Fraud Examination: What it Takes

ACFE President Offers Career Advice
Fraud Examination: What it Takes
When James Ratley, president of the ACFE, started his career in fraud examination, he was told by his supervisor that he would be worthless until he had five years of experience. Although a harsh statement, Ratley ultimately learned what it meant. And for people interested in entering the profession, Ratley's advice is similar: You have to work for that experience.

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"For the people that are coming out of college right now, plan on starting at the bottom," says Ratley, who heads the Texas-based Association of Certified Fraud Examiners.

But rest assured, the career opportunities are broad for fraud examiners, as the profession has "invaded" every possible industry, Ratley explains.

In offering advice to those individuals entering or already in the profession, Ratley says it's essential to find a job that offers you "as much experience as possible" within those first five years. "Those are the formative days," he says in an interview with Information Security Media Group's Tom Field [transcript below].

And after those five years have passed, fraud examiners must continue to sharpen their skills as the technology and profession evolves.

Specialized skills are also helpful in excelling in the profession, Ratley says. "We have attorneys that are involved in it. We have accountants," he says. "But the backbone of the fraud-examination profession is the investigative skills." And the more of these segments you can place in your arsenal, the better, he explains.

In an exclusive interview about fraud trends and careers, Ratley discusses:

  • Today's top global fraud threats;
  • How the fraud examiner's role must evolve;
  • Career opportunities in 2012.

A former Dallas police officer, Ratley left the police department in 1986 to join Wells & Associates, a forensic accounting practice, where he was in charge of fraud investigations. He handled investigations regarding internal frauds, conflicts of interest, and litigation support. In 1988, he was named Program Director for the Association of Certified Fraud Examiners and oversaw all aspects of the ACFE's training and education programs.

In 2006, Ratley was named President of the ACFE, and in 2011 he was also named CEO of the organization. In this role, he works to promote the ACFE to the public and other professional organizations and continues to assist in the development of anti-fraud products and services to meet the needs of ACFE's members. In addition, he is a member of the ACFE's faculty, and teaches regularly at workshops and conferences on a variety of fraud-related subjects.

TOM FIELD: We spoke earlier this year in the summer. What have been the top issues you've paid the most attention to since we first spoke?

JAMES RATLEY: Since we've talked, I've traveled internationally pretty extensively, and from people that I talked to all over the world, it seems the major problem that everybody's encountering is bribery and corruption, especially these international companies that are dealing with U.S. companies. They're very concerned about that and the latest techniques to detect it and prevent it as well.

Top Fraud Threats

FIELD: Given your global travels, what do you see as today's top fraud threats, and how do they differ by global regions, if in fact they do differ?

RATLEY: Well, we still face the same threats that we did ten years ago, they're just more pervasive now because of the Internet and the electronic age, if you still call it that. Ponzi schemes, for instance - back when we started the association, if you had a Ponzi scheme that was in the millions of dollars, it was huge. Now it's all too common to have one that's in the billions of dollars. Investment fraud - the Baby Boomers are reaching retirement age now, and so many of them have just been devastated by a variety of different types of investment frauds. Also, the Internet has allowed us to become more international, more businesses to become international, and the bribery and corruption that is oftentimes associated with that.

And because of the electronic age, we oftentimes don't have the documentation that a lot of us old heads are used to dealing with. Also, the international countries that I travel with don't have the open-records laws that we have in the United States. Oftentimes when you have a bribery-type situation, it's very hard to do the background and to do the fraud examination on it because the documentation is many times not there; and if it is, it's in an electronic format and many times can be difficult to get a hold of. We're seeing the Internet utilized more and more in fraudulent transactions because of, one, the anonymity of it and, two, it can be perpetrated from any place in the world. Oftentimes the country where the fraud is perpetrated from does not have a law against that particular act, so there's no recourse whatsoever.

Fighting Fraud in 2012

FIELD: Given what you've learned and what you've seen, how do you feel that we have to fight fraud differently in 2012 than we have in 2011 and previous years?

RATLEY: ... For so many years law enforcement and fraud examiners have been reactive. In other words, when a crime occurs, we go there and conduct a fraud examination; law enforcement is called in. What we have got to do is we've got to turn the corner here and be proactive. We have to work on the prevention of fraud. We've got to set up the controls that will help us detect it much earlier. For many years, fraud was oftentimes - as a matter of fact, the majority of the time - ignored. A corporation, a financial institution, would find someone that was involved in fraudulent activity, and they would either terminate them or many times they didn't even terminate them; they would transfer them to a different location and just write it off. Today fraud has gotten to the monumental cost, and it's no longer possible to just ignore it.

