Article from The Advocate Online

LSU professor makes a name as a forensic accountant

Danny Heitman, 2/17/2002, p. 1-H

Photo For: LSU professor makes a name as a forensic accountant

Advocate staff photo by Bill Feig
LSU accounting professor Larry Crumbley is also a forensic accountant -- an accountant who can use investigative skills in law enforcement or as an expert witness in court cases.
After last year's Sept. 11 terrorist attacks, The Christian Science Monitor called LSU accounting professor Larry Crumbley to get his insights.

Specifically, The Monitor wanted to know how much success investigators could expect in tracking the terrorists' money.

Crumbley is a certified forensic accountant -- an accountant with special training in conducting financial investigations for law enforcement and civil court cases. He's also the editor of the Journal of Forensic Accounting, which he founded a couple of years ago, and he's written novels with forensic accountants as the main character.

Many of the Sept. 11 terrorists used debit cards, Crumbley told The Monitor. "If those cards were set up by cash brought into the country, it would be largely untraceable," he said in a Monitor interview published on Sept. 26.

"That's when your forensic accountant has to start doing some walking," Crumbley recently told The Advocate. "A forensic accountant has to do a lot of interviewing."

The fall of Enron is another major news event that promises to give forensic accountants a higher profile. The rapid collapse of the Houston-based energy company has spawned numerous allegations of financial mismanagement and possible criminal activity.

"It might have been wise if some of those people who were working for Enron had a forensic background," said Crumbley. "Then, maybe those people wouldn't have lost all their money."

When most people hear the word "forensic," they think of a coroner -- an association that can be helpful in understanding what forensic accountants do, Crumbley said.

He compared forensic accounting to "Quincy," a once-popular TV show about a crime-solving coroner. "You remember Quincy? He worked on bodies. Well, we work on books," Crumbley said. "We don't assume that the books are correct. The books could be cooked. The records could be false. We have to look behind the records."

In addition to probing financial records, forensic accountants also look for suspicious behavioral clues in conducting investigations, Crumbley said. A lavish lifestyle, for example, could indicate that the manager or owner of a business is skimming money from the corporate till.

"You also become suspicious of someone who won't take a vacation," Crumbley said. When a financial manager won't take time off, that could mean an unwillingness to risk some unpleasant revelations while he's away, said Crumbley.

Crumbley cited the case of a business owner who always gave his unopened envelope of canceled checks directly to his assistant. When the assistant went on vacation, he opened a stack of canceled checks himself and made a startling discovery. The assistant had been writing the names of vendors in invisible ink on some of the checks. After the ink vanished, she would place her own name on the checks, then cash them for her own use.

"If he had just done one thing, if he had just opened one envelope before giving it to her, then it couldn't have happened," Crumbley said.

Though forensic accounting has particular relevance to today's headlines, its techniques originated at the dawn of civilization.

"The scribes of ancient Egypt who inventoried the pharaoh's grain, gold and other assets were probably the accountant's predecessors," Crumbley told The Forensic Examiner trade journal last year. "But forensic accounting, or at least accounting expert witnessing, can be found in an 1817 court decision in England."

There are two primary types of forensic examiners, Crumbley said. Some forensic examiners work in law enforcement agencies and help conduct criminal investigations.

During World War II, for example, the FBI employed more than 500 agents who were accountants. Earlier in its history, the FBI used accountants to convict mobster Al Capone for tax evasion.

The second kind of forensic examiner offers expert testimony in court cases dealing with financial disputes. Crumbley's work in the field has involved this kind of forensic accounting -- a specialty he calls "litigation support."

In many court cases connected to financial controversies, both the plaintiff and defendant hire forensic examiners to support their claims, Crumbley said.

"I like testifying in court," said Crumbley. "Testifying in the courtroom is a lot like the knights jousting in medieval times."

Crumbley's vivid imagination has inspired a number of unconventional methods for explaining forensic accounting to students and the general public. He's worn a fedora and trench coat to class to remind students that a forensic accountant is a kind of detective. He readily dons his detective costume for publicity pictures, and he's also written novels, such as "The Ultimate Rip-off," in which the hero is a forensic accountant.

"Accountants have to be detectives," Crumbley said. "Accounting can be fun. Other people may consider me a ham. Yes, you could probably say I'm a ham. I guess I'm a maverick. I guess I'm a Renaissance man. I like that term a little better."

Crumbley said he writes novels about forensic accounting because people tend to learn better about a subject when it unfolds in the form of a story. "Hopefully, I've made forensic accountants popular, because the main characters in my novels are forensic accountants," he said.

Accountants are often lampooned as boring because their work involves grueling detail, said Crumbley.

"It's tedious. It's very difficult," he said. "You have to be able to grasp difficult concepts. A forensic accountant is like someone eating a bowl of spaghetti. When you start pulling at each strand of spaghetti, you don't know where it will lead, and you have to follow it. Being a forensic accountant is like eating a bowl of spaghetti one strand at a time."

Accountants also endure a reputation for blandness because they tend to live conservatively, said Crumbley, whose own lifestyle seems aimed at breaking that mold.

The 61-year-old professor has traveled to 95 countries, bungee jumped, dived with sharks off the coast of Florida and auditioned unsuccessfully for "Survivor," a hit CBS show in which contestants play survival games in exotic locales.

"I have only three goals left in my life," Crumbley said.

"No. 1, I'd like to go to the moon. That's not going to happen. I'm too old.

"No. 2, I'd like to be in the Century Club. That's a group of people who have traveled to at least 100 countries. I've been to 95 already.

"No. 3, I'd like to be a guest on 'The David Letterman Show.' The only way I could do that is to get on 'Survivor,' because Letterman interviews all of the 'Survivor' contestants.

"But they're not going to pick me for 'Survivor,'" Crumbley said. "I'm too old, and I'm not good-looking. It's age discrimination."

But even when they don't end up on "Survivor," accountants face significant risks, Crumbley said. When firms such as Enron crash, plaintiffs are more likely to sue the company's accounting firm rather than the company itself. That's because the accounting firm has deeper pockets than the bankrupt corporation, he said.

"What people don't realize is that it's very dangerous to be an accountant," Crumbley said. "Juries generally believe that accountants did something wrong, whether they did it or not."

To shield themselves from liability, many major accounting firms are hiring their own forensic accountants to spot possible problems in clients' corporate ledgers before they reach the crisis stage.

In the meantime, as the Enron case makes its way to the courts, Crumbley is willing to make at least one confident prediction.

"Both sides," said Crumbley, "will have their own forensic accountants."