Professional skepticism: An auditor's defense against manipulation tactics

A recent study of fraud offenders suggests they often employ impression management tactics in their interactions with auditors to conceal fraud schemes in financial documents. But auditors have an indispensable tool to defend against these tactics: professional skepticism. The author details the findings of the study and describes how having a skeptical mindset can help auditors beat fraudsters at their game.

Barry Webne perpetrated a relatively simple scheme as the controller for a manufacturing firm in the 1990s by setting up a shell company and directing payments to himself. Years after his conviction for embezzlement and serving a stint in prison for the scheme, Webne refashioned himself as an anti-fraud consultant. He offered his “expertise” to advise companies on fraud prevention and spoke to groups about white-collar crime. In a 2007 lecture at the University of Cincinnati, he was forthright about his crime, stating, “I stole $1.25 million over a period of four years, and the auditors didn’t catch it.” He told the audience that his new mission was to “educate people about how easily fraud crimes can be committed and how to prevent becoming a victim.”