We've got to be more proactive on the prevention and the detection side as opposed to being completely reactive whenever we're told that there's a fraud. One of the things that the electronic age has done, first, is it's made it much easier for some people to steal. But what's oftentimes ignored is it has helped us. It's easier to implement internal controls, you can have real-time monitoring. We've just got to familiarize ourselves with this technology and utilize it to provide us the information that we need that will help us prevent the fraud and respond to it much, much earlier than what we have in the past.

Fraud Examiner's Role

FIELD: We've talked about the evolution of fraud and the trends. How does the fraud examiner's role continue to evolve?

RATLEY: The fraud examiner's role has first become much, much more essential and important to businesses throughout the world because back in 1988, when the Association of Certified Fraud Examiners was first founded, there was not a term "fraud examiner." The two words existed, but they were never used together, and the early fraud examiner played a minimal role in the business culture. Today, the 2011 report to the nations for the Association of Certified Fraud Examiners shows that businesses are losing approximately 5 percent of their gross revenue to fraud. The role of the fraud examiner is monumental in today's businesses because if you can add 5 percent to your bottom line, that's massive and major in today's economy. Their role has become much more essential to American businesses and to businesses throughout the world since the economy has declined. And it will continue to grow as we move forward in 2012 and beyond because executives have seen how cost-effective it can be to have a well-trained fraud-response team and a fraud-prevention program.

One of the mistakes that businesses made early on in the Association's life was they felt like anybody could do a fraud examination. They would oftentimes call an auditor or accountant in, or even a security official that they had and assign them the responsibility of a fraud examination. This is a specific profession. You have to have training to do it. You have to know what you're doing. It's a crime like no other crime. There was not a gun involved, there was not a knife; there was in many cases a ballpoint pen or a computer. Their role has become much more essential in the American business community.

Career Opportunities for Fraud Examiners

FIELD: As you look around at the different marketplaces you visited and different sectors you interact with, where do you see the best career opportunities for fraud examiners in the coming year?

RATLEY: The career opportunities are endless. We have a job board here and people are begging for fraud examiners, for well-trained fraud examiners. The one thing about fraud that's important to realize is it has invaded - you could call it that - every industry in the world. I get calls on a regular basis from religious organizations that people have stolen money from. There's nobody that's immune from fraud. Every industry has a need for well-trained fraud examiners, and it will continue to be that way. Fraud will be with us throughout all of our lifetimes.

There are a number of opportunities there, and we see two types of people that want to get into the profession. One is the college student that would like to move into that fraud-examination field when they graduate. But what's probably more common is the person that wants to make a mid-career life change and wants to move from their career into the fraud-examination field. And this is very open, too. We've got some information on our web page for people that want to do that, but the future is very bright for the fraud examiner.

Top Skills Needed

FIELD: What do you see as the most critical skills for the people getting into the field now?

RATLEY: I gave some thought to that because I've been asked that many times in the past. The fraud-examination field is comprised of a wealth of talent, but a wealth of specialized skills. We have attorneys that are involved in it. We have accountants that are involved in it. We have investigators, IT professionals. But the backbone of the fraud-examination profession is the investigative skills. And the more of these segments that you can put in your arsenal - the forensic IT specialists - there's a big demand for those now, someone that can come in and conduct an examination on a computer and retrieve deleted information. That's a very hot area right now. But if you take the forensic IT specialist and you provide them with investigative skills, they're even more sought after. The same thing with an auditor or a CPA - if you take an auditor or CPA and train them as an investigator, they're much, much more effective as a fraud examiner, and as a result they're in much greater demand.

FIELD: Final question for you. You talked about people that are starting their careers or in some cases restarting their careers as fraud examiners now. If you could boil it down for these individuals, what advice would you give to them about their careers as fraud examiners?

RATLEY: When I first started in the investigative field, I had a supervisor of mine tell me that I was worthless until I had five years of experience. And I took great offense to that and I didn't understand what he was saying until I had five years of experience. For the people that are coming out of college right now, plan on starting at the bottom. Work for that experience. Find a job where you can get as much experience as possible within the first five years because those are the formative days. Find a law-enforcement job where you work one fraud case after another.

After the five years, it's important that you continue to sharpen those skills and to hone those skills and to keep up with the latest technology that's out there. The investigative profession has evolved over my career. Interview techniques are much more effective now and much better. You've got to continue to seek the education that's necessary to keep you at the top of the pile. There's a wealth of opportunities for the diligent person. In Texas, we have a saying. If you do not believe in you, the view never changes. I would suggest that you work hard to believe in you.

About the Author

Jeffrey Roman

Jeffrey Roman

News Writer, ISMG

Roman is the former News Writer for Information Security Media Group. Having worked for multiple publications at The College of New Jersey, including the College's newspaper "The Signal" and alumni magazine, Roman has experience in journalism, copy editing and communications.

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