Tag: teaching

Mike Breon spent part of his 20-year accounting career working to investigate questions from workers – their concerns and their tips about fraud – who had reached out through a company hotline.

Now, he has taken his experience with Rite Aid Corp., where he helped uncover a kickback scheme, into the classroom, as well as into private practice.

“Accounting can be fun,” said Breon, who teaches at Bloomsburg University while also running Breon & Associates, which has several offices in the Harrisburg area. The lessons in his courses cover ethics, fraud and forensic accounting. “The kids seem to like that it is not the traditional accounting.”

Breon says he gives students a taste of what it is like to be an investigator, which requires additional training beyond an accounting degree. Those who specialize in fraud detection can obtain several different credentials, including certified fraud examiner or certified internal auditor, which are among the designations he holds.

As part of his work with Rite Aid, the pharmacy chain based in Cumberland County, Breon said, he and his team would investigate complaints that came in and then determine if there were patterns. He would then make recommendations on how to link those findings to employee training.

The training initially might spur an increase in complaints as workers become more aware of what is allowed and what isn’t. That is a good thing, he said, because the long-term culture will change and complaints eventually should diminish.

“A lot of times, businesses have some blind spots,” he said, adding that hotlines can help shed light on those areas.

Controls, though, start at the beginning.

“Hiring the right people is the most important,” Breon said. “You need to hire people who share your core values.”

Even then, companies shouldn’t assume that workers know what is OK and what isn’t. Adequate training can clearly lay out all expectations, he said. The rules – covering everything from mileage reimbursement to travel expenses to behavior – need to be clear and followed at all levels of management.

While many people note that top leaders must follow the rules and set a good example, he pointed out, most workers spend their time with middle managers.

“Tone at the top is important,” said Breon, who is a member of the Pennsylvania Institute of Certified Public Accountants. “But the person they see is their supervisor.”

If the tone is set and clear at all levels, he said, then employees can better navigate what might become ethical dilemmas, especially if employees feel valued and respected.

From corporate suite to classroom

Breon said he started his own accounting business in 2011, while still working at Rite Aid. After he lost the corporate job in a downsizing early last year during merger talks, he expanded his business, Breon & Associates. In addition to its fraud and forensics practice, the firm also offers traditional accounting services.

His experiences with the pharmacy company continue to offer lessons for both his students and his clients, he said. Rite Aid did a good job, including hiring well at the store level with “a lot of great employees.” The hotline showed that the company cared about its workers and that company executive wanted to make sure that concerns were investigated, he added.

The kickback scheme at Rite Aid involved a top manager working with outside vendors to defraud the public company based in Cumberland County. The co-owner of Nuvision, an Atlanta-based electronics company, and a Rite Aid Vice president, James Pilsner, were charged. A second Nuvision executive was exonerated earlier this year after a trial.

From 1995 to 2017, prosecutors alleged, Nuvision would submit fraudulent invoices that Pilsner would approve. Kickbacks of about $5.1 million were paid to Pilsner, according to previous reports by the CPBJ. Pilsner pleaded guilty last year and has yet to be sentenced. Breon said he and his team had investigated the problems after patterns emerged and through tips before the case was turned over to authorities.

James A. Krimmel, a CPA with Hamilton & Musser in Mechanicsburg, said such schemes are rare. Usually, fraud is much more mundane in that it involves theft or corruption involving individuals acting alone – where secrecy can be maintained – and not a group of people.

“It’s often good-old theft, where someone thinks they are going to get away with it,” said Krimmel, who specializes in fraud and forensic accounting and teaches accounting at Messiah College.

Companies will contact Krimmel when they either know something is amiss but aren’t sure the depths of the issues or if they think there is a problem but are not sure. He and others said they often hear the same things from managers and workers who know the person involved: They never thought it would happen to their company; and they never thought so-and-so would do such a thing.

Krimmel, a certified fraud examiner, sometimes encounters another reaction – “I thought something was wrong.” It is a thought that can haunt people who wonder why they didn’t act earlier

That is where internal controls become critical, the experts said, including establishing basic sets of checks and balances where no one person is in control of a system that could be abused.

“Every case is going to be different,” said Krimmel, who also is a member of PICPA. And the size of the organization doesn’t really matter. A large organization might be so complex that it takes time to unravel a scheme, but a smaller company is just as susceptible to people who want to manipulate a system to their advantage.

He agreed that good training is imperative, where fraud awareness is a key component, and then establishing systems such as hotlines and whistleblower policies that will allow workers who care about the company to report an issue. But the entire program needs to be established.

From words to action

When Enron imploded nearly a generation ago in an accounting scandal, Krimmel said, he looked at the company’s written policies and codes of ethics. The documents were “fantastic,” he said. “Thorough and complete.”

Clearly, he added, “It has to be more than words.” The words need to be put into action.

“It’s not one of the other,” Krimmel said. “It has to be both.”

The astonishing thing about Enron, Breon said, is that it brought down Arthur Andersen, which was an elite accounting firm with some of the top accountants in the world. A serious red flag should have been raised when Enron officials tried to explain that its business model of energy trading was too complex for its documents to be easily understood.

“Whenever someone tells you something is so complex that it isn’t easy to understand, that’s a big problem,” Breon said.

The more basic schemes involve patterns of behavior that Krimmel teaches to clients and students. The patterns can be seen in just about every fraud case and involve what experts call the fraud triangle:

1. Pressure: This might involve a worker who is under financial stress caused by substance-abuse problems, gambling, financial problems or other issues that might get someone to think about doing something wrong when they might not otherwise do so, Krimmel said.
2. Rationalization: They make the leaps in logic that they deserve the money. That might include having been passed over for promotion or feeling like they deserve a bigger raise, he said.
3. And the opportunity: That is where they have access to the money through their work and can commit fraud because of poor internal controls.

All three situations often are present. If they hire well, companies can do a lot to mitigate the first two, he said. But companies have the most control over the third.

“If they can’t do what they want to do because controls are in place, it is not going to happen,” Krimmel said.

Accountants trained in these areas can help companies find the weaknesses in the systems, he and others added, especially with experts bearing credentials such as certified fraud examiner, or CFE, credentials.

Lisa Myers, a CPA and CFE with Boyer & Ritter in Camp Hill, and her colleague, Kyle Taylor, said in a written response to questions that the accounting industry has evolved beyond the “jack-of-all-trades expert” and into such specializations.

“Forensics is a niche with a growing demand and supply dilemma,” they wrote.

That is where teaching some of the lessons in forensic accounting on the college level can be productive, they said.

“Even if the career path for specific individuals is in a different facet of accounting, the material taught in a forensic class is informative and creates future professionals who are more aware of risk,” they wrote.