Ep. 198: Leah Wietholter – Following the money with a forensic accountant

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Full Episode Transcript
Adam:

Welcome to Count Me In, the podcast that explores the world of business from a management accountants perspective. My cohost Rouba Zeidan spoke with our special guest Leah Wietholter. Leah is a certified fraud examiner and the author of the new book Data Sleuth: Using Data in Forensic Accounting Engagements and Fraud Investigations. Leah began her career supporting forensic accountants at the FBI and has since branched out to lead her own forensic accounting and private investigation firm. Forensic investigations are the center of so many great crime shows these days, and it was exciting to hear how accountants expose fraud and other problems lurking in bank accounts, credit card statements, and payroll reports. I hope you enjoy the conversation.

Rouba:

Good morning, Leah. And thank you so much for joining us.

Leah:

Thank you so much for having me.

Rouba:

I'm really looking forward to learning more about your very kind of interesting arena and industry, which is and you have a wonderful background in the FBI. So maybe you can drop in some examples on that part of it. So can you tell us a little bit about forensic accounting and forensic accounting engagement? What does it entail?

Leah:

Yeah, so I work forensic accounting engagements as a private consultant. So I'm not affiliated with law enforcement or anything like that. I own a forensic accounting practice in Oklahoma, and the majority of our engagements are solving some sort of financial problem that's either in litigation or could end up in litigation. So we work a lot of embezzlement investigations or fraud investigations. Then we also work to help sort through partnership dispute or a shareholder dispute, so if someone believes the general partner or whoever's managing the money, usually, has been taking more than their fair share, we get involved there and kind of our third other largest category of a forensic accounting engagement is in divorce matters when the two parties are looking to get divorced and they need to split their assets. Then usually one party is not familiar with how the marital funds were handled.

Leah:

And so they wanna make sure that when they go to divide those assets, that they're getting their fair share. So we help them either get comfortable with the known assets or try to find any other hidden assets within that situation. And we usually only work divorce cases. If there's a business involved, there's a lot of opportunities when people have closely held businesses where they can hide assets or just, they own things that maybe their spouse doesn't know about. So those are kind of the three types of engagements that fall under the three types of cases that are typically involved in a forensic accounting engagement for us.

Rouba:

Interesting. I mean, that, that kind of implies that there are numerous kind of legal consequences and circumstances you know, that might come into the equation and most well known would be maybe investigating alleged fraudulent activities like you, you know, in your experience, how prepared is the average finance and accounting professional to handle such circumstances?

Leah:

I would say that the accounting and financial professionals that I run into, they're familiar with what fraud looks like. They're familiar with, you know, the concept of, we talk about this a lot, cuz we use data analytics, but a lot in our investigations, but we talk about what should have happened, the framework what should have happened versus what happened. And so finance and accounting professionals know what should have happened. And then they also know what happened, but taking that information and then putting it in a format that could be explained to a judge or a jury or even to the client themselves is where our specialty usually shows up. As opposed to, you know, maybe someone working in corporate or even in audit connecting those dots. One of the things that I've been focusing on lately with my team is, okay, I understand that these journal entries, for example, these journal entries look strange and we can tell the client, Hey, these journal entries look strange, but we need to tell them why that matters.

Leah:

Why should they care about it? And what is the risk to them? What is the financial loss to them? And being able to connect what we know about accounting to losses, to the story of what happened, because that's what helps in, if it does result in litigation, that's what helps communicate the findings. So we've gotta be able to connect what we know as financial professionals with a group of individuals that this is not their specialty. And so connecting those dots, understanding a lot of times finance and accounting professionals are very good at understanding what all the financial statements say and what that means, but then to translate that into, okay, why should my client care, which is usually connected to what actual dollars are missing which would be found on bank statements and credit card statements and payroll reports. So just knowing where to go for that information to best communicate what happened. And the corresponding loss is kind of where this forensic accounting niche comes into play.

Rouba:

Did you find that the need for forensic accounting has grown over the past few years and more specifically, you know, post the COVID era? And if so, how and why?

Leah:

So when I first started in forensic, so my background, I worked for two years with the FBI under the direction of a forensic accountant. And that's how I got into this niche so early in life. But then when I joined I started doing this from the private sector. It wasn't as popular and that would've been like 2009. It, it was becoming more popular. The more that technology has advanced and the access that we have that keeps growing to different kinds of data and understanding what that data can tell us. And you know, how we can use that to understand what's happening and just to understand and put our arms around those facts. Then I think forensic accounting is becoming more popular in the private sector. And I haven't really noticed a huge increase in the need of forensic accounting.

Leah:

I think a lot of people after COVID, I tell my team, I think people are just mad at each other. So we have a whole lot more like the volume of partnership disputes is so much greater than it was before. We're starting to see an uptick in divorces as well. So I don't really know that COVID affected how much forensic accounting or, you know, increased that need. But I have seen an increase in over the course of the last 12 years or 15 years of my career in that, because there's so much more information readily available, that it is possible to find out what happened without relying on law enforcement to get involved and law enforcement, especially in the US, they already have too much work as it is. So if people want answers to their questions and they want it timely, then I think the best resource for them is a forensic accountant in financial investigations.

Leah:

So that's what I have kind of noticed in, you know, this basically has consumed my entire career, this field. And so just noticing the trends that way, you know, and like I said, COVID, I don't know that it increased the need for forensic accounting. It's just that there seem to be even more disputes since COVID. And so then that means that there's a lot more volume for not just forensic accountants, but I like to ...