Accounting gumshoes gain new respect.

JOHN Tonsick is an accountant, but his work has little to do with closing the monthly books or making payroll.

While typical bean counters spend hours honing financial statements, the former PricewaterhouseCoopers manager is a forensic accountant--a job that requires looking past the ledgers to ferret out corporate wrongdoing.

"There's nothing in GAAP that will help you uncover fraud," said Tonsick, now the managing director of Citigate Global Intelligence & Security. "You have to take off the green eye shades, learn about a company and actually talk to people."

Once obscure specialists in the accounting profession, forensic accountants have garnered more notice over the last two years as they have been called in to probe the books of such former high flyers as Enron Corp., Homestore Inc. and L90 Inc., now MaxWorldwide.

They've even made their way into novels such as "The Devil's Banker," the Christopher Reich thriller about a spy who teams up with a forensic accountant to chase down a terrorist ring.

"Enron shoved forensic accounting into people's faces because of the extent of the shenanigans involved. Corporate finance executives have at the very least heard of us and board members know what we do as well," said Deloitte & Touche partner Joe Anastasi, whose own hook, "The New Forensics," hit the shelves in July.

Detective work

While financial restatements and balance sheet scandals have brought forensic accounting into the spotlight, those matters only account for around 15 percent of the workload. At other times, lawyers call upon forensic accountants to comb through evidence and testify during trials. Corporate investigations into embezzlement, inventory theft and kickback schemes between executives and vendors make up the second-largest source of business. Then there are niches such as vetting insurance claims of damaged goods or checking into divorce cases.

While these accountants apply accounting training to their investigations, much of what's done involves gumshoe work. Even on a simple investigation, Tonsick may end up scouring employee timecards, chatting up truck drivers or checking out a vendor's address to rule out inventory theft or a kickback scheme.

With the help of computer specialists and special software such as "program sniffers," they check out hard drives using keywords and patterns. They comb through cancelled checks looking for missing check numbers, raw materials purchases--even invoices to see if an employee set up a phony vendor to siphon off corporate funds.

Often times, a forensic accountant will spend time talking to truck drivers, warehouse foremen or janitors to flesh out everything from internal controls to who works on the night shift.

"Warehouse people, truck drivers, they tell you everything," said RGL Gallagher Managing Director Robert Jones. "They have nothing to lose. More importantly, they see things that may not initially jump out at (accountants)."

It's the kind of work that takes a special kind of accountant.

Since the company's general counsel or chief financial officer usually calls on them after a suspected fraud has already begun taking place, they have to work quickly.

Stealth is key. To maintain cover, forensic accountants often are introduced as consultants studying the company's operations. The forensic accountant is usually talking to the suspected culprit at the beginning of the of the investigation, so the questions asked--such as how a company accounts for inventory flows--are kept innocuous so no one gets tipped off.

Tracking down numbers

Unlike auditors, who work in teams and only sample raw items such as invoices to test for veracity, forensic accountants will typically work alone. (Complex cases, such as a kickback scheme or false statements on a SEC filing, may require more personnel.) An investigation can take weeks, or even years.

The field attracts those who are bored with the routine mechanics of auditing. Typical is Tonsick, an amateur magician who likes comparing his work to revealing the secrets of magic tricks.

During the seminars he conducts on detecting corporate fraud, he will place a bottle of ketchup into a brown paper bag and make it disappear. Then he shows the audience the steps he takes to discover how the sleight-of-hand was achieved, then discusses how he uses those techniques in his fraud investigations.

"Magic is really nothing but lying, cheating and stealing, just like fraud," he said. "And both are fun to watch, especially when you can reveal what happened."

Among his favorite cases was one in which he vetted allegations of sexual harassment against an executive. Interviews with other employees revealed that the harassment charges had little basis. Instead, he began hearing about a monthly payment of $10,000 that the executive would make to a mysterious vendor. A quick check revealed that the vendor's address was a post office box, just blocks from the executive's home. Eventually, Tonsick uncovered evidence of embezzlement through the phony vendor scheme.

"Bless his heart, it was fun to uncover," said Tonsick.

A good number of forensic accountants start their careers in the field, usually as agents for federal agencies such as the FBI. But many fall into it by accident.

Steve Franklin's first bit of investigative work came in 1975, when he helped a lawyer prove that his client was improperly fired as finance chief of a plumbing company. The owners had let the finance chief go after they realized he was entitled to pension payments greater than their own.

Franklin jumped in the mid-1980s after he fired the partner who ran the forensic accounting side of his firm, now called Mayer Hoffman McCann.

"I asked my partners who should replace him and they looked at me," said Franklin. "That kind of pushed me head-on into the field."

Mercedes hunch

Tonsick spent the first five years of his career as an auditor, first for Coopers & Lybrand, then the University of Southern California. His introduction into forensic accounting came during a stint as an auditor for now-defunct cargo hauler Tiger International in 1982, where he was asked to check out a warehouse that suffered huge inventory losses. After noticing that the modestly paid manager was driving a Mercedes, Tonsick uncovered evidence that the person was orchestrating theft and promptly had him fired.

Tonsick moved into forensic accounting full-time two years later when he joined Frank Sweeney & Co., a now-defunct boutique, where tie spent the next five years helping the Federal Trade Commission sniff out boiler room schemes such as American National Cellular, which allegedly swindled investors out of $23 million.

Looking to spend more time with his son, he left the field and joined Atlantic Richfield Co. as a traditional auditor. But by 1997, he was hankering to return. That year, he joined Coopers & Lybrand's forensic accounting team for a five-year gig.

"I had gone through a divorce and my son was grown. I had watched all his swim meets and water polo matches," said Tonsick. "It was time for me to go back to what I liked best and that was chasing down bad guys."

For forensic accountants, the toughest work sometimes comes in wringing a confession from the suspect once the investigation is completed. Tonsick spent an hour getting a payroll manager--who had already confessed to stealing over $1 million--to admit stealing another $600,000.

"I couldn't break my gaze," said Tonsick. "In some ways it's almost like being a cop in an interview room."

Other times, it can get dangerous. When Martha Corbett went to Mexico to investigate alleged balance sheet shenanigans at an automobile factory, she had to bring along new security guards to replace those who allegedly were involved in the theft.

"It was really tense for a while. They weren't happy about being let go. But we couldn't let them stay on," said Corbett, now PricewaterhouseCoopers' L.A. practice leader. "In retrospect, it was quite fun."