As the leader of Navigant Consulting’s largest global practice group, the Disputes and Investigations practice, Timothy Hart, managing director, has testified in arbitration courts in the United States and around world. And, all too often today, a focus of such testimony is fraud.
In his September 20 Lyceum presentation, “Globalization of Forensic Accounting: Trends and Implications,” Hart said that although forensic accounting, or an accounting assignment relating to a legal action, dates back to the early 1800’s, it’s only within the past two decades that fraud has become a significant portion of the practice.
“There are many factors today that facilitate fraud,” Hart said. “These include pressures, whether they are from ego, or illegal activities; opportunity, where there is a lack of supervision and control, and rationalization, such as thinking the company owes you, or that everyone else is doing it.”
Fraudulent financial reporting, designed to mislead investigators and creditors, is currently the hottest area in terms of investigations across the globe, said Hart, with misappropriation of assets and corruption right behind. Why is forensic accounting becoming more global? Hart said it defies logic, somewhat, as most laws are domestic, but that we cannot ignore the forces of the global economy.
“The fact is that foreign direct investment is on the rise, while regulators and courts are crossing boundaries, and courts are working hard to seize assets around the world as well,” he added. “Emerging economies are fertile grounds for excess to occur, and the lack of transparency and rule-of-law in much of the world creates better places for fraudsters to operate.”
Among Hart’s career milestones include notable cases such as Rudy Giuliani’s prosecution of Michael Milken for his dealings in junk bonds in the mid-1980’s, and the first investment treaty case in the Czech Republic that concluded in 2003.
Although he entered the field through a surreptitious route, Hart said students today have a choice in electing and planning for this exciting and challenging career.
He outlined a typical path for becoming a forensic accountant that includes a strong finance understanding and mastery of financial modeling skills, as well as becoming a CPA and Certified Fraud Examiner. Hart also stressed the qualities that individuals should have, such as naturally being more inquisitive, adventurous, resourceful, change-oriented and comfortable with conflict than the average citizen.
“If you’re going to be a forensic accountant, you’d better be someone who is comfortable with asking tough questions and experiencing discomfort in a room, because tensions can get pretty high when someone’s career and he possibility of going to prison are on the line,” said Hart. “It also helps to be extra resourceful. There are no easy solutions when it comes down to your opinion in court about accounting issues and financial damages.”
“And of course, you’re always on call. Fraud knows no boundaries.”