort. Developing a realistic business plan is crucial.” Both Tierney and Greene say that meeting the key players is the most important aspect of growing such a practice.

MEETING THE RIGHT PEOPLE
Criminal fraud is a different world altogether from the workaday civil case that is the mainstay of many CPAs who provide litigation services. To integrate yourself into this community, it is necessary to meet the right people and cultivate meaningful relationships. In developing contacts it is best to start out with a letter introducing yourself and your firm and its area of specialty. Then you should follow up with a face-to-face meeting that is short and to the point: You are available for fraud-related assignments. Typically, you won’t get a great deal of work directly from the criminal justice community, but becoming known to them is a must. In addition to local police and prosecutors, this group includes the following.

Federal law enforcement
U.S. Attorneys. This office, which is an arm of the Department of Justice, is in charge of all federal criminal prosecutions investigated by a variety of agencies. It also handles certain civil claims. U.S. Attorney’s offices are located in most major cities.

Federal Bureau of Investigation. The FBI is the principal investigative arm of the Justice Department and investigates more than 200 separate violations of federal law. Typical fraud cases include financial institution frauds, bribery and corruption of federal employees, wire fraud and frauds against the U.S. government.

U.S. Postal Inspection Service. The postal inspectors investigate a wide variety of frauds that use the mail. These usually involve Ponzi schemes and other investment scams.

U.S. Secret Service. This agency, in addition to protecting high-level public officials, investigates credit card fraud and certain computer crimes.

Internal Revenue Service. The Criminal Investigation Division of the IRS handles all criminal tax-evasion cases as well as certain money-laundering investigations.

State/local contacts
State attorneys general. Although the duties vary somewhat from state to state, a typical state attorney general’s office will investigate consumer frauds and Medicare and Medicaid claims.

Criminal defense lawyers. Typically, attorneys handle either civil or criminal cases, but not both. The bread and butter of most criminal lawyers is drunken driving or drug cases. However, a small cadre of criminal defense attorneys—usually former government prosecutors—specializes in white-collar-crime defense. You should attempt to identify those in your area and cultivate them for possible work.

Some CPAs might object to helping defend accused white-collar criminals. When I was practicing in this field many years ago, I initially had such feelings, too. But the reality is that when you are conducting a fraud investigation, you will ask the same questions and perform the same analysis whether you are working for the prosecution or the defense. The truth is the truth, no matter who is telling it. Additionally, doing defense work allows you to see both sides of the issue. This experience will make you a better fraud examiner.

THE NATURE OF THE ASSIGNMENTS
You’ll normally receive assignments from either your clients or local attorneys. “The client usually wants you to resolve the allegation of fraud,” says Greene. “In some cases the client simply wants to get rid of the problem employee. In other situations you are expected to work with law enforcement officers, with civil attorneys attempting to recover a loss or with insurance companies to develop a bond claim.” The latter requires that the loss be fully documented.

Work for attorneys—either civil or criminal—typically involves your being hired to sort out the accounting facts and to testify as an expert witness in litigation. But there are two types of experts: consulting (no court room appearances involved) and testifying. They can be the same person, but not always.

“Many attorneys want to know how you will testify even before you’ve done the work,” Greene says. “You can avoid this situation by first accepting the assignment only as a consulting expert. Then, based upon your work, you can decide whether or not your testimony would be helpful. If so, you then can accept a second assignment as the testifying expert, too. If not, the attorney can hire someone else.”

Tierney sums it up best. “Doing fraud work can be exciting, challenging, frustrating and very rewarding. I can’t imagine doing anything else.”

Resources
Books CPA’s Handbook of Fraud and Commercial Crime Prevention (# 056504JA) Financial Reporting Fraud: A Practical Guide to Detection and Internal Control (# 029879JA) CPE Introduction to Fraud Examination and Criminal Behavior (# 730275JA) Identifying Fraudulent Financial Transactions (# 730244JA) Finding the Truth: Effective Techniques for Interview and Communication (# 730164JA) To order, go to www.cpa2biz.com.	AICPA’s Antifraud Initiatives Antifraud and Corporate Responsibility Resource Center, http://antifraud.aicpa.org/. SAS no. 99 information. Management Antifraud Programs and Controls (SAS no. 99 exhibit). Fraud Specialist Competency Model. Free corporate fraud prevention training and CPE. Academia outreach and assistance. Other antifraud activities.

Joseph T. Wells, CPA, CFE, is founder and chairman of the Association of Certified Fraud Examiners and professor of fraud examination at the University of Texas at Austin. Mr. Wells won the Lawler Award for the best JofA article in 2000 and 2002 and has been inducted into the Journal of Accountancy Hall of Fame. His e-mail address is joe@cfenet.com.