Forensic Accounting Outlook: Bringing Life to Numbers While Fighting Crime

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Nicole Ponziani spends her days chasing down criminals, and she uses a calculator and spreadsheet to do it. Her lifelong passion for justice led her to criminology and the growing field of forensic accounting. In professional services, the forensic accounting outlook is bright.

It may sound like an episode of “Law & Order,” but as a senior forensic analyst in Aprio’s Litigation Support and Forensic Accounting services group, Ponziani is focused on shady numbers — not grisly crime scenes.

“I give life to the numbers,” Ponziani said. “My background is more along the lines of the true fraud and forensic aspect of [accounting]. So, building a methodology, identifying evidence, evidence collections, interviews.”

At Aprio, Ponziani focuses on identifying and resolving alleged asset misappropriation for clients, which may involve the theft or misuse of company assets, such as cash or inventory. She draws on her 15-plus years of experience working in complex asset tracing, fraud investigations, financial services regulatory compliance, financial risk, and private and human resources (HR) investigations.

Forensic accounting has become one of the most promising sectors in professional services as technology and a litigious environment have increased the need for such services.

Calculators to Catch Criminals

Nicole Ponziani, senior forensic analyst at Aprio.

(Photo courtesy of Nicole Ponziani)

“My mom will say that from kindergarten, I wanted to be a cop,” Ponziani said. “And my big thing was I wanted to help people.” Pursuing her childhood ambitions, Ponziani attended the St. Petersburg College police academy in Florida.

“After working a white-collar crime case, I realized that I would much rather chase criminals with a calculator and an Excel spreadsheet than a firearm and a bulletproof vest,” Ponziani said. “So, I worked on getting my degree in criminology with a minor in victimology, so I could understand why people committed crimes.”

Ponziani graduated from the University of West Georgia and began her professional career as a child support enforcement officer for the Georgia Department of Human Services. She spent several years at SunTrust Bank working on mortgage fraud, wire fraud and Office of Foreign Assets Control-related matters. She later served as a consultant for the Georgia Parent Teacher Association (PTA), developing its fraud program.

In November 2017, Ponziani joined Aprio, which provides clients with litigation support and forensic accounting services. The firm has specific experience with such matters as Ponzi schemes, money laundering and billing scams. One of Ponziani’s first engagements at Aprio involved the tracing of assets for an insurance company that was trying to recoup losses from a bribery case.

A Growing Profession

An air of mystery may surround forensic accounting, but it’s been around for decades. In fact, the IRS reportedly used a forensic accountant to catch Al Capone for tax evasion when the FBI was unable to convict him of other crimes.

Forensic accounting came into the spotlight as the corporate scandals of the early 2000s, such as Enron and Worldcom, rocked the nation. In recent years, forensic accountants have also helped track and disrupt the financial activities of terrorist organizations.

A 2016 global fraud study by the Association of Certified Fraud Examiners estimated the typical organization loses 5 percent of revenues in a given year as a result of fraud. Asset misappropriation — including skimming, check tampering, billing schemes and expense reimbursement schemes — was by far the most common form of occupational fraud. It occurred in more than 83 percent of cases but caused the smallest median loss of $125,000.

Financial statement fraud was on the opposite end of the spectrum, occurring in less than 10 percent of cases but causing a median loss of $975,000. Corruption cases fell in the middle, making up 35.4 percent of cases and causing a median loss of $200,000. Organizations that lack anti-fraud controls suffer greater median losses — twice as much, in fact.

A 2014 study by the American Institute of CPAs indicated healthy demand for forensic and valuation services and strong prospects for the future. A total of 76 percent of forensic and 54 percent of valuation respondents expected their practices to grow, with the majority expecting growth of between 10 and 50 percent over the next two to five years.

In light of this growth, Aprio is working to expand its investigation services, which is when advisors use data analytics to assist clients in determining the scope and breadth of a wrongful act, such as billing schemes and money laundering.

“Over the last 10 years especially, fraud has changed dramatically — and how people commit fraud has changed dramatically,” Ponziani said. “I’ve learned that fraud is ever-evolving, through changes in tech like online payments. People will never cease to amaze you with the ways they come up with to commit fraud.”

Going forward, the forensic accounting outlook is strong, as demand for it increases.

“You are going to see companies bring in more diverse groups to their forensic accounting practices. You are going to have interviewers and investigators, like myself,” Ponziani said. “You are going to have accountants and valuators who can handle different pieces. So, to be a successful forensic practice, you are going to have a diverse workforce to combat the ever-changing world of fraud.”

What to Know

If you’ve identified or suspect fraudulent activity, and are unclear how to recover losses, it’s critical to hire a forensic accounting team.

“Having somebody who has handled large law enforcement cases and the accounting behind them makes the process smooth, from identifying it to prosecuting it to litigation in the courtroom,” Ponziani said.

People commit fraud for various reasons and often try to rationalize their actions. For example, an employee may justify his actions by saying the employer makes so much money that a few dollars won’t be missed. Even if your CPA audits your financial statements each year, you still need a forensic accountant, since an audit is not designed to uncover fraud.

Summary

Legal disputes and insurance loss claims are a reality in today’s business environment.

Minimize the impact of a dispute on your business operations by hiring a team with the expertise and ability to use data analytics and proven interview and investigative techniques.

And ensure your organization has the proper anti-fraud controls in place. Failure to do so could cost your company.

More content on forensic accounting:

You Found Employee Fraud — Now What?

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