Accountants Need Help Fighting War on Fraud; ACFE Founder Urges Anti-Fraud Education.

AUSTIN, Texas -- The founder and chairman of the Association of Certified Fraud Examiners (ACFE), Joseph T. Wells, CFE, CPA, fears our nation's CPAs are not trained to fight what may seem to be an intractable battle against accounting fraud.

"As a group, CPAs are neither stupid nor crooked. But the majority are still ignorant about fraud, " explains Wells, considered an international authority on the topic. "That's because for the last 80 years, untrained accounting graduates have been drafted to wage war against sophisticated liars and thieves. And as multi-billion dollar accounting failures have shown, it hasn't been much of a fight."

Legislation, including Sarbanes-Oxley, has not addressed a glaring oversight in the way colleges and universities educate auditors. In a 1999 study of America's 880 accounting programs, less than three percent offered a course in fraud. The situation is improving but has a long way to go. "Just ask the people holding accounting degrees," Wells says. "'How much did you learn about fraud in college?' The shocking answer: little or nothing."

After two years in public accounting, Wells spent nearly a decade as an FBI agent. By working actual cases, it became obvious that his formal education and accounting training had left him sorely lacking. "I wouldn't have recognized a fraud because it is much more than simply numbers."

Wells says there are three reasons CPAs cannot catch all material misdeeds. The first is the dichotomy of fraud. "Trust is an essential element of business -- and an essential element of fraud," he explains. "Absent trust, it is impossible to con anyone. But absent trust, it is also impossible to conduct business." Second, fraud is a crime without unique clues, making it easy to miss. While it is hard to mistake a robbery, an embezzlement may be marked merely by numbers that don't add up.

Finally, CPAs can only audit what is presented to them. "Under-the-table deals, sham transactions and the like can be easily concealed," Wells states. "Holding CPAs to a standard that requires them to detect all material fraud puts them in a no-win situation and they know it. Still, auditors can certainly do a much better job than they've done in the past."

History has shown that key insiders are usually the first to divulge corporate misdeeds. Sharron Watkins of Enron and Cynthia Cooper of WorldCom are only the latest in a long line of employees tarred as whistleblowers. But auditors typically react to these tips rather than seeking them out in time to avoid major financial disasters.

"Accountants don't currently learn what motivates fraudulent conduct, how to spot the signals, how to prevent fraud from occurring and much more," Wells explains. "As it stands now, auditors are fighting a war without being taught how to recognize the enemy. Until that changes, expect more heavy casualties," he warns.

About the ACFE

The ACFE, the world's leading provider of anti-fraud training and education, has over 35,000 members, sponsors more than 120 chapters worldwide and provides anti-fraud educational materials to over 100 universities. Certified Fraud Examiners (CFEs) on six continents have investigated more than 1 million suspected cases of civil and criminal fraud. For more information visit www.ACFE.com.

NOTE TO MEDIA: To schedule an interview with Joseph Wells, contact Cathy Hale at 512-444-4949 or 512-658-2709.