Closeup on business woman with crossed fingers

The human side of Fraud


“I still can’t believe I let this happen. What’s wrong with me that I didn’t see it?” my client lamented in my office a few weeks ago as we geared up for a sentencing hearing for her former best friend and beloved bookkeeper. Four years after the initial discovery of missing money and a report that showed over $400,000 missing, my client was still reeling from the duplicity this person showed for so many years.  

The emotional impacts of fraud are not something one would expect an expert forensic accountant to deal with or even talk about. However, these emotional impacts are critical to helping businesses understand just who is perpetrating these frauds, why they are able to go on for so long, and the complicated relationships that often cause confusion on just how to deal with these issues when they arise.  

If you had asked every single one of my clients, from the smallest of nonprofits to the largest of publicly-traded companies, to rank their employees from most trusted to least on the day before the fraud was uncovered, the fraudster would be in the top five most wellliked and trusted individuals in the organization.  

Every. Single. Time. 

The fact is, most of us wouldn’t give someone we didn’t trust access to our money. Fraudsters use their ability to be liked and trusted to first gain access. They maintain that trusting relationship to ensure there will be no oversight over their work. After all, implicit trust is the key to unfettered and unchecked access. 

Red flags 

The hiring of a trusted individual to handle bookkeeping and accounting functions is a godsend. It is that sense of relief that frees up owners and management to go about business doing what they do best – running the business. 

Eventually, financial questions will arise. It can be as innocuous as a vendor complaining about late payments or a customer complaining that they paid their bill but received a statement showing they owed money. It can be the delay in providing financial reports or a delay in getting the books to the CPA for the annual taxes. More often, clients will describe a “gut feeling” – a sense that something isn’t quite right. I often hear, “Business is really good, but we never seem to have any cash.”  

Questions posed to the trusted bookkeeper, accountant or CFO will always be met with plausible explanations. After all, these people are great at their job, they are trusted, and the explanations make sense.  

But the gut feelings won’t go away. Clients will describe reluctance in pressing the issue, asking for more information or gaining access to documents themselves. Their worries often sound like, “I don’t want them to think I don’t trust them or am questioning their authority.”  

Personal relationships are powerful. As humans, it is in our nature to trust what people tell us, even when facts and evidence may lead to other conclusions. Fraudsters are counting on their victims to feel the same way.  

An emotional cycle 

When a scheme is uncovered, the emotional reactions tend to cycle similar to the patterns of grief. First, there is a search for a plausible explanation. After all, this “can’t be true.”  Second, there is an internal blaming — What’s wrong with me that I didn’t see this coming?” Third, we usually see the struggle of what to do with the person, “They were my friend! She is my sister! He was like a brother to me!” Clients forget that the person ignored the personal relationship in exchange for the financial benefit they were receiving. In spite of that fact, they wrestle heavily with dealing consequences to the beloved person. Lastly comes anger and finally, acceptance.  

We have to have a degree of trust in every employeremployee relationship, otherwsie business would come to a halt. But, don’t rely so heavily on trust that you forego basic oversight of your financial well-being. Look at your bank deposits to ensure your sales are in your bank account and have not been diverted. Look at bank disbursements, including canceled checks, and make sure that those funds are only for the benefit of the business. Review basic things like credit card statements and processed payroll reports to ensure that payments are only those authorized by you.  

Strong emotional reactions are not expected by clients, but they should be. After all, internal fraud is almost always a crime of breached trust. 

Tiffany Couch is CEO and founder of Acuity Forensics, a nationally recognized forensic accounting firm. She also the author of “The Thief in Your Company,” a book that explores the financial and emotional impact of fraud on organizations of all sizes.

She can be reached at or at 360-573-5158.